JEANNE S. HOFFMAN, ON BEHALF OF ) ROY HOFFMAN, JR., DECEASED, )
vs. )
Respondent. )
Case No. 05-3200
JEANNE S. HOFFMAN, ON BEHALF OF ) ROY HOFFMAN, JR., DECEASED, )
vs. )
Respondent. )
Case No. 05-3679
This case came before Administrative Law Judge John G. Van Laningham for final hearing in Tallahassee, Florida, on December 6, 2005.
For Petitioner: Jon C. Moyle, Jr., Esquire
Moyle, Flanigan, Katz, Kollins, Raymond & Sheehan, P.A.
For Respondent: Thomas E. Wright, Esquire
The primary issue in this case is whether Petitioner is entitled to receive an early retirement benefit pursuant to Sections 121.091(3)(b) and 121.091(7)(b), Florida Statutes, based on an effective retirement date of February 1, 1996.
By letter dated March 15, 2005, Respondent Department of Management Services, Division of Retirement, notified Petitioner Jeanne Hoffman that it intended to deny her request that the retirement benefit to which she is entitled as her late husband's joint annuitant be based on an effective retirement date of February 1, 1996, the first day of the next month following her husband's death. Petitioner timely requested a hearing concerning this determination, and Respondent referred the matter to the Division of Administrative Hearings ("DOAH"), initiating Case No. 05-3200.
Mrs. Hoffman also petitioned Respondent, pursuant to Section 120.542, Florida Statutes, to waive——or grant her a variance from——the provisions of Florida Administrative Code Rule 60S-4.0035(3)(c) upon which Respondent had relied in preliminarily rejecting her request that February 1, 1996, be accepted as the effective date of her late husband's retirement. Respondent denied Mrs. Hoffman's petition in an order dated August 15, 2005. Thereafter, Petitioner timely requested a hearing to determine whether a waiver or variance should be granted, and Respondent referred the matter to DOAH, initiating Case No. 05-3679.
By order dated October 21, 2005, the two cases relating to Mrs. Hoffman's retirement benefit were consolidated for final hearing, which latter took place as scheduled on December 6, 2005, with both parties present. Mrs. Hoffman testified on her own behalf and offered Petitioner's Exhibits 1 through 10, each of which was admitted into evidence. (Petitioner's Exhibit 10 is the deposition of Sarabeth Snuggs, the State Retirement Director, whose testimony was received in this form.) Respondent presented the testimony of Ms. Stanley Colvin, Benefits Administrator, Survivor Benefits, Division of Retirement. In addition, Respondent moved four exhibits,
numbered 3, 7, 10, and 11, into evidence. (Respondent's Exhibit
testimony was received in this form.) The undersigned took official recognition of the applicable statutes and administrative rules.
Although a court reporter recorded the proceeding, neither party ordered a transcript. Each side submitted proposed recommended orders before the deadline established at hearing, which was December 21, 2005, and these have been considered.
Unless otherwise indicated, citations to the Florida Statutes refer to the 2005 Florida Statutes.
When he passed away on January 26, 1996, at the age of 56, Roy Hoffman, Jr., was a fully vested participant in the Florida Retirement System ("FRS"), having worked as a professor at Florida Atlantic University for nearly 27 years.
Professor Hoffman's named beneficiary and joint annuitant was his wife, Petitioner Jeanne Hoffman ("Hoffman"). As such, Hoffman became entitled, upon her husband's death, to receive a lifetime retirement benefit from the FRS.
By letter dated March 8, 1996, Respondent Department of Management Services, Division of Retirement ("Division"), which administers the FRS, first notified Hoffman of her eligibility to receive a benefit. The letter provided in pertinent part as follows:
As the designated beneficiary and joint annuitant, you are entitled to the Option 3 monthly retirement benefit. The Option 3 monthly benefit is payable for your lifetime and is estimated to be $1,812.58 effective February 1, 1996. To receive this benefit, you need to [submit an application and provide certain information.]
If we may be of further assistance, please call us at (904)488-5207.
