vs.
Respondent.
) Case No. 06-1556
Don W. Davis, a duly-designated Administrative Law Judge of the Division of Administrative Hearings (DOAH), held a formal hearing in the above-styled cause on July 26, 2006, in Tallahassee, Florida.
For Petitioner: Mallory E. Horne, Esquire
For Respondent: Geoffrey M. Christian, Esquire
Department of Management Services Office of the General Counsel 4050 Esplanade Way, Suite 160
The issue is whether Petitioner is eligible to participate in the Deferred Retirement Option Program (DROP) of the Florida Retirement System (FRS).
By final agency action letter, dated March 6, 2006, the Department of Management Services, Division of Retirement (Respondent), notified Susan Campbell (Petitioner) that, due to her failure to timely file her application materials, she was not eligible to participate in the DROP. Petitioner timely requested an administrative hearing to resolve the issue of whether she was eligible to participate in the DROP. Subsequently, the matter was transferred to the Division of Administrative Hearings for the assignment of an administrative law judge to conduct a formal hearing pursuant to Section 120.57(1), Florida Statutes.
At the hearing, Petitioner testified on her own behalf and offered Petitioner’s Exhibits 1 through 7, which were received into evidence without objection. Respondent presented the testimony of Doug Cherry, Chief of its Bureau of Calculations, who was accepted as an expert witness on the DROP and its administration, and Larry D. Scott, Esquire, an attorney for the Department of Management Services, Office of General Counsel.
which were received into evidence without objection, and requested official recognition of Chapters 26, 120, and 121 Florida Statutes, and Chapter 60S, Florida Administrative Code.
No transcript of the proceedings was filed. Proposed Recommended Orders were timely filed by the parties and have been duly considered in preparing this Recommended Order.
All references to Florida Statutes are to the 2005 edition, unless otherwise noted.
Based on the oral and documentary evidence presented at the hearing, the following findings of fact are made:
Petitioner is now, and has been since December 19, 1974, an employee of the State of Florida.
By virtue of her employment with the State of Florida, Petitioner is an active, regular class member of the FRS.
Petitioner was considered “vested” for purposes of the FRS when she completed 10 years of creditable service with the State of Florida.
The “normal retirement date,” for regular class members, is defined, in pertinent part, as the first day of the month following the date on which the member attains 62 years of age, with six or more years of creditable service,1/ or the date on which the member reaches 30 years of creditable service, regardless of age. § 121.021(29)(a), Fla. Stat.
Petitioner was born on June 6, 1944 and reached the age of 62 on June 6, 2006. She reached 30 years of creditable service in November 2004.
Petitioner’s “normal retirement date” for purposes of the FRS was established as December 1, 2004, by virtue of reaching 30 years of creditable service in November 2004. Petitioner was aware that her “normal retirement date” had been established as December 1, 2004.
An active member becomes eligible to enter the DROP upon reaching his or her “normal retirement date.” A member must elect to participate in the DROP within 12 months of the date on which he or she first attains his or her normal retirement date. A member who fails to make an election within such 12-month limitation period forfeits all rights to participate in the DROP. § 121.091(13)(a), Fla. Stat.
Petitioner’s period of eligibility to enter the DROP began on December 1, 2004 and ended on November 30, 2005.
Petitioner requested DROP retirement benefit estimates from the Division on three separate occasions.
On November 25, 2003, Petitioner asked Respondent to send her the first DROP retirement benefit estimate. On December 2, 2003, Respondent sent Petitioner the first DROP retirement benefit estimate. The Comments section of the document advised that the estimate was based on the assumption
that Petitioner would enter the DROP effective 12/1/2004. Accordingly, the DROP Estimated Benefit Accrual Calculation section provided for a 12/2004 “DROP Begin Date,” an 11/2009 “DROP End Date,” and 60 “Months in DROP.” The first DROP retirement benefit estimate makes no reference to Petitioner’s normal retirement date.
