STATE OF FLORIDA DEPARTMENT OF MANAGEMENT SERVICES JEANNE 8S. HOFFMAN, : Final Order No. DMS — 06-0013 Petitioner, vs. DOAH Case Nos. 05-3200 05-3679 DMS DOR No.: 05-5313 DEPARTMENT OF MANAGEMENT SERVICES, DIVISION OF RETIREMENT Respondent. FINAL ORDER PRELIMINARY STATEMENT After being formally notified of the Division of Retirement’s intent to deny her request for retroactive option 3 retirement benefits, the Petitioner timely filed a petition for hearing and the case was referred to the Division of Administrative Hearings. Petitioner also filed a Petition for Variance or Waiver, which was denied by the Division. Thereafter, Petitioner filed a Petition challenging that denial, which was referred to the Division of Administrative Hearings as well. The cases were consolidated for hearing. Pursuant to notice, the Division of Administrative Hearings, by its duly designated Administrative Law Judge, John G. Van Laningham, held a formal hearing in the above-styled case on December 6, 2005, in Tallahassee, Florida. At the formal proceeding, Petitioner testified on her own behalf and offered the testimony of Stanley Colvin, Benefits Administrator for Survivor Benefits, Division of Retirement. Petitioner also offered the deposition testimony of Sarabeth Snuggs, State Retirement Director, and nine exhibits, which were admitted. Respondent offered the testimony of Stanley Colvin, Benefits Administrator, Division of Retirement, the deposition testimony: of Petitioner, and 3 exhibits, which were admitted. Official Recognition was taken of Sections 26.012 and 121.091, Florida Statutes, and Sections 608-4.0035(1) and (3)(c), Florida Administrative Code. The Parties filed proposed Recommended Orders and a Recommended Order was issued January 17, 2006, which is incorporated by reference into this Final Order, Exceptions to the Recommended Order have been filed by both parties. A transcript of the hearing has been reviewed in the preparation of this Final Order, and references to it will be (T- ). STATEMENT OF THE ISSUES The issue in this case is to determine whether Petitioner is entitled to receive option 3 retirement benefits retroactive to February 1, 1996. STANDARD OF REVIEW Subsection 120.57(1)(1), Florida Statutes (2002), provides that an agency reviewing a Division of Administrative Hearings (DOAH) recommended order may not reject or modify the findings of fact of an administrative law judge, "unless the agency first determines from a review of the entire record, and states with particularity in the order, that the findings of fact were not based on competent substantial evidence or that the proceedings on which the findings were based did not comply with essential requirements of law." Florida law defines "competent substantial evidence" as "such evidence as is sufficiently relevant and material that a reasonable mind would accept it as adequate to support the conclusion reached." DeGroot v. Sheffield 95 So. 2d 912, 916 (Fla., 1975). Furthermore, an agency may not create or add to findings of fact because an agency is not the trier of fact. See Friends of Children v. Department of Health and Rehabilitative Services, 504 So. 2d 1345, 1347, 1348 (Fla. Ist DCA, 1987). Subsection 120.57(1)(1), Florida Statutes (2002), provides that an agency may reject or modify an administrative law judge’s conclusions of law and interpretations of administrative rules "over which it has substantive jurisdiction" whenever the agency’s interpretations are “as or more reasonable" than the interpretation made by the tw Administrative Law Judge. Florida courts have consistently applied this subsection’s "substantive jurisdiction limitation" to prohibit an agency from reviewing conclusions of law that are based upon the Administrative Law Judge’s application of legal concepts such as collateral estoppel and hearsay; but not from reviewing conclusions of law containing the Administrative Law Judge’s interpretation of a statute or rule over which the Legislature has provided the agency administrative authority. See Deep Lagoon Boat Club, Ltd. v. Sheridan, 784 So. 2d 1140, 1141-42 (Fla. 2d DCA, 2001); Barfield v. Department of Health, 805 So. 2d 1008, 1011 (Fla. Ist DCA, 2001). Further, an agency's interpretation of the statutes and rules that it administers is entitled to great weight, even if it is not the sole possible interpretation, the most logical interpretation, or even the most desirable interpretation. See State Board of Optometry v. Florida Society of Ophthalmology, 538 So.2d 878, 884 (Fla. Ist DCA, 1998.). EXCEPTIONS The Petitioner's Exceptions to Recommended Order are hereby rejected. It is noted that Petitioner fails to identify any portion of the Recommended Order with which she takes exception. See Section 120.57(1)(K), Florida Statutes (2005). Nonetheless, the exceptions fail because: this is not a civil case in which a judgment