After receiving this letter, Hoffman was uncertain about whether she should accept the benefit immediately or, alternatively, postpone the benefit commencement date until nearer her own retirement, so she called the Division for assistance. Following a telephone conversation with an FRS counselor, Hoffman was left with the impression that she would be better off waiting until she reached the age of 59.5 years to begin receiving the monthly benefit, for the benefit, she believed, would then be higher.1
The Division sent a second letter to Hoffman, which was dated April 26, 1996, and provided:
Please refer to our letter dated March 8, 1996. Before we can finalize [your] account, we need [to receive] the following [items and information from you.]
Hoffman did not respond to this letter.
Four months later, the Division sent a third letter to Hoffman regarding her benefit eligibility. Dated August 28, 1996, this letter provided in relevant part as follows:
We have not received a response from our letters dated March 8, 1996 and April 26, 1996. If we have not heard from you within thirty days of the date of this letter, the file will be placed on inactive status. It will then be your responsibility to contact us to apply for a monthly benefit. The benefit will be effective the first of the month following contact from you.
By this "warning letter," the Division intended to communicate its decision that, unless Hoffman submitted an application for benefits on or before September 27, 1996, she would forfeit the right to receive an "early retirement-death benefit"2 based on an effective date of retirement ("EDR") closely tied to her husband's date of death and be deemed to have elected a "deferred monthly benefit"3 based on a post-mortem EDR tied to the Division's receipt of her application for benefits. (EDR is a critical date because that is when the benefit accrues. See § 121.021(41), Fla. Stat.4) The parties dispute whether, in fact, the warning letter reasonably notified Hoffman of the Division's decision; the issue will be taken up below.
Hoffman did not take the warning letter to mean what the Division had intended to convey. Thus she had no idea that she was in jeopardy of forfeiting the right to an early retirement-death benefit. Further, she did not deliberately elect to forego receipt of an early retirement-death benefit in favor of a deferred monthly benefit. Rather, being unfamiliar with the details regarding benefits payable under the FRS,
Hoffman believed that, without any present action on her part, the benefit to which she was entitled had begun upon her husband's death to accrue for her use and benefit and would continue to accumulate until she was ready to begin receiving the benefit in monthly installments. Consequently, Hoffman made no reply to the warning letter, and at some point after September 27, 1996, the Division placed her file on inactive status.
For the next eight-and-a-half years, nothing relevant to this case occurred. Then, in January 2005, Hoffman met with a financial planner for advice concerning her retirement. She was 57 at the time and told the planner about the benefit she expected to receive in a couple of years as her late husband's joint annuitant. The financial planner recommended that she contact the Division straightaway.
On January 31, 2005, Hoffman called the Division and was informed that, having failed to apply for an early retirement-death benefit by September 27, 1996, in accordance with the warning letter dated August 28, 1996, she had forfeited nine years' worth of retirement income, and that her only remaining option was to request a deferred monthly benefit based on an EDR of February 1, 2005, at the earliest. The Division followed this telephone conversation with a letter dated February 16, 2005, which made clear that the only benefit for
which Hoffman could apply would commence no earlier than February 1, 2005. Being given no choice, Hoffman applied as instructed, with the result that the FRS began paying Hoffman approximately $2,011 per month, which it was continuing to do as of the final hearing.
Thereafter, by letter dated March 1, 2005, Hoffman petitioned the Division to pay her a retirement benefit "retroactive" to February 1, 1996, the date which, had she applied for an early retirement-death benefit on or before September 27, 1996, would have been her husband's EDR, without controversy.5
The Division denied Hoffman's request, by letter dated March 15, 2005. Relying on Section 121.091, Florida Statutes, and Florida Administrative Code Rule 60S-4.0035, which will be examined below, the Division determined that it could not "pay benefits retroactive to 1996 because [Hoffman had] not compl[ied] with the Rule requiring that the application be filed timely." Hoffman requested a hearing on this determination, giving rise to DOAH Case No. 05-3200.
Hoffman also petitioned the Division, pursuant to Section 120.542, Florida Statutes, to waive——or grant her a variance from——the provisions of Florida Administrative Code Rule 60S-4.0035(3)(c) upon which the Division intended to rely in rejecting her claim for an early retirement-death benefit.
The Division denied Hoffman's petition for waiver or variance in an order dated August 15, 2005. Thereafter, Hoffman timely requested a hearing on the matter, which led to the commencement of DOAH Case No. 05-3679.