On December 1, 2004, Petitioner asked Respondent to send her a second DROP retirement benefit estimate. On December 1, 2004, Respondent sent Petitioner the second DROP retirement benefit estimate. The Comments section of the document advised that in order for Ms. Campbell to retain a 12/2004 DROP retirement date, she must complete and return the enclosed DROP application materials within 30 days of the date the second estimate was mailed. Again, the DROP Estimated Benefit Accrual Calculation section provided for a 12/2004 “DROP Begin Date,” an 11/2009 “DROP End Date,” and 60 “Months in DROP.” The second DROP retirement benefit estimate makes no reference to Petitioner’s normal retirement date.
On October 24, 2005, Petitioner asked Respondent to send her a third DROP retirement benefit estimate. On October 25, 2005, Respondent sent Petitioner the third DROP retirement benefit estimate. Again, she was advised in that mailing that in order for Petitioner to retain a 10/2005 DROP
retirement date, she must complete and return the enclosed DROP
application materials within 30 days of the date the third estimate was mailed. The Comments section also advised that Petitioner’s 50 months of DROP participation would be from 10/01/2005 to 11/30/2009. Accordingly, the DROP Estimated Benefit Accrual Calculation section was changed to provide for a 10/2005 “DROP Begin Date,” an 11/2009 “DROP End Date,” and 50 “Months in DROP.” The third DROP retirement benefit estimate makes no reference to Respondent’s normal retirement date.
Petitioner alleged at final hearing that she was confused by the language Respondent used in the third DROP retirement benefit estimate. Petitioner presumed that Respondent had changed her normal retirement date to 10/2005, and therefore she believed she had an additional 12 months to elect to participate in the DROP.
There is no indication in Respondent’s records that Petitioner ever contacted Respondent’s personnel to express confusion about or to ask questions about any of the DROP retirement benefit estimates provided to her.
Respondent’s standard practice is to enclose an informational brochure, entitled “Deferred Retirement Option Program,” when it sends DROP retirement benefit estimates.
Petitioner also testified at final hearing that she was confused by certain language Respondent used in the DROP
Brochure to her to explain when a member could begin the DROP, specifically:
The earliest you may begin participation in DROP is the month you reach your normal retirement date based upon your age, or the month after the month you reach your normal retirement date based upon your years of service.
Petitioner claim of confusion is not credible in view of the fact that the above language is followed by an example designed to help those members who may have difficulty understanding the meaning of the language:
If you are vested (have at least 6 years but less than 30 years of service credit), and attain age 62 on May 22nd; your normal retirement date would be May 1st. Or, if you will complete 30 years of service in May, your normal retirement date is June 1st. (Exhibit R-10).
Finally, the DROP Brochure was intended to put statutory language into laymen’s terms for the FRS membership. The DROP Brochure includes a disclaimer on the first page after the cover page which states:
If questions of interpretation arise as a result of the attempt to make these retirement provisions easy to understand, Chapter 121, Florida Statutes, Chapter 60S, Florida Administrative Code, and the Internal Revenue Code shall remain the final authorities.
There is no indication in Respondent’s records that Petitioner ever contacted Respondent’s personnel to express her
confusion about the wording of the DROP Brochure or to ask questions about when she could begin DROP or her DROP participation eligibility.
Petitioner possesses both Bachelor’s and Master’s Degrees in Education. In addition, she formerly possessed a Florida Teaching Certificate. On the basis of her educational achievements and teaching certification, Petitioner is a well- educated individual.
Petitioner’s former employer, the Division of State Group Insurance, was in the process of privatizing during 2005, and was therefore laying off some of its employees. Petitioner also feared lay-off and decided to delay filing her application materials for the DROP.
Respondent received Petitioner’s Application for Service Retirement and the Deferred Retirement Option Program (Form DP-11) on January 5, 2006. Petitioner signed the Form DP-
11 on December 22, 2005. Petitioner’s employer certified the Form DP-11 on December 29, 2005. Petitioner’s Form DP-11 also included the following acknowledgement:
I . . . elect to participate in the DROP in accordance with Subsection 121.091(13), Florida Statutes (F.S.). My DROP participation cannot exceed a maximum of 60 months from the date I first reach my normal retirement date as determined by the Division of Retirement.
