The Issue The issue for determination in this case is whether Respondent’s application of a fair rental value system of property cost reimbursement to Petitioner under the Florida Title XIX Long-Term Care Medicaid Reimbursement Plan is appropriate.
Findings Of Fact Petitioner, CONSULTING MANAGEMENT AND EDUCATION, INC., d/b/a GULF COAST NURSING AND REHABILITATION CENTER (CME), is the licensed operator of a 103-bed nursing home in Clearwater, Florida, which is presently known as GULF COAST NURSING AND REHABILITATION CENTER (GULF COAST). CME participates in the Florida Medicaid Program as an enrolled provider. Respondent, AGENCY FOR HEALTH CARE ADMINISTRATION (AHCA), is the agency of the State of Florida authorized to implement and administer the Florida Medicaid Program, and is the successor agency to the former Department of Health and Rehabilitative Services, pursuant to Chapter 93-129, Laws of Florida. Stipulated Facts Prior to 1993, the GULF COAST nursing home facility was known as COUNTRY PLACE OF CLEARWATER (COUNTRY PLACE), and was owned and operated by the Clearwater Limited Partnership, a limited partnership which is not related to CME. In 1993 CME agreed to purchase, and did in fact purchase, COUNTRY PLACE from the Clearwater Limited Partnership. Simultaneous with the purchase of COUNTRY PLACE, CME entered into a Sale/Leaseback Agreement with LTC Properties, Inc., a Maryland real estate investment trust which engages in the financing of nursing homes. The Purchase and Sale Agreement between Clearwater Limited Partnership and CME was contingent upon the Sale/Leaseback Agreement and the proposed Lease between CME and LTC Properties, Inc. On September 1, 1993, CME simultaneously as a part of the same transaction purchased COUNTRY PLACE, conveyed the facility to LTC Properties, Inc., and leased the facility back from LTC Properties, Inc. As required, CME had notified AHCA of the proposed transaction. AHCA determined that the transaction included a change of ownership and, by lease, a change of provider. CME complied with AHCA's requirements and became the licensed operator and Medicaid provider for COUNTRY PLACE. Thereafter, CME changed the name of the facility to GULF COAST. After CME acquired the facility and became the licensed operator and Medicaid provider, AHCA continued to reimburse CME the same per diem reimbursement which had been paid to the previous provider (plus certain inflation factors) until CME filed its initial cost report, as required for new rate setting. In the normal course of business, CME in 1995 filed its initial Medicaid cost report after an initial period of actual operation by CME. Upon review of the cost report, AHCA contended that the cost report was inaccurate and engaged in certain "cost settlement" adjustments. During this review, AHCA took the position that CME's property reimbursement should be based on FRVS methodologies rather than "cost" due to the lease. In November of 1995, CME received from AHCA various documents which recalculated all components of Petitioner's Medicaid reimbursement rates for all periods subsequent to CME's acquisition of the facility. In effect, AHCA placed CME on FRVS property reimbursement. The practical effect of AHCA's action was to reduce CME's property reimbursement both retroactively and prospectively. The retroactive application would result in a liability of CME to AHCA, due to a claimed overpayment by AHCA. The prospective application would (and has) resulted in a reduction of revenues. CME is substantially affected by AHCA's proposed action and by Sections I.B., III.G.2.d.(1), V.E.1.h., and V.E.4. of the Florida Medicaid Plan. Additional Findings of Fact The Florida Medicaid Plan establishes methodologies for reimbursement of a nursing home's operating costs and patient care costs, as well as property costs. The dispute in this matter relates only to reimbursement of property costs. CME as the operator of the GULF COAST nursing home facility is entitled to reimbursement of property costs in accordance with the Florida Medicaid Plan. CME as the operator of the GULF COAST facility entered into a Florida Medicaid Program Provider Agreement, agreeing to abide by the provisions of the Florida Medicaid Plan. The Sale/Leaseback Agreement entered into by CME and LTC Properties Inc. (LTC) specifically provides for a distinct sale of the nursing home facility to LTC. LTC holds record fee title to GULF COAST. LTC, a Maryland corporation, is not related to CME, a Colorado corporation. The Florida Medicaid Plan is intended to provide reimbursement for reasonable costs incurred by economically and efficiently operated facilities. The Florida Medicaid Plan pays a single per diem rate for all levels of nursing care. After a nursing home facility's first year of operation, a cost settling process is conducted with AHCA which results in a final cost report. The final cost report serves as a baseline for reimbursement over the following years. Subsequent to the first year of operation, a facility files its cost report annually. AHCA normally adjusts a facility's reimbursement rate twice a year based upon the factors provided for in the Florida Medicaid Plan. The rate-setting process takes a provider through Section II of the Plan relating to cost finding and audits resulting in cost adjustments. CME submitted the appropriate cost reports after its first year of operation of the GULF COAST facility. Section III of the Florida Medicaid Plan specifies the areas of allowable costs. Under the Allowable Costs Section III.G.2.d.(1) in the Florida Title XIX Plan, a facility with a lease executed on or after October 1, 1985, shall be reimbursed for lease costs and other property costs under the Fair Rental Value System (FRVS). AHCA has treated all leases the same under FRVS since that time. AHCA does not distinguish between types of leases under the FRVS method. The method for the FRVS calculation is provided in Section V.E.1.a-g of the Florida Medicaid Plan. A “hold harmless” exception to application of the FRVS method is provided for at Section V.E.1.h of the Florida Medicaid Plan, and Section V.E.4 of the Plan provides that new owners shall receive the prior owner’s cost-based method when the prior owner was not on FRVS under the hold harmless provision. As a lessee and not the holder of record fee title to the facility, neither of those provisions apply to CME. At the time CME acquired the facility, there was an indication that the Sale/Leaseback transaction with LTC was between related parties, so that until the 1995 cost settlement, CME was receiving the prior owner’s cost-based property method of reimbursement. When AHCA determined that the Sale/Leaseback transaction between CME and LTC was not between related parties, AHCA set CME’s property reimbursement component under FRVS as a lessee. Property reimbursement based on the FRVS methodology does not depend on actual period property costs. Under the FRVS methodology, all leases after October 1985 are treated the same. For purposes of reimbursement, AHCA does not recognize any distinction between various types of leases. For accounting reporting purposes, the Sale/Leaseback transaction between CME and LTD is treated as a capital lease, or “virtual purchase” of the facility. This accounting treatment, however, is limited to a reporting function, with the underlying theory being merely that of providing a financing mechanism. Record fee ownership remains with LTC. CME, as the lease holder, may not encumber title. The Florida Medicaid Plan does not distinguish between a sale/leaseback transaction and other types of lease arrangements. Sections IV.D., V.E.1.h., and V.E.4., the “hold harmless” and “change of ownership” provisions which allow a new owner to receive the prior owner’s method of reimbursement if FRVS would produce a loss for the new owner, are limited within the Plan’s organizational context, and within the context of the Plan, to owner/operators of facilities, and grandfathered lessee/operators. These provisions do not apply to leases executed after October 1, 1985. Capital leases are an accounting construct for reporting purposes, which is inapplicable when the Florida Medicaid Plan specifically addresses this issue. The Florida Medicaid Plan specifically addresses the treatment of leases entered into after October 1985 and provides that reimbursement will be made pursuant to the FRVS method.
The Issue The issues are whether Petitioner, Daniel O. Cobb, is entitled to payment of claims for surgery performed on Ms. Cobb, Susan Catherine Cobb, his spouse, on November 11, 1985, and whether Respondent, the State, is estopped from denying coverage. A prehearing stipulation was filed limiting the facts, issues, exhibits and witnesses. The stipulated facts were incorporated into the Recommended Order and are in the Final Order as well. Petitioner presented the testimony of himself and his spouse. Petitioner's exhibits 2 through 6 were accepted into evidence. Exhibits 3 and 4 constituted hearsay. The Department presented the testimony of Hazel Rosser and Joseph F. Wellman. Four exhibits by the Department were offered into evidence and were accepted. Neither party ordered a transcript. Only the Department filed a proposed recommended order and findings of fact. The Findings of Fact and the Conclusions of Law in the Recommended Order are hereby adopted, except in Findings of Fact Nos. 16, 17, and 18, Mrs. Scott is changed to Mrs. Cobb and in Findings of Fact No. 18, Mr. Scott is changed to Mr. Cobb.