Factual Analysis
The parties sharply disagree about whether the Division reasonably notified Hoffman of the important decision (see paragraph 6, supra) that it made in late August 1996 respecting her eligibility to receive a benefit, which decision the Division intended to communicate to Hoffman via the warning letter.
To recapitulate, the warning letter told Hoffman that if she failed to contact the Division by September 27, 1996, then (1) her file would become "inactive"; (2) it would be her responsibility to initiate further contact with the Division; and (3) her "benefit" would be "effective" starting the month after she contacted the Division. Yet, in fact, the Division had decided that if Hoffman did not contact the Division by September 27, 1996, then (1) she would forfeit the right to receive an early retirement-death benefit based on an EDR closely proximate to her husband's date of death; (2) the Division would treat her inaction as an affirmative election to receive a deferred monthly benefit; and (3) her benefit would be
based on an EDR related to the Division's receipt of her application for benefits.
It is striking, in reading the warning letter from the standpoint of a reasonable recipient, that no mention was made therein of the different types of benefits available to a surviving spouse, no explanation regarding the distinction between an early retirement-death benefit and a deferred monthly benefit was given, and no information concerning a beneficiary's right to elect the latter as an alternative to the former——much less why one might do so——was imparted. (The same can also be said of the two letters that preceded the warning letter.) It is striking, too, that neither the warning letter nor the two earlier ones mentioned EDR or its significance. Instead, the warning letter spoke of an effective date of "benefit," which, at least without more information than was contained in the letter, could be understood to refer to the date on which the benefit payments would commence as opposed to when benefits would start to accrue.
The undersigned finds, therefore, that, as a matter of fact, the warning letter itself did not reasonably communicate that Hoffman was at risk of forfeiting the early retirement- death benefit and being deemed to have elected a deferred monthly benefit based on a future EDR to be determined. Put another way, although the warning letter clearly established a
deadline (September 27, 1996) for making contact with the Division, its description of the consequences of letting the deadline pass without contacting the Division did not fairly match the consequences the Division actually had decided would follow such inaction.
Of course, as the Division points out, the warning letter was not the only source of information about retirement benefits available to Hoffman. There were, in addition, the governing statutes and rules. Hoffman did not actually avail herself of these references, but, as the Division argues, she is presumed to know the contents of the applicable laws.6 Perhaps, armed with such knowledge, she would have——and hence should have——understood what the Division was trying to tell her in the warning letter.
If Hoffman had consulted the relevant statutes, she would have learned that she was entitled to receive an early retirement benefit pursuant to Section 121.091(3), Florida Statutes, which provides as follows:
EARLY RETIREMENT BENEFIT.--Upon retirement on his or her early retirement date, the member shall receive an immediate monthly benefit that shall begin to accrue on the first day of the month of the retirement date and be payable on the last day of that month and each month thereafter during his or her lifetime. Such benefit shall be calculated as follows:
* * *
(b) If the employment of a member is terminated by reason of death subsequent to the completion of 20 years of creditable service, the monthly benefit payable to the member's beneficiary shall be calculated in accordance with subsection (1), but shall be based on average monthly compensation and creditable service as of the date of death. The benefit so computed shall be reduced by five-twelfths of 1 percent for each complete month by which death precedes the normal retirement date specified above or the date on which the member would have attained 30 years of creditable service had he or she survived and continued his or her employment, whichever provides a higher benefit.
There is no dispute that Hoffman was entitled to an early retirement benefit under Section 121.091(3)(b) when her husband's employment was terminated by reason of death after completing nearly 27 years of creditable service. The parties agree as well that, by the clear and unambiguous terms of the statute, the benefit would have been reduced by five percent per year for each of the approximately three years by which Professor Hoffman's death preceded the date on which he would have attained 30 years of creditable service. See also Fla. Admin. Code R. 60S-4.005(2)(c)(describing benefits payable upon early retirement brought about by death).
If Hoffman had read Section 121.091(7)(b), Florida Statutes, she would have learned the following:
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, subsection
(2) if eligible for benefits payable for dual normal retirement, or subsection (3) if eligible for early retirement benefits. Benefits payable to the designated beneficiary shall be as follows:
1. For a beneficiary who qualifies as a joint annuitant, the optional form of payment provided in accordance with [option 3] shall be paid for the joint annuitant's lifetime.