(Exhibit R-5).
On January 5, 2006, Respondent also received Petitioner’s Notice of Election to participate in the Deferred Retirement Option Program (DROP) and Resignation of Employment (Form DP-ELE). Petitioner signed the Form DP-ELE on
December 22, 2005. Petitioner’s employer certified the Form DP- ELE on December 29, 2005. Petitioner’s Form DP-ELE also included the following acknowledgement:
I elect to participate in the DROP in accordance with Subsection 121.091(13), Florida Statutes (F.S.), as indicated below.
. . . I understand that the earliest date my participation in the DROP can begin is the first date I reach my normal retirement date as determined by law and that my DROP participation cannot exceed a maximum of 60 months from the date I reach my normal retirement date, . . . .
(Exhibit R-6).
On January 11, 2006, Respondent issued an initial agency action letter which advised Petitioner as follows:
To participate in the Deferred Retirement Option Program (DROP), you were required to submit a Form DP-ELE (Notice of Election to Participate in the DROP and Resignation of Employment) within twelve months of the date you first became eligible to participate in the DROP. If the Form DP-ELE is not received within this twelve month period, the right to participate in DROP is forfeited.
Your dates of eligibility to elect participation in the DROP was [sic] from 12/01/2004 to 11/30/2005. We received your Form DP-ELE and Form DP-11, Application for Service Retirement and DROP, in our office
on 01/05/2006. Because the Division received the DP-ELE after the ending eligibility date, you are not eligible to participate in the DROP. The DP-ELE and DP-
11 forms are considered null and void. (Exhibit R-7).
On March 6, 2006, Respondent issued a final agency action letter which advised Petitioner as follows:
Section 121.091(13)(a)(2), Florida Statutes, gives all active Florida Retirement System (FRS) members the right to elect participation in the DROP provided that: “Election to participate is made within 12 months immediately following the date on which the member first reaches normal retirement date. . . A member who fails to make an elections [sic] within such 12-month limitation period shall forfeit all rights to participate in the DROP “
(emphasis added).
You first became eligible to participate in the DROP on 12/01/2004, after earning 30 years of service credit in 11/2004.
Therefore, your Form DP-ELE, Notice of Election to Participate in the Deferred Retirement Option Program (DROP) and Resignation of Employment and Form DP-11, Application for Service Retirement and the Deferred Retirement Option Program (DROP) must have been received no later than 11/30/2005 for you to be eligible to participate in the DROP. Your Forms DP-ELE and DP-11 were received in the Division of Retirement on 01/05/2006. Since the Forms DP-ELE and DP-11 were not submitted and received by the Division within the 12-month limitation period, you have forfeited your right to participate in the DROP. The Forms DP-ELE and DP-11 you submitted are null and void.
It is unfortunate that your eligibility period to begin participation in DROP has expired, however because the 12-month eligibility period stated above is a statutory requirement and we have no authority to waive the law, we must deny your request for DROP participation.
(Exhibit R-8)
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties hereto. § 120.57(1), Fla. Stat.
The burden of proof in administrative hearings is on the party asserting the affirmative of an issue. Wilson v.
Department of Administration, Division of Retirement, 538 So. 2d 139, 141-42 (Fla. 4th DCA 1989); Florida Department of Transportation v. J.W.C. Co., Inc., 396 So. 2d 778, 788 (Fla.
1st DCA 1981); and Balino v. Department of Health and
Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 349 1977). Petitioner bears the burden of proof in this case.
The standard of proof in administrative hearings such as this case is a preponderance of evidence. Florida Department
of Health and Rehabilitative Services v. Career Service Commission, 289 So. 2d 412, 414 (Fla. 4th DCA 1974); and Section 120.57(1)(j), Florida Statutes (“Findings of fact shall be based upon a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise
provided by statute. . .”). A preponderance of the evidence means that Petitioner must prove that some thing is “more probable than not.” Holland v. Department of Management Services, DOAH Case No. 02-0986 (Final Order dated October 1, 2002). Petitioner must establish facts upon which her allegations are based by a preponderance of the evidence.