Findings Of Fact Daniel O. Cobb was an employee of the Florida Department of Transportation during 1985. Mr. Cobb and his spouse, Susan Cobb, had family coverage under the State of Florida Employees Group Health Self Insurance Plan (hereinafter referred to as the "State Plan"), until November 1, 1985. The State Plan is administered by Blue Cross/Blue Shield. Pursuant to the agreement between the State of Florida and Blue Cross/Blue Shield benefits which are payable under the State Plan are governed by a "Benefit Document." Each year, State employees are given an opportunity change the form of health insurance coverage they wish to have. During this "open enrollment period" an employee covered by the State Plan can elect to participate in a Health Maintenance Organization and an employee covered by a Health Maintenance Organization can elect to participate in the State Plan. During 1985, there was an open enrollment period between September 9, 1985, and September 20, 1985. During the 1985 open enrollment period State employees, including Mr. Cobb, were provided a Notice to Employees in which they were advised to carefully review information contained in a Benefit Comparison Brochure, a Rate Comparison Chart and a Health Care Plan Selection Form. These documents were provided to all State employees. The Selection Form instructed employees to "Please read the employee notice about HMO service areas and effective date of coverage before completing this section." State employees were also advised that any change in coverage would be effective November 1, 1985. On September 19, 1985, Mr. Cobb signed a State of Florida Employes Group Health Self Insurance Plan, Change of Information Form. Pursuant to this Change of Information Form, Mr. Cobb elected to terminate his health insurance coverage with the State Plan. On the Change of Information Form it was indicated that Mr. Cobb's election to terminate his coverage under the State Plan was to be effective November 1, 1985. Therefore, Mr. Cobb was informed and should have known that he was no longer eligible for medical cost payment for himself or his family pursuant to the State Plan after October 31, 1985. Mr. Cobb also signed a Member Enrollment (Group) and Physician Selection Form on September 19, 1985. Pursuant to this Form, Mr. Cobb enrolled himself, his Spouse and their children, in Health Options, Inc., a health maintenance organization. Mr. Cobb's participation in Health Options, Inc., began November 1, 1985. On September 19, 1985, Mr. Cobb was provided a list of Health Options, Inc., approved physicians which were available for use by Mr. Cobb and his family. Mr. Cobb designated Gerald A. Giurato, M.D., as his primary care physician on the Physician Enrollment Form which he signed on September 19, 1985. On October 28, 1985, Mr. Cobb was mailed a copy of the Health Options Member Handbook which, among other things, describes the grievance procedure to be followed when medical expenses were not paid by Health Options Inc., and the manner in which physicians were to be used in order to be entitled to payment, of their charges. The Handbook informed Mr. Cobb that all care had to be arranged through a primary care physician and that only services provided or approved by the primary care physician were covered. The Handbook also indicated that treatment by physicians who were not approved by the primary care physician would be the responsibility of the patient. During 1985 Mrs. Cobb was under the care of Alexander Rosin, M.D. Dr. Rosin performed surgery for the removal of a cyst on Mrs. Cobb, on November 11, 1985. Dr. Rosin was not a physician approved by Health Options, Inc., or Mr. Cobb's primary care physician. Nor was the surgery approved. Claims attributable to the November 11, 1985, surgery were submitted to the State Plan. Claims, for the charges of Dr. Rosin, Scott Blonder, M.D., and a Pathologist were submitted. The expenses for the November 11, 1985, surgery were incurred after coverage of Mr. and Mrs. Cobb under the State Plan ended. The type of surgery performed on Mrs. Cobb was also not authorized by the Benefit Document. No claims were submitted to Health Options, Inc., for medical expenses incurred for Mrs. Cobb's operation on November 11, 1985. None of the medical expense attributable to Mrs. Cobb's November 11, 1985, surgery were incurred with physicians or facilities approved by Health Options, Inc. By letter dated August 27, 1986, the Department denied the claims submitted to the State Plan attributable to Mrs. Cobb's November 11, 1985, surgery. Mr. Cobb filed a request for an administrative hearing to contest the Department's proposed denial.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law it is RECOMMEDED that a final order be issued by the Department denying payment of claimed expenses attributable to Mrs. Cobb's surgery of November 11, 1985. DONE and ENTERED this 15th day of July, 1988, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 864109 The Department has submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Department's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number, of Acceptance or Reason for Rejection 1 18. The letter denying payment was dated August 27, 1986, and not September 4, 1986. See DOA exhibit 1. 2 7. 3 Hereby accepted. 4 7. 5 3. 6 4 and 5. 7-9 6. 10-12 11. Summary of testimony and irrelevant. Summary of testimony argument. Concerning the weight to be given evidence and cumulative. 15 7. 16 Hearsay. 17-18 Conclusion of law. 19-20 16. 21 Not supported by the weight of the evidence. 22 15. COPIES FURNISHED: O. C. Beakes, Esquire Lindner Smith, Jr., Esquire 836 Riverside Avenue Jacksonville, Florida 32205 Andrea R. Bateman, Esquire Department of Administration Room 438, Carlton Building Tallahassee, Florida 32399-1550 Adis Vila, Secretary 435 Carlton Building Tallahassee, Florida 32399-1550 Augustus D. Aikens, Jr. General Counsel 435 Carlton Building Tallahassee, Florida 32399-1550 =================================================================
Findings Of Fact The parties have stipulated to the following facts: The petitioner received payment of $1,920 from Blue Cross/Blue Shield for the purchase of an EBI bone healing system. Blue Cross/Blue Shield also paid $2,000 to EBI Medical Systems, Inc., the provider, for the purchase of the same equipment. The petitioner was not covered by his state health insurance plan at the time of the purchase of the equipment, because he had failed to pay his premiums while he was on leave without pay from his state employment position. The petitioner has not remitted payment for the purchase of the EBI equipment to the respondent agency. The petitioner owes the State of Florida the sum of $1,920.
Recommendation In consideration of the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered by the Department of Administration requiring that the petitioner, Gregory Chrishon, pay the Department of Administration, Office of State Employees' Insurance, the sum of $1,920 in accordance with a payment schedule to be agreed upon by the respondent and the petitioner, and to provide that such payment will constitute the total amount due to the respondent from the petitioner arising out of the claim for reimbursement for services received related to the purchase of the subject equipment. DONE and ENTERED this 23rd day of December, 1987, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of December, 1987. COPIES FURNISHED: T. Patterson Maney, Esquire, P.A. 123 Staff Drive Post Office Drawer 1628 Fort Walton Beach, Florida 32549 Andrea R. Bateman, Esquire Assistant General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Adis M. Vila, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550
The Issue Whether the State of Florida through its Employees Group Health Self Insurance Plan is responsible for paying medical expenses incurred by Petitioner's newborn child where Petitioner had only individual coverage in effect at the time of that child's birth?
Findings Of Fact The State of Florida makes available to its employees several group insurance programs. In the area of health insurance, employees may choose to participate in the State of Florida Employees Group Health Self Insurance Plan, or they may enroll in a number of different HMOs depending upon the county in which each employee resides. The State of Florida Employees Group Health Self Insurance Plan (hereinafter "the Plan") is a plan of self insurance established by the State, specifically described in a Benefit Document, and administered by Blue Cross/Blue Shield. In addition to the provisions of the Plan embodied in the Benefit Document, the self insurance plan is regulated by those rules contained in Chapter 22K, Florida Administrative Code. If an employee voluntarily chooses to participate in the Plan, the State as the employer contributes to the employee's costs by paying a portion of the premium for each employee. HMOs wishing to capture a portion of the State employee insurance market may participate in bidding procedures whereby the winner(s) can offer insurance to State employees in particular geographical locations. Winning HMOs must comply with many of the rules and provisions involved in the Plan but are still able to establish additional benefits and requirements for coverage. If an employee voluntarily chooses to participate in an HMO insurance program, the State will assist with the employee's costs by contributing to that employee's insurance premium expense. At the time that they commence employment with the State, employees may elect to participate in the Plan, in one of the HMOs approved for that particular geographical location, or may choose to not participate in any of the voluntary insurance programs offered through the State. Thereafter, employees may only join one of the insurance programs or switch between programs during an annual open enrollment period. An employee may purchase individual coverage, insuring only himself or herself, or an employee may purchase family coverage, insuring that employee and one or more of his or her eligible dependents. During an open enrollment period, an employee may switch between individual coverage and family coverage for the following year. Under the State Plan, there is an exception to the restriction that employees may only change coverage and health plans during the open enrollment period. An employee having individual coverage may change to family coverage within 31 days after the date of acquisition of any eligible dependent. In that event, coverage for the eligible dependent does not relate back to the date of acquisition but rather will commence on some future date following the payment of the additional premium required for the additional family coverage. Similarly, an employee with only individual coverage may begin family coverage prior to acquiring eligible dependents and may obtain coverage for those dependents effective on the actual date the dependent is acquired by making application in time for a complete month's premium to be deducted prior to the first day of the month during which the dependent(s) will be acquired. In other words, payment must be made prior to the acquisition of an eligible dependent and the change to family coverage with its increased premium must be made prior to the acquisition of the dependent in order that coverage can be effective as of the date of acquisition. During open enrollment periods, all employees (even those not currently participating in any of the insurance programs offered by the State) are given summary information regarding the various programs in which they are being given an opportunity to participate. Brochures giving summarized comparisons of the Plan and the relevant HMOs are provided to all employees. Employees are advised, if they have questions regarding the Plan, to contact their personnel officer or the Division of State Employees' Insurance. After the employee makes a selection as to which health plan he or she wishes to participate in, if any, the employee will subsequently receive more detailed information about that plan. For example, an employee choosing to participate in the Plan will subsequently receive a copy of the State of Florida Employees Group Health Self Insurance Plan Brochure. The first page of that Brochure specifically advises the employee that the brochure does not include all of the provisions, definitions, benefits, exclusions, and limitations of the Plan. The Brochure specifically advises the employee that it is a summary of the benefits and that any questions the employee might have should be presented to the employee's agency personnel offices or the Office of State Employees' Insurance, and provides that latter office's address and telephone numbers. The Plan itself is a lengthy document which is not distributed to each individual employee but rather is made available to each agency's personnel office for reference by any interested employee. Under the Plan, a woman with individual coverage is entitled to maternity or