Clearly, under the plain language of Section 121.091(7)(b), Hoffman was entitled to receive death benefits in the form of an early retirement benefit, for which latter her husband was eligible at the time of his death. As just mentioned, however, Professor Hoffman satisfied the conditions set forth in Section 121.091(3)(b) for an early retirement benefit, payable to his beneficiary, without reference to Section 121.091(7)(b). Moreover, because Professor Hoffman was, at the time of his death, closer to attaining 30 years' service than reaching age 62, Hoffman's early retirement benefit would be highest if calculated under Section 121.091(3)(b). Nevertheless, as Section 121.091(7)(b) is not inconsistent with Section 121.091(3)(b), there is no reason to treat them as mutually exclusive. Thus, bowing to the interrelatedness of these statutes——Section 121.091(3)(b)(early retirement benefits
upon termination of employment by death) and Section 121.091(7)(b)(death benefits)——the undersigned has chosen to use the term "early retirement-death benefit" to refer to that benefit, available thereunder, which is based on an EDR in close proximity to the member's death.
As an alternative to the early retirement-death benefit, Section 121.091(7) makes available to beneficiaries such as Hoffman another option, namely the "deferred monthly benefit." Had Hoffman studied the statute, she would have discovered that
[t]he designated beneficiary who is the surviving spouse or other dependent of a member whose employment is terminated by death subsequent to becoming vested, but prior to actual retirement, may elect to receive a deferred monthly benefit as if the member had lived and had elected a deferred monthly benefit, as provided in paragraph (5)(b), calculated on the basis of the average final compensation and creditable service of the member at his or her death and the age the member would have attained on the commencement date of the deferred benefit elected by the beneficiary, paid in accordance with option 3 of paragraph (6)(a).
§ 121.091(7)(h); see also Fla. Admin. Code. R. 60S-4.008(2)(b).
The deferred monthly benefit allows a surviving spouse to postpone the deceased member's EDR, thereby reducing or eliminating the early retirement penalty of five percent per annum for each year the EDR precedes the member's normal
retirement date.7 Postponing the EDR would make sense, most obviously, when, because of the number of years between the member's date of death and his or her normal retirement date, the survivor's early retirement-death benefit would be substantially consumed by the penalty. Because Professor Hoffman met the criteria for an early retirement benefit under Section 121.091(3)(b), however, his wife's benefit was subject to a relatively light penalty. Thus, it is unlikely that Hoffman intentionally would have made an election under Section 121.091(7)(h) for a deferred monthly benefit, had she been aware of the statute.
The Division has promulgated a rule that specifies how the EDR will be determined in certain circumstances. Rule 60S- 4.0035(3)(c) was available to inform Hoffman as follows:
For a member who dies prior to an effective retirement date established pursuant to paragraph (a) or (b), the effective retirement date shall be the first day of the month following the month in which the member died, provided the joint annuitant makes timely application for benefits; or, for a deferred monthly benefit, the first day of the month following the month in which the Division receives the joint annuitant's application for benefits, or the first day of a later month specified by the joint annuitant.
Significantly, the Division has not established by rule a method of determining whether an application is "timely" for purposes
of Rule 60S-4.0035(3)(c). Rather, it determines timeliness on a case-by-case basis.
Had Hoffman been aware of Rule 60S-4.0035(3)(c), she might have surmised, upon reading the warning letter, that the Division had decided that her application for benefits would be "timely," for purposes of the Rule, only if received on or before September 27, 1996. She might also have reasoned that if her application were untimely, then the applicable EDR might not be February 1, 1996 (i.e. the first day of the month following the month in which her husband had died). At that point, she might have concluded that unless her application were received by September 27, 1996, she would forfeit the early retirement- death benefit, as the Division would deem her delay an election to receive a deferred monthly benefit.
Maybe Hoffman would have connected all these dots.
The undersigned finds, however, as a matter of fact, that a reasonable person could not have figured out what the Division had decided and what it intended to do, even if armed with the statutes and rules, because ascertaining the true nature of the Division's determination entails more analytical, indeed legal, reasoning than an ordinary layperson should be expected to employ. In fact, it is determined, the warning letter was inadequate to put even a well-informed person, cognizant of the applicable laws, on notice of the Division's decision regarding
Hoffman's potential forfeiture of the early-retirement death benefit and "deemed election" of the deferred monthly benefit.