has been, or will be entered; the "contract" referred to is between the member and the FRS, not a beneficiary; no statutory authority for the payment of interest was provided; the exceptions fail to demonstrate how Petitioner is not at fault for not filing an application; and, finally, the exceptions essentially state that somehow, the Division was required to force Petitioner, in 1996, to accept benefits which it had no reason to expect that Petitioner wanted. The Respondent's Exceptions to the Recommended Order have merit, and will be addressed below. FINDINGS OF FACT The Department of Management Services accepts the Findings of Fact set forth in the Recommended Order with the following exceptions: 1. The Department rejects finding of fact 6 of the Recommended Order to the extent that it relies on an incorrect statement of the law. The definition of "effective date of retirement" is set forth in Section 121.021(41), Florida Statutes (2005), as follows: “Effective date of retirement” means the first day of the month in which benefit payments begin to accrue pursuant to s. 121.091. (emphasis added). As set forth in Section 121.091, Florida Statutes (2005): Benefits may not be paid under this section unless the member has terminated employment as provided in s. 121.021(39)(a)...and a proper application has been filed in the manner prescribed by the department. (emphasis added). 2. . The Department rejects finding of fact 7 of the Recommended Order. No evidence was presented that the Division took any forfeiture action against the Petitioner. A forfeiture is a loss of benefits due to criminal actions under Chapter 121, Florida Statutes. Likewise, a review of the record reveals no evidence that Petitioner had any reasonable belief that the monthly benefit was increasing and accruing in some separate account. She specifically testified that no one ever told her the benefit would be retroactive if she deferred receipt. (T-50). No competent evidence was presented that benefits accrue in a "pot" of money for distribution. Such a scheme would be exactly the opposite of the benefit structure of the FRS, which is in the form of an annuity. 3. The Department rejects footnote 5 of finding of fact 10 of the Recommended Order. The record is quite clear, and the Petitioner's testimony and exhibits demonstrated that the parties definitely understood that the issue was retroactive benefits, and no competent evidence was presented indicating otherwise. (T-40; Petitioner's Exhibits 5 and 9). 4. The Department rejects paragraph 14 of the Recommended Order. A review of the record reveals no competent evidence that Petitioner forfeited any right to an early retirement date. Rather, Petitioner chose not to file an application in 1996. She was free to file an application at any time, including the 4 years subsequent to 1996, during which time she still would have been applying for an "early" retirement benefit. 5. The Department rejects paragraphs 15 and 16 of the Recommended Order. A review of the record reveals no competent evidence that a forfeiture of benefits occurred, or that the Division took any action affecting her substantial interests in 1996. Forfeitures are governed by Sections 112.3173 and 121.091(5), Florida Statutes. They occur when a member (or beneficiary) commits an enumerated felony. No evidence was presented to support any such finding. In 1996, the Division took no action. The Petitioner took action, albeit by her silence, electing to defer her application for benefits. No coercion was alleged to procure this action, and no evidence of coercion was presented. In fact, the Administrative Law Judge was not persuaded that any false or misleading statements were made to the Petitioner by any Division employee. He further found it more likely than not that the information given to Petitioner was verbatim from the retirement guide in effect at the time. The materials referred to by the Administrative Law Judge were a correct statement of the law and in no way misleading. As also found by the Administrative Law Judge in paragraphs 17, 18, 19, 20, 21, and 22 of the Recommended Order, Petitioner had access to all of the relevant statutes and rules. The fact that Petitioner chose not to avail herself of these materials, and instead drew an incorrect conclusion from the information given to her cannot create an obligation on the part of the Division. Finally, the suggestion that agency action was taken by the Division in 1996, would require the absurd result that any elections made by anyone, for any reason, even if in writing, could be attacked years, even decades later unless the agency followed up with an appeal rights letter. Several examples are obvious: the irrevocable choice of a retirement option at retirement (Section 121.091(6), Florida Statutes); the choice to join (or not) the investment plan of the FRS (Section 121.4501(4)(a)2., Florida Statutes); enroliment in the DROP within 12 months of attaining eligibility (Section 121.091(13)(a), Florida Statutes); the election to enroll in the state group insurance plan within 60 days of hire (Rule 60P-2.002(1)(A), Florida Administrative Code); and the irrevocable election to join the State University System Optional Retirement Program (Section 121.35(3)(e), Florida Statutes.) 