pregnancy benefits. As part of those benefits, charges for "well baby care," i.e., the charges for the nursery for the baby, are covered under the Plan as part of the maternity benefit of the mother. In well-baby care, charges are not incurred by the baby as a separate patient. On the other hand, if a baby is ill and is admitted to the hospital as a patient in its own right, well-baby care coverage does not apply, and family coverage must be in effect or the infant will be an uninsured individual under the State Plan. The Dade County Public Defender's Office has approximately 265 employees. Faith Quincoses, an Administrative Assistant in that office, began her employment there in 1981 when the office had approximately 165 employees. As the number of office personnel increased, it was determined that someone within that Office should be responsible for employee benefits. That assignment was given to Quincoses, who at the time had duties related to payroll. Quincoses had no training in employee benefits, particularly employee insurance benefits, prior to her assuming responsibility for those duties at the Dade County Public Defender's Office. After she assumed those duties, the Public Defender's Office provided her with no training, and that office did not send her to any of the training sessions regularly conducted by Respondent for employees with and without personnel duties, including those seminars related to employee insurance benefits. When Quincoses would receive informational brochures and memoranda from Respondent regarding employee insurance benefits, she would read them but intentionally did not study them. She did not believe it was her responsibility to assist employees in selecting a particular insurance plan, or in advising employees as to which plan best met that employee's needs, or in answering any specific questions regarding coverage that any employee may have other than routine questions. Although many, if not most, of the informational brochures received from time to time by Quincoses advised employees (including Quincoses) to contact the Division of State Employees' Insurance with any questions regarding benefits and coverage, Quincoses did not contact that office when she had questions about the several insurance plans offered by the State to its employees. She very seldom contacted the Division of State Employees' Insurance to ask questions; rather, she discussed insurance benefits and coverage questions on an almost daily basis with a payroll clerk who worked for the Justice Administrative Commission, an agency belonging to the judicial branch of government with no responsibility or authority for administering the various insurance programs for state employees. Although Quincoses knew that she did not posses a copy of the State of Florida Employees Group Health Self Insurance Plan and had never read a copy, she made no effort to obtain a copy other than to once request a copy from the payroll clerk she daily contacted at the Justice Administrative Commission. When told by that payroll person that she did not have a copy of the Plan, Quincoses made no further efforts to obtain a copy and never requested a copy from the Division of State Employees' Insurance. Quincoses knew she was not an insurance expert and did not feel the need to become one. She believed that her responsibilities regarding the various insurance programs made available to employees by the State of Florida was to simply disseminate information provided to her, fill out the appropriate forms for payroll deductions, answer routine questions, and refer specific questions to the Division of State Employees' Insurance. She rightfully believed that each employee's decision as to which of the individual plans that employee should select was the employee's responsibility. Petitioner Annemarie Harris is an attorney employed as an Assistant Public Defender by the Dade County Public Defender's Office since October, 1983. As a new employee, she chose to enroll in one of the group health insurance programs approved by the State. She chose to join an approved HMO plan rather than enroll in the State of Florida Employees Group Health Self Insurance Plan. Thereafter, and up through December of 1987, each year during the open enrollment period, Petitioner chose to participate in one of the approved HMOs rather than the State's Self Insurance Plan. In December of 1987, the contract between the HMO of which Petitioner was a member and the State of Florida was being terminated, and Petitioner therefore had the option of selecting to participate in one of the other group health insurance programs offered through the State of Florida. In December of 1987, Petitioner was three months pregnant. Her baby was due to be born approximately June 20, 1988. Petitioner was, therefore, very interested in the most extensive coverage which she could obtain for her maternity benefits. Petitioner advised Quincoses that her expected delivery date was June 20, 1988, and that she wished her newborn to be covered by the insurance policy to be selected by Petitioner. Quincoses advised Petitioner that the baby's expenses would be covered if Petitioner added the newborn baby to Petitioner's coverage within 31 days after the date the baby was born. Quincoses did not advise Petitioner that waiting until after the baby's birth would mean that the baby would not be an individual insured until after Petitioner had paid the premium in time for the baby to be added as an insured by the first day of a month subsequent to the baby's birth, since Quincoses did not understand that distinction. The information Quincoses gave Petitioner was wrong and is not contained in any of the written materials describing the Plan which had been transmitted by the State to Quincoses or Petitioner, and is contrary to the information contained in Chapter 22K, Florida Administrative Code. Petitioner then conducted her own investigation of which health plan she wished to choose by asking her friends that worked in the Public Defender's Office about their personal experiences. Further, as Petitioner testified at the final hearing in this cause, Petitioner's husband strongly insisted that she choose the State's Self Insurance Plan in which Plan he had previously participated as a State employee and with which he therefore had some familiarity. Petitioner did not contact the Division of State Employees' Insurance regarding her specific questions and specific situation, did not consult the Benefit Document itself and did not--although both she and her husband are attorneys--consult the rules and regulations regarding coverage contained within Chapter 22K, Florida Administrative Code. Petitioner voluntarily selected the State's Self Insurance Plan and purchased only individual coverage, insuring herself at a lower premium than family coverage which would have covered the newborn infant as of the date of the baby's birth. It is unknown whether Petitioner relied solely on the advice of Quincoses in choosing to purchase individual coverage rather than family coverage, whether Petitioner relied instead on the advice she obtained from questioning her friends or whether she relied upon her husband's desires, in choosing to participate in the State Plan or in choosing to purchase only individual coverage. Although the basis for Petitioner's decision is unknown, her intentions at the time are clear. She planned to, and took steps to, initiate the paperwork necessary to switch to family coverage and pay the additional premium required early enough so that insurance for the baby would be in place on June 1, 1988, prior to the baby's expected arrival date. During April of 1988, Petitioner caused Quincoses to begin filling out the appropriate forms so that Petitioner would have family coverage in place as of June 1, 1988. Since Quincoses had earlier advised Petitioner that Petitioner could switch to family coverage after the baby's birth (which would make the baby's coverage effective subsequent to the baby's birth) but Petitioner chose instead to attempt to convert to family coverage prior to the baby's birth (which was contrary to Quincoses' advice and would have established coverage immediately upon the baby's birth), it can be reasonably inferred that Petitioner understood that the difference between converting to family coverage prior to the baby's birth rather than subsequent to the baby's birth involved the sole issue of the date on which the baby's coverage would become effective. Although Quincoses initiated the paperwork to have family coverage in place for Petitioner prior to the baby's birth expected to occur on June 20, 1988, Petitioner experienced complications with her pregnancy causing the baby to be delivered prematurely on April 24, 1988, prior to Petitioner signing and processing the paperwork started by Quincoses. Almost immediately after the baby's birth, the baby was transferred from the hospital in which her mother was a patient to another hospital where the baby was admitted as a separate patient. The baby remained in that hospital for some time, incurring medical expenses of approximately $180,000.00. Petitioner's medical expenses were paid by the Plan pursuant to her individual coverage. The baby's medical expenses were submitted to the Plan. Petitioner's claim for payment of the baby's medical expenses was denied for the reason that the baby was admitted to a different hospital than the mother as a separate patient but was not an insured under any insurance policy as of the date of the baby's birth, the date on which the baby commenced incurring her own personal medical expenses. When Petitioner converted her individual coverage to family coverage subsequent to the baby's birth, her claims for payment of the baby's medical expenses incurred subsequent to the date upon which the baby became an insured under the State Plan were denied since they arose from a condition pre-existing the date of commencement of insurance coverage. On April 24, 1988, Petitioner's newborn child was not an insured under the State Plan since Petitioner only had individual coverage on that date.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a Final Order be entered denying Petitioner's claims for payment of medical expenses incurred by Petitioner's newborn baby which are the subject of this proceeding. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 27th day of October, 1989. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of October, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO 88-5519 Petitioner's proposed Findings of Fact numbered 1-4, 7-9, 15-18, 34, 35, 37, 38, and 40-42 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed Findings of Fact numbered 5, 6, 10-12, 21, and 33 have been rejected as not being supported by the weight of the credible evidence in this cause. Petitioner's proposed Findings of Fact numbered 13, 14, 39, 44, and 45 have been rejected as being subordinate to the issues for determination herein. Petitioner's proposed Findings of Fact numbered 19 and 22-25 have been rejected as not constituting findings of fact but rather as constituting recitation of the testimony, argument of counsel, or conclusions of law. Petitioner's proposed Findings of Fact numbered 20, 26-31, and 43 have been rejected as being irrelevant to the issues under consideration herein. Petitioner's proposed Finding of Fact numbered 32 has been rejected as being contrary to the weight of the totality of the evidence in this cause. Petitioner's proposed Finding of Fact numbered 36 has been rejected as being unnecessary for determination of the issues involved herein. Respondent's proposed Findings of Fact numbered 1-5, 7-18, the second 19-24, the first 27, the second 26, the second 27, and 28 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed Findings of Fact numbered 6, the first 19, 25, and the first 26 have been rejected as being subordinate to the issues required to be determined in this proceeding. COPIES FURNISHED: James N. Hurley, Esquire William P. Harris, Jr., Esquire Mitchell, Harris, Horr & Associates 2650 Biscayne Boulevard Miami, Florida 33137-4590 William A. Frieder, Esquire Department of Administration Office of the General Counsel 440 Carlton Building Tallahassee, Florida 32399-1550 A. J. McMullian, III Interim Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 Augustus D. Aikens, Jr. General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 =================================================================
The Issue The basic issue in this case concerns the scope of the coverage provided by the State of Florida Employees Group Health Self Insurance Plan ("State Plan"). The Petitioner incurred extensive expenses for medical treatment, some of which have been paid by the State Plan. The Petitioner contends that under the State Plan, specifically under the "extended coverage" portion of the State Plan, she is entitled to more than has already been paid. The Respondent contends that the correct amount has already been paid.