While the warning letter was deficient in that it failed reasonably to tell Hoffman what the Division actually had determined with regard to her substantial interests, it was defective in yet another consequential way: the warning letter failed to notify Hoffman of her right to request a hearing to determine the substantial interests affected by the Division's establishment of an application deadline and the consequences of noncompliance therewith. The warning letter, in other words, did not afford Hoffman a clear point of entry into an adversarial proceeding, where the Division would be required to substantiate its determination with competent substantial evidence.
CONCLUSIONS OF LAW
DOAH has personal and subject matter jurisdiction in this proceeding pursuant to Sections 120.569 and 120.57(1), Florida Statutes.
The Division's position that Hoffman cannot receive an early retirement-death benefit based on an EDR of February 1, 1996, ultimately depends on Rule 60S-4.0035(3)(c), which is quoted above in paragraph 24. On its face, this Rule (1) prescribes what the EDR will be, "provided" a joint annuitant makes a "timely" application for "benefits" (the term "benefits"
plainly being used here to mean the early retirement-death benefit) and (2) tells what the EDR will be "for a deferred monthly benefit." Looking at the Rule more closely, it becomes apparent that while the "provided" clause makes clear that the EDR will be the first day of the next month after the member's death if an application is timely filed, the absence of an "otherwise" clause raises the question: What happens if the application is deemed untimely? The implicit answer is that, at a minimum, the EDR might not be the first day of the next month after the member's death; but the Rule is ambiguous as to what the EDR will be in that event.
Closer examination of the Rule reveals, as well, its failure explicitly to acknowledge that the deferred monthly benefit, rather than being the default selection, is actually an option that a surviving spouse or dependent "may elect" in accordance with Section 121.091(7)(h), Florida Statutes, which is quoted above in paragraph 22. Given the unambiguous statutory language, the Rule's phrase "for a deferred monthly benefit" could be construed to mean "when the joint annuitant elects to receive a deferred monthly benefit." But the Rule's use of the disjunctive "or" before the phrase "for a deferred monthly benefit" could also be read as implying that the "deferred monthly benefit" is the exclusive alternative to
benefits timely applied for pursuant to the first part of the Rule.
The latter reading is, in fact, how the Division interprets the Rule. Under this construction, all joint annuitants who, for whatever reason, do not timely file an application for the early retirement-death benefit are deemed to have elected a deferred monthly benefit pursuant to Section 121.091(7)(h)——and hence forfeited the right to receive the early retirement-death benefit. This implied "deemed election" provision answers the question posed above concerning the consequences of making an untimely application for the early retirement-death benefit.
Indeed, although perhaps not readily apparent, the Division's implied "deemed election" provision actually affects the substantial interests of only those beneficiaries whose applications for an early retirement benefit are deemed untimely. This is because surviving spouses who would prefer to receive the deferred monthly benefit have no reason to apply, on time or otherwise, for an early retirement death benefit; for them, the "deemed election," being consistent with their actual election, is superfluous, changing the desired outcome not a bit. In contrast, the "deemed election" imposes a harsh penalty on joint annuitants whose failure to timely apply for an early retirement-death benefit was not the result of a conscious
decision to postpone the EDR, as desired retirement income is deemed forfeit. For them, the "deemed election" is potentially disastrous.
The undersigned does not believe that Rule 60S- 4.0035(3)(c) can permissibly be interpreted to include the "deemed election" and forfeiture provisions that the Division urges are implicit in the Rule's text. For one thing, the Division's interpretation runs counter to the rule that laws authorizing forfeiture must be clearly drawn to be enforced, with any uncertainty settled in favor of the party against whom the penalty would be imposed. See, e.g., Cabrera v. Department of Natural Resources, 478 So. 2d 454, 455-56 (Fla. 3d DCA 1985). For another, while the Rule is ambiguous regarding the consequences of failing timely to apply for the early retirement-death benefit, the Division's resolution of the ambiguity gives the Rule a meaning that is not readily apparent from the Rule's literal language but rather emerges (if at all) from deductive reasoning; thus, the Division's unwritten interpretation, if it is not a rule-by-definition, is very close to being one, in violation of Section 120.54(1)(a), Florida Statutes.8 Cf. Beverly Enterprises-Florida, Inc. v. Department of Health & Rehabilitative Services, 573 So. 2d 19, 22 (Fla. 1st DCA 1990)(interpretation which gives statute a meaning not readily apparent from its literal reading and purports to create
rights, to require compliance, or otherwise to have the direct and consistent effect of law, is a rule); St. Francis Hospital,
Inc. v. Department of Health & Rehabilitative Services, 553 So. 2d 1351, 1354 (Fla. 1st DCA 1989).