As the party seeking a change in retirement status, Petitioner has failed to meet her burden of proving by a preponderance of the evidence that she is entitled to the requested relief.
Chapter 121, Florida Statutes, contains the Florida Retirement System Act. § 121.011(1), Fla. Stat.
Section 121.1905, Florida Statutes, “create[s] the Division of Retirement within the Department of Management Services,” and it further provides that “the mission of the Division of Retirement is to provide quality and cost-effective retirement services as measured by member satisfaction and by comparison with administrative costs of comparable retirement systems.”
The DROP is a program administered by the Division.
The DROP is described in Section 121.091(13), Florida Statutes, as follows:
DEFERRED RETIREMENT OPTION PROGRAM.--In
general, and subject to the provisions of this section, the Deferred Retirement Option
Program, hereinafter referred to as the DROP, is a program under which an eligible member of the Florida Retirement System may elect to participate, deferring receipt of retirement benefits while continuing employment with his or her Florida Retirement System employer. The deferred monthly benefits shall accrue in the System Trust Fund on behalf of the participant, plus interest compounded monthly, for the specified period of the DROP participation, as provided in paragraph (c). Upon termination of employment, the participant shall receive the total DROP benefits and begin to receive the previously determined normal retirement benefits. Participation in the DROP does not guarantee employment for the specified period of DROP. Participation in the DROP by an eligible member beyond the initial 60-month period as authorized in this subsection shall be on an annual contractual basis for all participants.
Section 121.091(13)(a), Florida Statutes, addresses the eligibility of FRS members to participate in the DROP and provides, in pertinent part, that:
[a]ll active Florida Retirement System members in a regularly established position
... are eligible to elect participation in the DROP provided that:
* * *
2. .... election to participate is made within 12 months immediately following the date on which the member first reaches normal retirement date . . . . A member who fails to make an election within such 12- month limitation period shall forfeit all rights to participate in the DROP.
Section 121.021(29), Florida Statutes, defines “normal retirement date,” in pertinent part, as follows:
121.021 Definitions.--The following words and phrases as used in this chapter have the respective meanings set forth unless a different meaning is plainly required by the context:
* * *
(29) “Normal retirement date” means the first day of any month following the date a member attains one of the following statuses:
(a) If a Regular Class member, the member:
Completes 6 or more years of creditable service and attains age 62; or
Completes 30 years of creditable service, regardless of age, . . .
Petitioner, pursuant to Section 121.091(13)(a)2., Florida Statutes, had to make an election to participate in the DROP within 12 months of December 1, 2004. Petitioner’s DROP application materials were not received by Respondent until January 5, 2006.
Petitioner admitted on direct examination that she knew her normal retirement date, and that she delayed filing application materials for the DROP due to lay-offs occurring in her workplace. Petitioner made a knowing and informed decision to not join the DROP during this 12-month period.
In failing to join DROP within the statutorily prescribed period, Petitioner "forfeit[ed] all rights to participate in the DROP,” and, as a result, Respondent is without statutory authority to allow her to now join the program. See City of Cape Coral v. GAC Utilities, Inc., of Florida, 281 So. 2d 493, 495-96 (Fla. 1973); Sun Coast
International, Inc. v. Department of Business Regulation, 596 So. 2d 1118, 1121 (Fla. 1st DCA 1991); Schiffman v. Department of Professional Regulation, Board of Pharmacy, 581 So. 2d 1375, 1379 (Fla. 1st DCA 1991) (“An administrative agency has only the authority that the legislature has conferred it by statute.”).
As a matter of law, Petitioner is not eligible to participate in the DROP and the Division must deny
Ms. Campbell’s application to participate in the DROP.