Findings Of Fact The State of Florida makes available to its officers and employees several group insurance programs. With regard to group health insurance, the available programs include the State of Florida Employees Group Health Self Insurance Plan ("State Plan") and a number of different HMO's, depending upon the county in which an employee resides. Upon commencement of employment, State employees may elect to participate in the State Plan, may elect to join one of the HMO's in their geographical region, or may elect not to participate in any of the voluntary group insurance programs offered by the State. Employees who choose to participate in the State Plan are charged a premium which is normally deducted from their paychecks. The State also contributes regular amounts to pay a portion of the premium for each participating employee. Roberta Rubin has been an employee of the State of Florida for twelve years. She is currently employed as a judicial assistant to Circuit Court Judge George Orr. Roberta Rubin is an insured under the State of Florida Employees Group Health Self Insurance Plan ("State Plan"). The basic terms and conditions of the State Plan are set forth in a document titled State of Florida Employees Group Health Self Insurance Plan Benefit Document ("Benefit Document"). The version of the Benefit Document applicable to this case is the version amended effective July 1, 1988. The Department of Administration, Division of State Employees' Insurance, distributes a brochure titled Group Health Self Insurance Plan Benefits which describes the benefits under the State Plan and is intended to assist State employees in deciding which health insurance plan to select. The Department of Administration, Division of State Employees' Insurance, also distributes a brochure titled Group Health Self Insurance Plan Brochure ("Plan Brochure") to individuals enrolled for coverage under the State Plan. At page 1, the Plan Brochure describes the State Plan as follows: "This is a self-insured group health insurance program belonging to those State officers, employees, retirees, and their eligible dependents who elect to participate in the Plan." At the first unnumbered page inside the front cover of the Plan Brochure is a statement of the brochure's purpose, which includes the following: This brochure is not a contract since it does not include all of the provisions, definitions, benefits, exclusions and limitations of the State Self Insured Health Plan's Benefit Document, a copy of which is on file in your agency's personnel office. The purpose of this brochure is to furnish State officers and employees with a summary of the benefits available under the State Self Insured Health Plan. It is hoped that this brochure will answer any questions that might arise about the Plan. The State of Florida Employees Group Health Self Insurance Plan is administered by Blue Cross Blue Shield of Florida, Inc. In December of 1990, the Petitioner, Roberta Rubin, was diagnosed as having cervical cancer. The prognosis and recommended treatment provided by her treating physicians in Miami were not acceptable to Petitioner and she sought another opinion. Petitioner was referred to and ultimately treated by Dr. Neil Rosenshein, a gynecological oncologist at Johns Hopkins Hospital in Baltimore, Maryland. Dr. Rosenshein and Johns Hopkins Hospital are both "non-preferred patient care providers" within the meaning of the definitions in the Benefit Document. Dr. Rosenshein performed the following surgical procedures: radical abdominal hysterectomy; radical pelvic node dissection; bilateral commoniliac node dissection; and periaortic node dissection. The Physician's Procedural Terminology published by the American Medical Association ("PPT Code Book") assigns procedure codes to various surgical procedures that are utilized by billing physicians and various insurers. The PPT Code Book does not contain procedure codes that accurately reflect the latest technology or the complexity, intricacy, or radical nature of the procedures being performed in gynecological cancer surgery. Since no single or multiple procedure codes accurately characterized the surgical procedures performed by Dr. Rosenshein, his bill was submitted to Blue Cross Blue Shield of Florida, Inc., reflecting only one procedure code, 58210, with amodifier, "-22." The modifier "-22" is described in the 1986 version of the Approved Fee Schedule, of the State Plan, as follows: -22 UNUSUAL SERVICES: WHEN THE SERVICES PROVIDED ARE GREATER THAN THOSE USUALLY REQUIRED FOR THE LISTED PROCEDURE, IDENTIFY BY ADDING THIS MODIFIER -22 TO THE USUAL PROCEDURE NUMBER. LIST MODIFIED VALUE. REPORT MAY BE REQUIRED. However, the Benefit Document, as amended effective July 1, 1988, does not provide for or allow the use of the modifier "-22" in determining the amount of payment due on a claim even when the services provided are greater than those usually required for the listed procedure. The modifier "-22" is used by Blue Cross Blue Shield in the administration of other group health insurance plans. The claim form submitted by Dr. Rosenshein went through a level three review by Blue Cross Blue Shield of Florida, Inc., and in response to a request for additional information, Dr. Rosenshein submitted a letter explaining the nature of the procedures performed and a copy of the operative report. Following its review, Blue Cross Blue Shield of Florida, Inc., allowed payment only for the approved fee schedule amount for a single procedure code 58210, or $3,726.00. Dr. Rosenshein's uncontradicted testimony established that the most accurate representation of the procedures he performed would require the following three procedure codes: Code # Description 58210 limited periaortic lymphadenectomy 49201 extensive excision or destruction by any method of intra-abdominal retroperitoneal tumors or cysts or endometriomas 38780 retroperitoneal transabdominal lymphade- nectomy, extensive, including pelvic, aortic and renal nodes. The approved fee schedule for these procedure codes allows the following amounts: Code # Amounts 58210 $3,726.00 49201 2,683.00 38780 2,764.00 Petitioner has incurred the following bills in 1991 which are in excess of the applicable deductible and $1,500.00 out-of-pocket amount provided for under the Extended Coverage provisions of the benefit Document: Provider Amount JHU Department of Radiology $ 159.30 JHU Pain Management Anesthesia 698.10 JHU Anesthesiology 507.70 John Hopkins Hospital Outpatient 50.00 JHU Department of Oncology 503.50 JHU Cardiology 90.00 JHU Pathology 230.00 Dr. Neil Rosenshein 9,904.50 Total $12,143.10 The amounts reflected above are exclusive of benefits already paid by Blue Cross Blue Shield of Florida, Inc., and other insurers and do not include any charges for room and board services or ambulance services. Section I of the Benefit Document contains definitions of numerous terms, including the following: D. "AFS" means the "Approved Fee Schedule," as approved or amended by the Department of Administration. "Covered provider" shall mean a person, institution, or facility as defined herein and who furnishes a covered service or supply. "Covered service or supply" shall mean a medically necessary service or supply furnished by a covered provider and which is covered by the Plan. Q. "Deductible" shall mean the dollar amount of covered services and supplies which each insured is required to pay before benefits are payable by the Plan. BA. "Preferred Patient Care Fee Schedule" or "PPC Fee Schedule" means a list of allowances for each service which has been set and agreed to by the preferred patient care providers. BB. "Preferred Patient Care Provider" or "PPC Provider" means a physician or hospital which has an agreement with the Administrator to provide health care services at set fees to individuals insured under the Plan. A non-preferred patient care provider does not have such an agreement. BJ. "Reasonable Charge" shall mean the following: an average of the amounts charged by the non-preferred patient care hospital, skilled nursing facility, hospice facility or birth center facility for services to individuals using such hospital or facility, as determined by the Administrator; or the charge set forth in the AFS for covered medical-surgical services. BS. "Usual, Customary and Reasonable" or "UCR" means a schedule of fees for covered services in a geographical area which is determined by the Administrator based upon the normal amount charged by the provider in his/her practice, (b) the range of fees for most providers in an area for the same service, and (c) any unusual circumstances or complications requiring additional time, skills and experience by the provider which can be documented. Section II of the Benefit Document contains the provisions regarding coverage for hospital and other facility services. That section reads as follows, in pertinent part: The following services shall be covered when ordered by a physician a nd are medically necessary for the treatment of an insured as a result of a covered accident or illness. Non-Preferred Patient Care Hospital Inpatient Room and Board Services: 1. When confined to a semi-private or private room or ward, 80% of the hospital's average semi-private room rate shall be paid but not to exceed an actual payment of one- hundred and fifty-two ($152.00) per day. Other Covered Non-Preferred Patient Care Inpatient Services: 80% of the actual charge for the following services will be paid by the Plan: Use of operating room, labor room, delivery room and recovery room; All drugs and medicines used by the patient while confined in the hospital, provided such drugs and medicines are listed in "New and Non-Official Remedies" or the "United States Pharmacopoeia"; Solutions (including glucose); Dressings; Anesthesia and related supplies; Oxygen therapy; Transfusion supplies and services including blood, blood plasma and serum albumin, if not replaced; Laboratory services; Electrocardiograms; Basal metabolism examinations; X-ray, including therapy; Electroencephalograms; Diathermy and physical therapy. Covered Outpatient Hospital, Ambulatory Surgical Center or Outpatient Health Care Facility Services: Ninety percent (90%) of the reasonable charge shall be paid for covered outpatient services provided by a Non-PPC provider. When such services are provided by a PPC provider, the plan shall pay ninety percent (90%) of the charge subject to the PPC fee schedule limits. Covered Clinical Laboratory Services: Ninety percent (90%) of the charge for covered clinical laboratory services shall be paid by the Plan not to exceed the maximum amount permitted under the AFS. Section III of the Benefit Document contains the provisions regarding coverage for medical-surgical services. That section reads as follows, in pertinent part: A. Ninety percent (90%) of the charge for medically necessary inpatient/outpatient services provided to an insured by a non- preferred patient care physician, physical therapist or nurse anesthetist for the treatment of the insured as a result of a covered accident or illness shall be paid by the Plan, subject to the provisions of Section VI and Section XXIII; however, such payment shall not exceed the maximum amount permitted under the AFS. C. If a covered procedure does not have a specified fee listed in the AFS, pricing will be performed by the Administrator in accordance with its normal procedures. Section V of the Benefit Document, titled "Extended Coverage," contains the provisions regarding what is commonly known as