But even if the Division's interpretation is permissible, the Rule does not define the term "timely" and hence fails to prescribe a generally applicable deadline for submitting an application to receive an early retirement-death benefit. Notice the contrast in this regard between Rule 60S- 4.0035(3)(c) and Rule 60S-4.0035(3)(a), which latter provides as
follows:
For a member who makes application for a normal or early retirement benefit as provided in Rule 60S-4.004 or 60S-4.005, F.A.C., the effective retirement date shall be the first day of the month following the month in which the member's termination occurs, provided the Division receives such member's application for retirement no later than 30 calendar days after such termination. If a member fails to apply for retirement within 30 calendar days after termination or if the member chooses to defer his retirement to a later date, the effective retirement date shall be the first day of the month following the month in which the Division receives the member's application, or the first day of a later month specified by the member.
(Emphasis added.) Not only does Rule 60S-4.0035(3)(a) specify a generally applicable deadline (30 calendar days after
termination), but it also, unlike Rule 60S-4.0035(3)(c), specifies the consequences of failing to meet that deadline.
Because Rule 60S-4.0035(3)(c) does not fix a generally applicable deadline, the Division necessarily must determine, for each beneficiary, the date by which his or her application must be received to be considered timely. In this case, for example, the Division determined that Hoffman's application would be timely if filed no later than September 27, 1996, which was about eight months after her husband's death.
Due process requires that before a penalty may be imposed for missing this sort of individualized deadline, the affected party must be given reasonable notice of the deadline before it arrives and fair warning regarding the consequences of noncompliance therewith. Cf. Perez & Perez, M.D., P.A. v.
Holder, 867 So. 2d 622, 624 (Fla. 2d DCA 2004)("Due process requires that a court imposing a deadline on a litigant for the performance of a particular act give the litigant reasonable notice of the deadline before the deadline arrives."); United
Auto. Ins. Co. v. Total Rehab & Med. Ctr., 870 So. 2d 866, 869 (Fla. 3d DCA 2004)("[F]airness dictate[s] that if a failure to file the brief by the [court-imposed] deadline may subject the appeal to dismissal, there must be fair warning of that fact in advance."). The Division failed to give Hoffman fair warning that she would forfeit the right to receive an early retirement-
death benefit unless her application therefor were received on or before September 27, 1996. The undersigned therefore concludes that Hoffman's application cannot be deemed "untimely" for purposes of Rule 60S-4.0035(3)(c) because she missed the deadline of September 27, 1996.
There is, however, yet another reason, specific to administrative law, that the Division cannot enforce the September 27, 1996, deadline against Hoffman. Recall that in August 1996, the Division took the position that Hoffman would be deemed to have elected a deferred monthly benefit unless she submitted an application for the early retirement-death benefit no later than September 27, 1996; it reduced that position to writing, albeit inadequately, in the warning letter; and it disseminated the decision to Hoffman, who then needed either to submit an application immediately or suffer the (not adequately explained) consequences. Clearly, therefore, the Division took action that affected Hoffman's substantial interests. See General Development Utilities, Inc. v. Florida Dep't of
Environmental Regulation, 417 So. 2d 1068, 1069-70 (Fla. 1st DCA 1982)(notice to operator of sewage treatment plant that it would need to develop and implement plan for eliminating particular effluents from its waste discharge prior to the expiration of its current operating permits constituted a decision affecting the operator's substantial interests).