6. The Department rejects the last sentence of paragraph 23 of the Recommended Order as mere speculation not supported by competent evidence. Records introduced provided a logical reason for deferral of the benefit, i.e. Petitioner's belief that creditors could make a claim to the money. As noted in paragraphs 17 through 22 of the Recommended Order, Hoffman had available all relevant statutes and rules. The fact that she chose not to avail herself of the information does not create an obligation on the part of the Division, nor does it absolve her of constructive knowledge of the published statutes and rules. 7. The Department rejects paragraph 26 of the Recommended Order. A review of the record reveals no competent evidence to support this finding. With the exception of this Petitioner, not a single instance was presented, out of a retirement system with over 800,000 members, of a beneficiary not understanding the letters the Division has been sending out for years. In fact, numerous cases were cited in the Division's Proposed Recommended Order of cases in which the petitioners were held responsible for knowledge of statutes and'rules. Yet in this case, the Administrative Law Judge found, without any corroborating evidence, that this member could not find materials that he previously found she was responsible for knowledge of. Further, the Petitioner has two college degrees, is a nationally certified teacher of language skills, and testified that nothing in the letters she received from the Division was misleading. (T-47- 51). 8. The Department rejects paragraph 27 of the Recommended Order. A review of the record reveals no competent evidence that the Division took action affecting Petitioner's substantial interests. The evidence clearly showed that it was Petitioner who took action, albeit by her silence, to defer the benefit for which she was eligible. It is also worth noting that this ground was not included in either Petition for Hearing, nor was it argued either during the hearing or in the Proposed Recommended Orders. Also worthy of mention is the fact that, under the line of reasoning employed by the Administrative Law Judge, no election or choice, written or otherwise, by any person with any interest in any matter involving the State could ever be considered valid unless the state followed up with an appeal rights letter pursuant to Chapter 120, Florida Statutes. The annual cost of certified mail to the Division alone could be in the hundreds of thousands of dollars, which must be appropriated by the Legislature, not directed by an agency head, whose authority cannot be exceeded by an Administrative Law Judge. CONCLUSIONS OF LAW The Division of Retirement accepts the Conclusions of Law set forth in the Recommended Order, which are incorporated herein by reference, with the exception of conclusions 29 through 42, which are hereby rejected as incorrect. The conclusions offered by the Administrative Law Judge lead to the absurd result that no election by a member or beneficiary, even if in writing, could ever be considered valid unless an agency follows up with a “point of entry" letter allowing them to appeal their_own decision. Therefore, based on the record evidence, the following conclusions of law are substituted and adopted: , 29. The Division of Retirement is charged with administering the Florida Retirement System (FRS) pursuant to Chapter 121, Florida Statutes (2002). 30. Section 121.091, Florida Statutes (2005), provides, in relevant part: Benefits may not be paid under this section unless the member has terminated employment as provided in s. 121.021(39)(a) or begun participation in the Deferred Retirement Option Program as provided in subsection (13), and_a proper application has been filed in the manner prescribed by the department. (emphasis added). 31. Rule 608-4,0035, Florida Administrative Code, provides in relevant part: (1)_It_shall_be the responsibility of the member, or the beneficiary in the event of the member’s death, to make proper application to the Division for retirement benefits. (3) The Division shall establish the member’s effective retirement date as follows: (c) 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. (emphasis added). 32. The validity of this Rule has not been challenged. 