the "stop loss" feature of the plan. That section reads as follows, in pertinent part: If under individual or family coverage, the out-of-pocket expenses of an insured for covered services under Section II., Section III., Section IV and Section XXV amount to one thousand five hundred dollars ($1500.00) during a calendar year, all further covered charges for such services incurred by the insured during the remainder of the calendar year shall be paid by the Plan at one hundred percent (100%), subject to the lifetime maximum and the maximum payments listed in paragraph C. below. If under family coverage, the out-of- pocket expenses of two or more insureds for covered services under Section II., Section III., Section IV. and Section XXV. amount to three thousand dollars ($3000.00) during a calendar year, all further covered charges for such services incurred by any insured during the remainder of the calendar year shall be paid at one hundred percent (100%), subject to the lifetime maximum and the maximum payments listed in paragraph C. below. Maximum payments subject to Subsections A. and B. above shall apply only to room and board services under Subsection II A., Subsection II E., Subsection II G., and ambulance services under Section IV, as follows: One hundred and ninety dollars ($190.00) per day for hospital room and board; Ninety-five dollars ($95.00) per day for room and board in a skilled nursing facility; Three hundred and eighty dollars ($380.00) per day for an intensive care unit; Two hundred and eighty-five dollars ($285.00) per day for a progressive care unit; One hundred and twenty-five dollars ($125.00) per use for ambulance service; One thousand dollars ($1000.00) for ambulance transportation of a newborn child; One hundred and ninety dollars ($190) per day for room and board in a specialty institution or residential facility. Charges for covered services and supplies applicable to the deductible(s) under the Plan shall not be considered an out-of-pocket expense under the provisions of Section V. The brochure titled Group Health Self Insurance Plan Brochure contains the following language at page seven regarding the stop loss feature of the plan: Maximum Out-Of-Pocket Expense If, during a calendar year, the out-of-pocket expenses for one person insured under individual or family coverage amount to $1,500, or $3,000 for two or more persons insured under family coverage, all further charges will be paid at 100%, subject to the lifetime maximum, any allowance limits for room and board while confined to Non-PPC facilities, and ambulance transportation allowance limits for newborn children. This provision applies to all covered services except Hospice services; however, charges applicable to the deductible shall not be considered an out-of-pocket expense. The language of Section V of the Benefit Document regarding "Extended Coverage" is ambiguous with regard to the scope of the coverage provided by that section of the benefit document. The language of Section V of the Benefit Document regarding "Extended Coverage" also conflicts with the language at page seven of the Plan Brochure regarding "Maximum Out-Of-Pocket Expense. /1
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that the Department of Administration issue a Final Order to the following effect: (a) concluding that the "Extended Coverage" language of Section V of the Benefit Document is ambiguous; (b) concluding that the "Extended Coverage" language of Section V of the Benefit Document is in conflict with the language at page 7 of the Plan Brochure under the caption "Maximum Out-Of-Pocket Expense;" (c) concluding that after the Petitioner's out-of- pocket expenses for covered services reached $1,500, she was entitled to have "all further charges" for covered services paid at 100% of the amount of the charges except as specifically limited in paragraph C. of Section V of the Benefit Document; and (d) providing for payment in the total amount of $12,143.10 to the Petitioner or to the providers listed in paragraph 15 of the Findings of Fact. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 22 of May 1992. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SC 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 22 day of May 1992.
The Issue The ultimate issue is whether Julie E. Reeber, Alexander Reeber and Christine Tadry are entitled to receive survivor benefits payable under the Florida Retirement System (FRS) for Marjorie A. McCollum, deceased, under the facts and circumstances of the Case. The factual issue is whether Marjorie A. McCollum was incompetent when she made the designation of beneficiary and under the undue influence of her daughter Suzanne L. Benson.
Findings Of Fact In August of 1991, Ms. Marjorie A. McCollum, a member of the Florida Retirement System (FRS) applied for disability retirement benefits. (Deposition of Stanley Colvin). As part of her application for disability retirement benefits on Form FR-13 (Florida Retirement System Application for Disability Retirement), Ms. McCollum designated her daughter, Suzanne L. Benson, as her beneficiary. (Exhibit 1 of the deposition of Stanley Colvin). The designation reads, "All previous beneficiary designations are null and void. The beneficiary whom I designate to receive the benefit or refund at my death is Suzanne L. Benson." (Deposition of Stanley Colvin, Exhibit 1). According to the date on the form, Ms. McCollum signed the application on August 28, 1991, and was properly witnesses by a notary public, John T. West. (Testimony of Mary Shere). According to the application, Ms. McCollum was suffering from cancer. She selected the Option 2 retirement benefit. (Exhibit 1 of Stanley Colvin deposition). Ms. McCollum's application for disability retirement benefits, with the Option 2 retirement benefit, was approved by the Division of Retirement with an effective date of September 1, 1991. (Deposition of Stanley Colvin, Exhibit 9). Prior to receiving her first check, Ms. Marjorie McCollum died on September 23, 1991. (Deposition of Stanley Colvin, Exhibit 9). On November 4, 1991, the Division, by letter, notified Suzanne L. Benson that as designated beneficiary of Ms. Marjorie McCollum, she was entitled to the Option 2 benefit in the amount of $280.69 per month through August 31, 2001, for ten years. On November 19, 1991, the Division received a letter from Julia Reeber, another daughter of Ms. McCollum (the deceased), disputing the designation of her sister Suzanne L. Benson as the beneficiary. (Deposition of Stanley Colvin, Exhibit 16). As a result of the notice of dispute by Julia Reeber, the Division on November 26, 1991, notified Ms. Benson by letter that payment of the Option 2 benefit would not be forthcoming until the dispute was resolved. (Deposition of Stanley Colvin, Exhibit 12). The designation of beneficiary executed by Ms. McCollum was properly executed and filed with the Division of Retirement in accord with the Florida Statutes and rules pertaining to the designation of beneficiaries for Florida retirement benefits. (Deposition of Stanley Colvin). Suzanne L. Benson was the properly designated beneficiary, and the Division intended to pay the Option 2 benefit to Suzanne L. Benson in accord with the Division's rules. (Deposition of Stanley Colvin). Ms. McCollum suffered some deterioration of her mental faculties prior to her death because of her illness, she could no longer handle her financial matters, and needed aid from her children in the payment of her bills. However, at no time was the Petitioner legally declared incompetent. Testimony of Julie Reeber). Despite suffering from the ravages of the disease, Ms. McCollum was at times able to function in a normal matter without evidence of diminished mental capacity. (Testimony of Mary Shere). On August 23, 1991, the deceased came to the office of Ms. Mary Shere. Ms. McCollum had been a regular customer of Ms. Shere's beauty parlor and later her accounting service. Ms. Shere had known Ms. McCollum for over ten years. (Testimony of Mary Shere). On August 23, 1991, Ms. McCollum and Ms. Shere talked for an hour to an hour and a half regarding her illness and her application for disability retirement. Ms. McCollum expressed her desire for Ms. Shere to notarize the application for disability retirement benefits. Ms. McCollum told Ms. Shere that Ms. McCollum wanted her daughter Suzanne to be the beneficiary of her death benefits. However, they could not complete the designation of beneficiary because the form had not come. Another discussion concerning the arrival of the forms took place by telephone on August 24, 1991, between Ms. Shere and the Deceased. On August 26, 1991, Suzanne Benson telephoned Ms. Shere advising Ms. Shere that her mother had been hospitalized, and that she needed to come to the hospital in order to notarize the disability application. (Testimony of Mary Shere). On August 26, 1991, Ms. Shere accompanied by one of her employees, John West, visited Ms. McCollum in the hospital. In her presence, the application was signed by Ms. McCollum and notarized by John West. (Testimony of Mary Shere). Ms. Shere's very credible testimony was that Ms. McCollum knew what she was doing, was aware of what she possessed and knew she was terminal. Ms. McCollum made a knowing and rational decision to designate Suzanne L. Benson as her beneficiary.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is, RECOMMENDED: That a Final Order be entered by the Division holding that Marjorie McCollum retired with an Option 2 retirement benefit and that Suzanne L. Benson, her designated beneficiary, receive the Option 2 benefit. DONE and ENTERED this 29 day of May, 1992, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29 day of May, 1992. COPIES FURNISHED: Julie E. Reeber 133 Kirkwood Drive Debary, FL 32713 Larry D. Scott, Esquire Department of Administration Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, FL 32399-1560 Rhonda B. Goodson, Esquire Post Office Box 4319 South Daytona, FL 32121 A. J. McMullian, III, Director Division of Retirement Cedars Executive Center, Building C 2539 North Monroe Street Tallahassee, FL 32399-1550 John A. Pieno, Secretary Department of Administration 415 Carlton Building Tallahassee, FL 32399-1550
The Issue Whether respondent is obligated to remit to petitioner, administrator of the State of Florida Employees Group Health Self-Insurance Program, an alleged underpayment of insurance premiums in the amount of $435.81, covering the period from October, 978,through June, 1983.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department enter a Final Order requiring respondent to remit $435.81, for total insurance premium underpayments, within 90 days, failing which respondent's insurance coverage under the State Employees Insurance Program should be cancelled and the underpayment obtained through certified payroll deductions from any salary due the respondent. DONE and ENTERED this 13th day of March, 1984, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of March, 1984. COPIES FURNISHED: Daniel C. Brown, General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32301 Wyatt Wyatt Department of English University of Central Florida Post Office Box 25000 Orlando, Florida 32816 Nevin G. Smith, Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32301
The Issue Whether Respondent committed the acts alleged in Petitioner’s ten-count Second Amended Administrative Complaint, and, if so, what penalty, if any, should be imposed upon Robert Gordon DeWald’s (Respondent) insurance agent licenses.