It is a fundamental tenet of administrative law that when an agency determines a party's substantial interests, the agency must grant the affected party a clear point of entry into formal or informal proceedings under Chapter 120, which point of entry cannot be "so remote from the agency action as to be ineffectual as a vehicle for affording [the affected party] a prompt opportunity to challenge" the decision. See, e.g., id. at 1070. Unless and until a clear point of entry is offered, "there can be no agency action affecting the substantial interests of a person." Florida League of Cities, Inc. v. State
of Florida, Administration Com., 586 So. 2d 397, 413 (Fla. 1st DCA 1991). Indeed, absent a clear point of entry, "the agency is without power to act." Id. at 415 (emphasis added).
In the present case, the Division failed to grant Hoffman a clear point of entry in connection with the determination reflected in the August 28, 1996, warning letter. In fact, at no time before the application deadline of September 27, 1996, did the Division inform Hoffman of her right to request a hearing and the time limits for doing so. Obviously, moreover, any notice provided after the deadline (there was none until March 15, 2005), being too remote from the determination to be effectual, is "meaningless and a nullity." Id. at 414.
Because Hoffman was not afforded a clear point of entry, the determination announced in the August 28, 1996, warning letter, including especially the September 27, 1996, application deadline, never became effective agency action; consequently, the Division does not now possess, and never had, the power to act on the deadline it believed was operative. It is concluded that the Division, having failed effectively to establish a deadline and give Hoffman advance notice thereof, cannot deem Hoffman's 2005 application "untimely" under Rule 60S-4.0035(3)(c).9
Because Hoffman's application for benefits was not untimely under Rule 60S-4.0035(3)(c), and because Hoffman in fact did not voluntarily choose to receive a deferred monthly benefit, she cannot be deemed, pursuant to the Rule, to have made a Section 121.091(7)(h) election and thereby forfeited the right to an EDR of February 1, 1996. Thus, it is not necessary to decide whether the Division should be estopped from taking the position that Hoffman impliedly elected, by postponing her application, to receive a deferred monthly benefit.
Likewise, because Rule 60S-4.0035(3)(c), as applied in accordance herewith, does not adversely affect Hoffman, it is not necessary to reach the question whether a variance of that Rule's provisions, or a waiver thereof, should be granted pursuant to Section 120.542, Florida Statutes.
RECOMMENDATION
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division enter a final order determining that Hoffman shall receive an early retirement-death benefit based on an EDR of February 1, 1996, and establishing the form in which Hoffman shall be paid the benefits that have accrued, but not been paid, from the EDR to the present, as well as the benefit going forward.10 In the event that one or more factual disputes arise over the amount of the unpaid accrued benefits or the method of paying them, the amount or form of the benefit going forward, or some combination of these, then Hoffman should be afforded the right to request a hearing to determine the disputed issue(s).11
DONE AND ENTERED this 17th day of January, 2006, in Tallahassee, Leon County, Florida.
S
JOHN G. VAN LANINGHAM
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 17th day of January, 2006.
ENDNOTES
1/ Hoffman does not recall the name of the person with whom she spoke, and she is unable to remember precisely what she was told. No written record of the conversation was produced.
While the undersigned believes Hoffman's testimony regarding the conclusions she drew from her contact with the Division, he is not persuaded that the retirement counselor made any false or misleading statements to Hoffman, either by misrepresenting or failing to disclose material facts. Rather, the undersigned infers that, more likely than not, the counselor simply read (or communicated the substance of) the section on "regular survivor benefits" that appeared in the retirement handbook called FRS Today: A Retirement Guide for the Regular Class (June 1995).
The handbook provided in pertinent part as follows:
If you [meaning the member——in this instance, Professor Hoffman] die after you are vested but before you retire, your named beneficiary, who qualifies as a joint annuitant, [as Hoffman did,] may choose one of the following:
A refund of your contributions, if any; or
A lifetime monthly benefit calculated as if you had retired on your date of death and chosen option 3 The
benefit is adjusted for early retirement if you were not of normal retirement age at the time of your death; or
An option 3 benefit may be deferred to a future date and based on the age you would have been when the benefit starts. A deferred benefit is higher when it begins closer to the normal retirement age because it is reduced less for early retirement.
2/ For the definition of the term "early retirement-death benefit" as used in this Recommended Order, see paragraph 21.
3/ The term "deferred monthly benefit" is explained in paragraph 22.