Petitioner’s claim is based on the theory of equitable estoppel. As a general rule, the Division of Administrative Hearings has no jurisdiction to award equitable relief. Strickland v. Department of Management Services, Division of
Retirement, DOAH Case No. 03-4031 (Final Order dated March 29, 2004) (DOAH does not have jurisdiction to grant equitable remedies). Such jurisdiction is vested in the circuit courts of Florida pursuant to Section 26.012(2)(c), Florida Statutes.
However, in appropriate circumstances, principles of equity and fairness may be applied in administrative proceedings
to prevent unjust results, notwithstanding the absence of any statutory or rule provision expressly authorizing the application of these principles. See Occidental Chemical Agricultural Products, Inc. v. Department of Environmental Regulation, 501 So. 2d 674 (Fla. 1st DCA 1987) (“It is noteworthy that the administrative process in this State routinely handles cases in which parties have introduced equitable estoppel issues.”).
As a general rule, equitable estoppel will be applied against a governmental entity “only in rare instances and under exceptional circumstances.” Department of Revenue v. Anderson,
403 So. 2d 397, 400 (Fla. 1981), citing North American Co. v.
Green, 120 So. 2d 603 (Fla. 1959).
The elements that must be established for the doctrine of equitable estoppel to apply against a governmental entity are set forth in Council Brothers, Inc. v. City of Tallahassee, 634 So. 2d 264, 266 (Fla. 1st DCA 1994). The elements which must be present for application of estoppel are: (1) a representation as to a material fact that is contrary to a later-asserted position; (2) reliance on that representation; and (3) a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon. Id.; see also
Department of Revenue v. Anderson, 403 So. 2d 397, 400 (Fla. 1981). In addition, to invoke estoppel against a governmental
entity, certain additional “exceptional” circumstances must be present. One seeking to invoke the doctrine of estoppel against a governmental entity first must establish the usual elements of estoppel, and then (1) must demonstrate the existence of affirmative conduct by the government which goes beyond mere negligence, (2) must show that the government conduct will cause serious injustice, and (3) must show that the application of estoppel will not unduly harm the public interest. Id.; see also Alachua County v. Cheshire, 603 So. 2d 1334, 1337 (Fla. 1st DCA 1992).
The first determination to make in this matter is whether Petitioner relied upon a misrepresentation by Respondent to a material fact that is contrary to a later asserted position. If so, the second determination to make is whether there existed affirmative conduct by Respondent, which went beyond mere negligence. Respondent made no misrepresentation of material fact and has not engaged in conduct which could provide the basis for estoppel. Accordingly, it is unnecessary to address the second determination.
There was no erroneous statement of fact to support estoppel in this case. The first, second and third DROP retirement benefit estimates clearly state the applicable DROP retirement dates. None of the DROP retirement benefit estimates mention Petitioner’s normal retirement date or any change
thereto. The DROP Brochure is clear in describing when a member can begin to participate in the DROP. The party urging that equitable principles be applied bears the burden of establishing the appropriateness of their application. See Flanigan’s Enterprises, Inc. v. Barnett Bank of Naples, 614 So. 2d 1198, 1200 (Fla. 5th DCA 1993) (“It is well established that when estoppel is raised as a defense, the burden of proof is on the party asserting it.”). Petitioner failed to meet her burden.
Respondent, having made no misrepresentation of fact, has not engaged in conduct which could provide the basis for
estoppel.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent issue a Final Order denying Petitioner’s application to participate in the DROP.
DONE AND ENTERED this 13th day of September, 2006, in Tallahassee, Leon County, Florida.
DON W. DAVIS
Filed with the Clerk of the Division of Administrative Hearings this 13th day of September, 2006.
1/ In July 2000, an amendment to Section 121.021, Florida Statutes, took effect whereby FRS members were “vested” after six years of service. This change in the law reduced the time to vest for retirement purposes from the ten years previously set forth in the statute.
Geoffrey M. Christian, Esquire Department of Management Services 4050 Esplandade Way, Suite 160
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.