Findings Of Fact Respondent is currently licensed in Florida as a resident Life Including Variable Annuity (2-14), Life Including Variable Annuity & Health (2-15), Life (2016), and Life & Health (2-18) insurance agent. At all times pertinent to the dates and occurrences referred to herein, Respondent was licensed in this state as an insurance agent and has been a licensed insurance agent in Florida for over 21 years. Prior to being licensed in Florida, Respondent was a licensed insurance agent in the state of New York. Petitioner has jurisdiction over Respondent’s insurance agent licenses and appointments, pursuant to Chapter 626, Florida Statutes (2008).1 National Foundation of America The National Foundation of America (NFOA) is a registered Tennessee corporation that was formed on January 27, 2006, and headquartered in Franklin, Tennessee. NFOA Corporate Resolution, dated April 19, 2006, provides for the corporate authority to “liquidate stocks, bonds, and annuities . . . in connection with charitable contributions or transactions. ” This same resolution also provides for the corporate ability to “enter into and execute planned giving or charitable contribution transactions with donors, including executing any and all documentation related to the acceptance or acquisition of a donation, . . . given in exchange for a charitable gift annuity. ” On September 18, 2006, the State of Washington Office of Insurance Commissioner issued an Order to Cease and Desist: In the Matter of: National Foundation of America, Richard K. Olive, and Susan L. Olive, Order No. D06-245. The Order, among other things, was based on NFOA doing business in the state and not having been granted a certificate of authority as an insurer in the state of Washington and not having been granted tax exempt status under Section 501(c)(3) of the IRC. On April 13, 2007, the Florida Office of Insurance Regulation (OIR) issued an Immediate Final Order (IFO) In the Matter of: National Foundation of America, Richard K. Olive, Susan L. Olive, Breanna McIntyre, and Robert G. DeWald, Case No. 89911-07, finding that the activities of NFOA, et al., constituted an immediate danger to the public health, safety or welfare of Florida consumers. OIR further found that, in concert, NFOA, et al., were “soliciting, misleading, coercing and enticing elderly Florida consumers to transfer and convey legitimate income tax deferred annuities for the benefit of themselves and their heirs to NFOA in exchange for charitable term-certain annuities”; and that NFOA, et al., had violated provisions of the Florida Insurance Code, including Sections 624.401 and 626.901, Florida Statutes. NFOA has never held a license or Certificate of Authority to transact insurance or annuity contracts in Florida, nor has NFOA ever been registered, pursuant to Section 627.481, Florida Statutes, for purposes of donor annuity agreements. NFOA was never a registered corporation with the Florida Department of State, Division of Corporations. On May 11, 2007, NFOA appealed OIR’s IFO to the First District Court of Appeal of Florida (1st DCA). The 1st DCA dismissed NFOA’s appeal on July 24, 2007. Therefore, NFOA operated an as unauthorized insurer in Florida. On May 17, 2007, the IRS sent a letter to the Texas Department of Insurance stating that NFOA was not classified as an organization exempt from Federal Income Tax as an organization described in Section 501(c)(3) of the IRC. On May 23, 2007, the DCI filed a Verified Petition for Appointment of Receiver for Purposes of Liquidation of National Foundation of America; Immediate and Permanent Injunctive Relief; Request for Expedited Hearing, in the matter of Newman v. National Foundation of America, Richard K. Olive, Susan L. Olive, Breanna McIntyre, Kenny M. Marks, and Hunter Daniel, Chancery Court of the State of Tennessee (Chancery Court), Twentieth Judicial District, Davidson County, Case No. 07-1163-IV. The Verified Petition states, at paragraph 30: NFOA’s contracts reflect an express written term that is recognized by the IRS as a charitable non-profit organization under Section 501(c)(3) of the Internal Revenue Code (Prosser, attachment 4), and the NFOA represents in multiple statements and materials that the contract will entitle the customers to potential generous tax deductions related to that status. The IRS states that it has granted NFOA no such designation. The deceptive underpinning related to NFOA’s supposed tax favored treatment of its contracts permeates its entire business model and sales pitch. This misrepresentation has materially and irreparably harmed and has the potential to harm financially all its customers and the intended beneficiaries of the contracts. These harms are as varied in nature and degree as the circumstances of all those individual’s tax conditions, the assets turned into NFOA, and the extent to which they have entrusted their money and keyed their tax status and consequences to reliance on such an organization. On August 2, 2007, the Commissioner for the Tennessee DCI, having determined that NFOA was insolvent with a financial deficiency of at least $4,300,000, filed a Verified Petition to Convert Rehabilitation by Entry of Final Order of Liquidation, Finding of Insolvency, and Injunction, in the matter of Newman v. National Foundation of America, et al. On September 11, 2007, pursuant to a Final Order of Liquidation and Injunction entered in the matter of Newman v. National Foundation of America et al., the Chancery Court placed NFOA into receivership after finding that the continued rehabilitation of NFOA would be hazardous, financially and otherwise, and would present increased risk of loss to the company’s creditors, policy holders, and the general public. On February 6, 2008, the IRS sent a letter to the court appointed Tennessee DCI Receiver (Receiver) for NFOA stating that NFOA does not qualify for exemption from Federal income tax as an organization described in Section 501(c)(3) of the IRC. The IRS, in determining that NFOA did not qualify for tax exempt status, stated that the sale of NFOA annuity plans has a “distinctive commercial hue”, and concluded that NFOA was primarily involved in the sale of annuity plans that “constitute a trade or business without a charitable program commensurate in scope with the business of selling these plans.” The IRS letter also provides that consumers may not take deductions on their income tax returns for contributions made to NFOA. Insurance Agent’s Duties An insurance agent has a fiduciary duty to his clients to ensure that an insurer is authorized or otherwise approved as an insurer in Florida by OIR prior to the insurance agent selling the insurer’s product to his clients. There are several methods by which an insurance agent could verify whether or not an insurer was authorized or otherwise approved (hereinafter: “authorized”) as an insurer in Florida by OIR. It is insufficient for an insurance agent to depend on the assurances of his insurance business peers as to whether an insurer needs to be authorized in Florida. Due to the importance of income tax considerations in a consumer’s decision making process as to whether or not to purchase an insurance product, an insurance agent has a fiduciary duty to his clients to verify the validity of any representations that an insurer’s product has an IRS 501(c)(3) tax exempt status, prior to the insurance agent selling the product to his clients. There are several methods by which an insurance agent could verify whether or not an insurer has an IRS 501(c)(3) tax exempt status. Respondent admitted, in his testimony, that he had depended on the assurances of others and assumed that NFOA did not need to be authorized as an insurer in Florida. Respondent testified it was his understanding that only insurance companies sell annuities; that NFOA was not an insurer; and therefore, NFOA did not need to be licensed as a Florida insurer. Respondent did not inquire of the Florida OIR whether or not NFOA was authorized to do business in the State of Florida. However, Respondent admitted that the NOFA product he sold “mirrored” an annuity product. Respondent testified that he had verified (by phone, in writing, and the Internet) with the IRS that NFOA had applied for 501(c)(3) tax exempt status. However, Respondent was aware that the tax exempt status had not been granted to NFOA. Respondent knew income tax considerations were materially important to his clients. However, none of the NFOA materials or any Florida consumer contracts signed by Respondent and his clients contain any disclaimer language informing consumers that the 501(c)(3) tax exempt status had been applied for but had yet to be granted by the IRS. Respondent testified that he made use of the Internet to obtain information. However, Respondent failed to use the Internet to find out that the State of Washington Office of Insurance Commissioner entered an Order of Cease and Desist on September 18, 2006, against NFOA based on NFOA not having a certificate of authority as an insurer and because NFOA did not have a 501(c)(3) tax exemption. As is noted below, the filing date of the Washington Order to Cease and Desist, preceded in time all but two of Respondent’s NFOA sales to Florida consumers. Respondent received commissions totaling $171,328.18 for selling NFOA annuities to Florida consumers. Respondent failed to disgorge any of these commissions to the Receiver for NFOA in the state of Tennessee. Re: Count I: Consumer – Yvette Potvin On November 30, 2006, Respondent solicited and induced Yvette Potvin of Casselberry, Florida, then age 81, to transfer or otherwise surrender ownership of her existing annuity contract with Allianz Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Potvin that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew that NFOA had not been approved for tax exempt status by the IRS. Based upon Respondent’s transaction of insurance, Ms. Potvin transferred to NFOA and is anticipated to lose approximately $10,410.42. This amount includes a surrender penalty incurred for transferring her original Allianz annuity to NFOA, and after receiving partial refunds by the Receiver. Based upon Respondent’s transaction of insurance with Ms. Potvin, Respondent was paid a commission of $3,682.89 by NFOA. Re: Count II: Consumer – Edna Bishop On January 18, 2007, Respondent solicited and induced Edna Bishop of Orlando, Florida, then aged 89, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Ultimately, this transaction did not close. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Bishop that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance with Ms. Bishop, Respondent was paid a commission of $8,185.35 by NFOA, even though the transaction was not completed. Re: Count III: Consumer – Genevieve McCann On December 14, 2006, Respondent solicited and induced Genevieve McCann of Fern Park, Florida, then aged 85, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. McCann that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance, Ms. McCann is anticipated to lose approximately $6,100.23. The loss consists of $20,933.04, the amount transferred to NFOA, less $1,742.85 (installment payments made by NFOA to Ms. McCann); $12,473.62 (the first payment sent by Receiver); and $2,686.63 (the second payment sent by Receiver). Ms. McCann lost $2,070.29 through surrender charges incurred for transferring her original American Equity annuity to NFOA. If the surrender penalty is excluded from the calculation, Ms. McCann’s loss is $4,029.94. Based upon Respondent’s transaction of insurance with Ms. McCann, Respondent was paid a commission of $1,879.52 by NFOA. Re: Count IV: Consumer – Lenora Bricker On or about November 30, 2006, Respondent solicited and induced Lenora Bricker of Winter Haven, Florida, then aged 87, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Ultimately, this transaction did not close. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Bricker that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance with Ms. Bricker, Respondent was paid a commission of $1,085.17 by NFOA, even though the transaction was not completed. Re: Count V: Consumer – Louise Blevins On or about November 30, 2006, Respondent solicited and induced Louise Blevins of Longwood, Florida, then aged 81, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Ultimately, this transaction did not close. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Blevins that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance with Ms. Bricker, Respondent was paid a commission of $5,469.09 by NFOA, even though the transaction did not close. Re: Count VI: Consumer – Audrey Piel On December 14, 2006, Respondent solicited and induced Audrey Piel of Maitland, Florida, then aged 81, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Piel that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance, Ms. Piel is anticipated to lose approximately $5,594.24. The loss consists of $21,089.17, the amount transferred to NFOA; less $996.35 (installment payments made by NFOA to Ms. Piel); $13.645.33 (the first payment sent by Receiver); and $2,938.99, (the second payment sent by Receiver). Ms. Piel lost $2,085.74 through surrender charges incurred for transferring her original American Equity annuity to NFOA. If the surrender penalty is excluded from the calculation, Ms. Piel’s loss is $3,508.50. Based upon Respondent’s transaction of insurance with Ms. Piel, Respondent was paid a commission of $1,839.54 by NFOA. Re: Count VII: Consumer – John Bartlett On February 13, 2007, Respondent solicited and induced John Bartlett of Orlando, Florida, then age 75, to transfer or otherwise surrender ownership of his existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Ultimately, this transaction did not close. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Mr. Bartlett that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance with Mr. Bartlett, Respondent was paid a commission of approximately $16,385.56 by NFOA, even though the transaction was not completed. Re: Count VIII: Consumer – Lilla Dama On January 18, Respondent solicited and induced Lilla Dama of Orlando, Florida, then aged 86, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Ultimately, this transaction did not close. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Dama that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance with Ms. Dama, Respondent was paid a commission of approximately $2,757.52 by NFOA, even though the transaction was not completed. Re: Count IX: Consumer – Agnes Burns On February 28, 2007, and April 2, 2007, Respondent solicited and induced Agnes Burns of Orlando, Florida, then aged 87, to transfer or otherwise surrender ownership of her existing annuity contract with American Equity Investment Life Insurance Company and New York Life Insurance and Annuity Company, respectively, in return for an NFOA annuity. The NFOA agreement that the consumer entered into, and which was signed by Respondent, is dated subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Respondent, by use of the NFOA installment plan agreement, knowingly misrepresented to Ms. Burns that NFOA was a charitable non-profit organization under Section 501(c)(3) of the IRC, even though Respondent knew or should have known that NFOA was not a tax exempt corporation. Based upon Respondent’s transaction of insurance, Ms. Burns is anticipated to lose approximately $77,509.17. The loss consists of $335,070.29, the amount transferred to NFOA; less $18,363.66 (installment payments sent by NFOA to Ms. Burns); $205,859.31 (the first payment sent by Receiver); and $44,338.93 (the second payment sent by Receiver). A surrender penalty of $11,000.78 was incurred by Ms Burns for transferring her original annuities to NFOA. If the surrender penalty is excluded from the calculation, Ms. Burns’ loss is $66,508.39. Based upon Respondent’s transaction of insurance with Ms. Burns, Respondent was paid a commission of $30,080.00 by NFOA. Re: Count X: Consumers – Ms. Buchanan; Ms. Golus, and Mr. Owens Respondent solicited and induced Elizabeth Buchanan, aged 42, of Bradenton, Florida; Nancy Golus, aged 59, of Palmetto, Florida; and Herbert Owens, aged 86, of St. Petersburg, Florida, to transfer or otherwise surrender ownership of their existing annuity contracts in return for an NFOA annuities. As to the the NFOA agreement that Mr. Owens entered into, and which was signed by Respondent, the date of the agreement is subsequent to the State of Washington Order to Cease and Desist that was filed against NFOA. The NFOA agreements that Ms. Buchanan and Ms. Golus entered into were dated prior to the State of Washington’s Order to Cease and Desist. Respondent knew or reasonably should have known that NFOA was not an authorized insurer in Florida. Based upon Respondent’s transactions of insurance, Ms. Buchanan is anticipated to lose approximately $89,031.12. The loss consists of $162,445.60, the amount transferred to NFOA; less $20,000.00 (installment payments sent by NFOA to Ms. Buchanan); $92,589.64 (the first payment sent by Receiver); and $19,942.38 (the second payment sent by Receiver). Ms. Buchanan suffered $59,117.54 in losses from surrender charges incurred. Even after partial refunds by the DCI Receiver and the surrender penalty are excluded from the calculation, Ms. Buchanan’s loss is still $29,913.58. Ms. Golus is anticipated to lose approximately $146,027.18, the amount transferred to NFOA. Ms. Golus received $94,917.67 (the first payment by Receiver) and $20,443.81 (the second payment by Receiver). However, Ms. Golus suffered $53,152.47 in surrender charges incurred. Even after partial refunds by the Receiver and the surrender penalty are excluded from the calculation, Ms. Golus’ loss is $30,665.67. Mr. Owens is anticipated to lose approximately $10,976.33. The loss consists of $54,743.52, the amount transferred to NFOA; less $5,108.40 (installment payments sent by NFOA to Mr. Owens); $32,262.83 (the first payment by Receiver); and, $6,948.92 (the second payment sent by Receiver). Mr. Owens incurred $552.96 in surrender charges. Even after partial refunds by the Receiver and the surrender penalty are excluded from the calculation, Mr. Owens’ loss is still $10,423.37. In each and every count, Petitioner proved by clear and convincing evidence that: Respondent directly or indirectly represented or aided an unauthorized insurer to do business in Florida. Respondent knew or reasonably should have known that the annuity contracts he contracted with clients were with an unauthorized insurer. Respondent knowingly placed before the public a statement, assertion, or representation with respect to the business of insurance that was untrue, deceptive or misleading. Respondent knowingly caused to be made, published, disseminated, circulated, delivered, or placed before the public a false material statement. Respondent demonstrated a lack of fitness and trustworthiness to engage in the business of insurance. Respondent engaged in unfair and deceptive practices or showed himself to be a source of injury or loss to the public.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Chief Financial Officer enter a final order finding that: Respondent violated Subsections 626.901(1), 626.901(2), 626.9541(1)(b)4., 626.9541(1)(e)1.e., 626.611(7), 626.621(2), and 626.621(6), Florida Statutes, as charged in Counts I-X of the Second Amended Administrative Complaint; Revoking each and every one of Respondent’s licenses and appointments issued or granted under or pursuant to the Florida Insurance Code; and Providing that if Respondent, subsequent to revocation, makes application to Petitioner for any licensure, a new license will not be granted if Respondent fails to prove that he has otherwise satisfied the financial losses of his NFOA clients, or if Respondent otherwise fails to establish that he is eligible for licensure. DONE AND ENTERED this 10th day of December, 2009, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of December, 2009.
The Issue Whether Petitioner, Rina Richard DeMichael (“Petitioner”), the surviving spouse of David DeMichael, is entitled to change the Florida Retirement System (“FRS”) retirement benefits payment Option 1 selected by Mr. DeMichael.