4/ Section 121.021(41), Florida Statutes, states: "'Effective date of retirement' means the first day of the month in which benefit payments begin to accrue pursuant to s. 121.091."
5/ Both sides have referred to Hoffman's desire as being to receive "retroactive" benefits, suggesting that a decision in her favor necessarily would operate to change rights or interests that previously had become legally fixed in accordance with the parties' preexisting relationship. It should be noted, however, that if February 1, 1996, were the correct EDR notwithstanding Hoffman's failure to apply for a benefit on or before September 27, 1996——a disputed issue, to be sure——then Hoffman's request would be, not for "retroactive" benefits, but for accrued benefits, the payment of which, rather than entailing an after-the-fact change of the parties' legally established rights, would merely discharge a preexisting obligation. (By contrast, if the 2006 legislature were to raise the annual cost of living adjustment applicable to retirement benefits from three percent to, say, six percent in a bill having an effective date of January 1, 2005, then it would be correct to label payments to beneficiaries above what they had received under the preexisting formula as "retroactive" benefits.)
6/ The public is on constructive notice of statutory requirements. See, e.g., Ellis v. State, 762 So. 2d 912, 912 (Fla. 2000)(publication of statutes gives all citizens constructive notice of the consequences of their actions); In re Will of Martell, 457 So. 2d 1064, 1068 (Fla. 2d DCA 1984)(acknowledging that each person is presumed to know the law; Hart v. Hart, 377 So. 2d 51, 52 (Fla. 2d DCA 1979)("All citizens are presumed to know the law."); see also Health Care & Retirement Corp. of America v. Department of Health & Rehab.
Servs., 463 So. 2d 1175, 1177 (Fla. 1st DCA 1984)(applicant for certificate of need is presumed to know the applicable law).
7/ Postponing the deceased member's EDR might also increase the percentage value per year of service, which would produce a higher benefit.
8/ Hoffman has not challenged the Division's interpretation pursuant to § 120.56(4), Florida Statutes, nor has she raised the issue pursuant to § 120.57(1)(e). Accordingly, it is not necessary to decide whether the interpretation constitutes an unpromulgated rule. The undersigned mentions the issue only to underscore the extent to which the Division's interpretation of Rule 60S-4.0035(3)(c) adds substantial meaning to the Rule's text.
9/ It should go without saying that the Division cannot declare an application untimely under Rule 60S-4.0035(3)(c) if the application was received prior to the Division's establishing—— and giving effective advance notice of——the specific deadline applicable to the particular applicant. That is, the Division cannot decide, after receiving an application, that the applicant failed to comply with a previously unannounced deadline, for the same reasons that a court cannot dismiss a legal action because of a missed filing deadline unless the deadline and the consequences of failing to meet it were fairly made known to the affected litigant before the deadline's arrival.
10/ Payment of Hoffman's accrued benefits will not, contrary to the Division's argument, violate the prohibition, set forth in Section 112.61, Florida Statutes, against transferring to future taxpayers any FRS costs that reasonably should be paid by current taxpayers. Section 112.61 expresses the legislature's intent that, to the extent reasonably possible, today's taxpayers should fund today's promises to public employees respecting retirement income. The undersigned presumes (there being no evidence to the contrary) that when promises were made to Professor Hoffman regarding the retirement income he and his named beneficiary could expect to receive, those promises——which included the promise to pay the professor's joint annuitant an early retirement-death benefit if he should die before retiring—
—were properly funded, by yesterday's taxpayers, in accordance with the legislative intent articulated in Section 112.61.
Thus, paying Hoffman's accrued benefits will merely discharge an obligation for which financial provision already has been (presumably) made, so that neither present nor future taxpayers will be affected. Indeed, if Hoffman were denied payment of the benefits which have accrued since February 1, 1996, the effect would be a windfall for the state. (And, of course, even if she receives her accrued benefits, Hoffman will have lost forever the time-value of that money, which the state has held interest- free since February 1, 1996.)
11/ The Division's pending Motion for Attorney Fees and Costs is denied.
Jon C. Moyle, Jr., Esquire Moyle, Flanigan, Katz, Kollins,
Raymond & Sheehan, P.A.
Thomas E. Wright, Esquire Department of Management Services Division of Retirement
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.