33. The rule above clearly states that a member or beneficiary has three options; an immediate (or in this case, "early" benefit), a deferred benefit effective after an application is filed, or a deferred benefit effective the fist of some future month as requested by the beneficiary. The undersigned fails to see any ambiguity in this rule. 34. The evidence clearly established that Petitioner chose to defer her benefit in 1996. Even if it was due to her ignorance of the statutes and rules it does not obviate this fact. As noted by the Administrative Law Judge, these materials were available to Petitioner, and it was her responsibility to be aware of them. See Ellis v. State, 762 So.2d 912 (Fla. 2000)(publication of statute gives all citizens constructive notice of the consequences of their actions). (Recommended Order, p.28, FN6). 35. In this case no evidence was presented that the Division took any action with regard to Petitioner. Rather, the evidence clearly demonstrated that Petitioner made a choice to defer her benefit. The reasoning employed by the Administrative Law Judge can lead only to the absurd result that no action taken by a member of the public, with respect to any rights they may have with an agency, can ever be considered valid unless the agency follows up with an opportunity for them to appeal their own action. This would effectively nullify all “elections” by members of the FRS, even though they are clearly set forth in statute. Some obvious examples are set forth above in paragraph 5, 36. The undersigned finds, as a matter of law, that the Division took no action affecting Petitioner's substantial interests. Rather, the Petitioner made an election to defer the benefit available to her. To find otherwise would require the absurd result that the Division be required to give a member or beneficiary a right to appeal their own decision. 37. Section 120.542, Florida Statutes (2005), provides: (2) Variances and waivers shall be granted when the person subject to the rule demonstrates that the purpose of the underlying statute will be or has been achieved by other means by the person and when application of a rule would create a substantial hardship or would violate principles of fairness. For purposes of this section, "substantial hardship" means a demonstrated economic, technological, legal, or other type of hardship to the person requesting the variance or waiver. For purposes of this section, "principles of fairness" are violated when the literal application of a rule affects a particular person in a manner significantly different from the way it affects other similarly situated persons who are subject to the rule. 38. As for the Petition for Waiver or Variance, no evidence was presented that Petitioner was treated any differently than other similarly situated people, or that denial of a waiver would create a substantial hardship on Petitioner. As for hardship, the waiver would simply result in a windfall to Petitioner. No evidence was presented, nor was any allegation made in the Petition, that Petitioner would be placed in an untenable position if the waiver were not granted, or that Petitioner was treated differently than anyone else. The Respondent's Proposed Recommended Order recounted numerous similar examples of actions by members or beneficiaries that were treated in exactly the same way. See Angela Roberts v. Department of Management Services. Division of Retirement, DOAH Case No. 04-0309; McLendon _y. FDLE, Criminal Justice Standards and Training Commission, DOAH Case No. 00-2350; Creech v. Department of Management Services, Division of Retirement, DOAH Case No.s 98-5207, 99-4566. Accordingly, the Waiver or Variance was properly denied by the Division. ORDER Based on the foregoing, it is hereby ORDERED AND DIRECTED that the Petitioner's request for retroactive option 3 retirement benefits is hereby DENIED. It is further ORDERED AND DIRECTED that the Petition for Variance or Waiver is hereby DENIED. ptt . DONE AND ORDERED this day of 1 2006, in Tallahassee, Leon County, Florida. Tom Lewis, Jr. Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Fl. 32399-0950 (850) 488-2786 NOTICE OF RIGHT TO JUDICIAL REVIEW A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DEPARTMENT OF MANAGEMENT SERVICES, 4050 ESPLANADE WAY, SUITE 160, TALLAHASSEE, FLORIDA 32399-0950, AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. IJ HEREBY CERTIFY that this Final Order was filed in the official records of the Division of Retirement, and copies distributed by U.S. Mail to the parties below, on the // Baay of lipact , 2006. . ebbie Shoup Clerk Department of Management Services Copies furnished to: Jon C. Moyle, Jr., Esq. : Moyle, Flanigan, Katz, Raymond & Sheehan, P.A. 118 North Gadsden Street Tallahassee, Florida 32301 Judge John G. Van Laningham Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, FL, 32399-3060 Thomas E. Wright Senior Attorney Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, FL 32399-0950

Docket for Case No: 05-003679

Orders for Case No: 05-003679