Findings Of Fact Respondent is the state agency charged under chapter 121, Florida Statutes, with administering the FRS. In 1991, Mr. DeMichael began employment with the Broward County Sheriff’s Office (“BCSO”). Mr. DeMichael was a member of the FRS pension plan based on his employment with the BCSO as a deputy sheriff. Mr. DeMichael married Petitioner on November 19, 2011. On February 11, 2013, Mr. DeMichael retired from the BCSO. At that time, he signed the Florida Retirement System Pension Plan Application for Service Retirement form (“Application for Service Retirement Form”) designating Petitioner as his primary beneficiary. On February 11, 2013, Mr. DeMichael also signed the Florida Retirement System Pension Plan Option Selection for FRS Members form (Form FRS-110)(“Option Selection Form”). On the Option Selection Form, Mr. DeMichael was required to select one of four retirement benefit payment options. The Option Selection Form provided an explanation for each of the four options. Mr. DeMichael selected to receive an Option 1 retirement benefit by checking the line next to the Option 1 benefit payment option. Option 1 provides the maximum benefit for the life of the FRS member with no continuing benefit after the member’s death. On February 11, 2013, Petitioner signed the Spousal Acknowledgement Form (Form SA-1)(“Spousal Acknowledgement Form”) acknowledging that Mr. DeMichael “selected either Option 1 or 2.” The purpose of the Spousal Acknowledgement Form is to inform the spouse that he/she will not receive a lifetime benefit following the FRS member’s death. The Spousal Acknowledgement Form does not give a spouse control over which option the FRS member selects. That option selection decision is the sole choice of the member. The Spousal Acknowledgement Form provided an explanation of the four different retirement payment options available to FRS members. At the hearing, Petitioner acknowledged she signed the Spousal Acknowledgement Form. Ms. Tiffany Pieters was a duly licensed notary with the State of Florida and an employee of BCSO on February 11, 2013. Ms. Pieters notarized the Application for Service Retirement Form and Option Selection Form signed by Mr. DeMichael, and the Spousal Acknowledgement Form signed by Petitioner. The Division received Mr. DeMichael’s Application for Service Retirement Form, Option Selection Form, and Petitioner’s Spousal Acknowledgement Form on or about February 11, 2013. On February 20, 2013, Respondent mailed Mr. DeMichael an Acknowledgement of Service Retirement Application letter acknowledging Respondent’s receipt of Mr. DeMichael’s Application for Service Retirement Form; his selection of Option 1 as the benefit payment option; his employment termination date of February 11, 2013; and retirement date of March 1, 2013. The Acknowledgement of Service Retirement Application letter expressly provides that Mr. DeMichael cannot change the option he selected once his retirement becomes final, and that retirement benefits become final when any payment is cashed or deposited. Mr. DeMichael’s Application for Service Retirement Form and Option Selection Form also expressly provide that he cannot change the option he selected once his retirement becomes final, and that retirement benefits become final when any benefit payment is cashed or deposited. On February 20, 2013, Respondent also mailed Mr. DeMichael an Estimate of Retirement Benefit letter, which provides an estimate of the payment benefit for each of the four options. The letter also acknowledges that Mr. DeMichael selected Option 1, and that his option selection cannot be changed after any payment is cashed or deposited. On April 1, 2013, Respondent mailed a request for birth date verification to Mr. DeMichael. In response, on April 30, 2013, Respondent received Mr. DeMichael’s birth certificate. Based on his selection of Option 1, Mr. DeMichael received an initial retroactive payment of $7,809.76 on May 10, 2013; an initial regular retirement payment of $3,904.88 on May 31, 2013; and a subsequent retirement payment every month in 2013 in the monthly amount of $3,904.88. Mr. DeMichael received a retirement payment every month beginning May 2013 until he died on August 25, 2015. Mr. DeMichael received a total of 29 retirement payments for a total gross benefit amount of $119,832.92. Each retirement payment was cashed or deposited into Mr. DeMichael’s bank account. Respondent was notified of Mr. DeMichael’s death in August 2015. On or about October 6, 2015, Respondent notified Petitioner that Mr. DeMichael’s benefit had ended and that there would be no continuing benefit to her based on Mr. DeMichael’s Option 1 selection. In this proceeding, Petitioner claims she is entitled to change Mr. DeMichael’s Option 1 retirement benefit selection and receive a continuing monthly spousal benefit. In support of her position, Petitioner contends Mr. DeMichael’s selection of Option 1 is invalid because he lacked the mental capacity to make a retirement option at the time his Application for Service Retirement Form and Option Selection Form was submitted to Respondent. Based on the persuasive and credible evidence adduced at hearing, Petitioner failed to establish that Mr. DeMichael lacked the mental capacity to make a retirement option at the time his Application for Service Retirement Form and Option Selection Form were submitted to Respondent. No medical evidence was presented establishing that Mr. DeMichael was mentally incapacitated at the time he executed the Application for Service Retirement Form and Option Selection Form on February 11, 2013. In fact, Mr. DeMichael was released from Sunrise Detoxification Center on February 11, 2013, following in-patient rehabilitative treatment for his alcoholism. Petitioner’s Exhibit 7 expressly states that Mr. DeMichael “was medically stable for discharge” at 8:00 a.m. that morning. Moreover, Petitioner and Mr. DeMichael ate breakfast together later that morning at the BCSO cafeteria. Subsequently, Petitioner was escorted to the BCSO Internal Affairs area where she was questioned about Mr. DeMichael’s alcoholism. After Petitioner refused to answer any questions, she was escorted to the BCSO rooftop terrace. After a while, Mr. DeMichael came to the rooftop terrace. According to Petitioner, Mr. DeMichael was smiling and they exchanged pleasantries. After February 11, 2013, Mr. DeMichael continued to manage his own financial affairs, including his bank account. On April 1, 2013, Respondent sent a request to Mr. DeMichael to provide verification regarding his date of birth. In response, Mr. DeMichael sent his birth certificate to Respondent. Finally, at no time did Petitioner ever seek a guardianship or power of attorney over Mr. DeMichael, and at no time was Mr. DeMichael adjudicated incompetent by a court. Petitioner also claims that Mr. DeMichael’s selection of Option 1 is invalid and that she is entitled to a continuing benefit because she lacked the opportunity to read the Spousal Acknowledgement Form before signing it. Based on the persuasive and credible evidence adduced at hearing, Petitioner failed to establish that she lacked the opportunity to read the Spousal Acknowledgement Form before signing it. In support of her position, Petitioner testified at one point in the hearing that she only saw the area of the form near where she signed it. However, in the area of the form near where Petitioner signed (Respondent’s Exhibit No. 6) is the express “acknowledgement that the member has selected either Option 1 or 2.” At another point in the hearing, Petitioner testified she saw the small writing below her signature at the bottom of the Spousal Acknowledgement Form, but she did not read any of the writing. The small writing below Petitioner’s signature at the bottom of the form provides an explanation of the four retirement benefit payment options. Notably, Petitioner did not testify that she asked Ms. Pieters for any explanation of the Spousal Acknowledgement Form. Further, Petitioner did not testify that she needed or asked for more time to read the Spousal Acknowledgement Form before signing it, or that Ms. Pieters refused to allow her to read the form. Petitioner could have asked Ms. Pieters for more time to read the Spousal Acknowledgement Form if she felt it was necessary, but she did not. At no time did Petitioner ever file a complaint against Ms. Pieters or complain about her handling of the Spousal Acknowledgement Form. Had Petitioner been concerned about the Spousal Acknowledgement form or Mr. DeMichael’s mental capacity on February 11, 2013, she also could have spoken to Judy Cowell, Mr. DeMichael’s supervisor at BCSO. Ms. Cowell greeted Petitioner and Mr. DeMichael at the front office when they arrived at BCSO on the morning of February 11, 2013, and Ms. Cowell escorted them to the cafeteria and rooftop terrace. At hearing, Petitioner testified that Ms. Cowell “was like a mom,” and that she had spoken to her on numerous occasions when Mr. DeMichael had problems with his employment. At hearing, the undersigned had the distinct opportunity to observe Petitioner’s testimony and her demeanor. Petitioner’s testimony regarding Mr. DeMichael’s alleged mental incapacity on February 11, 2013, and her not having the opportunity to read the Spousal Acknowledgement Form and the alleged invalidity of the Spousal Acknowledgement Form, Option Selection Form, and Application for Service Retirement Form, is not credited and is rejected as unpersuasive. In sum, Petitioner is not entitled to change Mr. DeMichael’s selection of Option 1 as his FRS retirement benefits payment option and she is not entitled to a continuing benefit.
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 Petitioner’s request to change the Florida Retirement System retirement benefits payment Option 1 selected by Mr. DeMichael and receive a continuing monthly spousal benefit. DONE AND ENTERED this 14th day of April, 2020, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of April, 2020. COPIES FURNISHED: James C. Casey, Esquire Law Offices of Slesnick and Casey, LLP 2701 Ponce de Leon Boulevard, Suite 200 Coral Gables, Florida 33134 (eServed) Ladasiah Jackson Ford, Esquire Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399-0950 (eServed) Nikita S. Parker, Esquire Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399-0950 (eServed) David DiSalvo, Director Division of Retirement Department of Management Services Post Office Box 9000 Tallahassee, Florida 32315-9000 (eServed) Sean Gellis, General Counsel Office of the General Counsel Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399-0950 (eServed)
