Conclusions An Administrative Law Judge of the Division of Administrative Hearings has entered an Order Closing File in this proceeding. A copy of the Order is attached to this Final Order as Exhibit A.
Other Judicial Opinions OF THIS FINAL ORDER PURSUANT TO SECTION 120.68, FLORIDA STATUTES, AND FLORIDA RULES OF APPELLATE PROCEDURE 9.030(b)(1)(C) AND 9.110. TO INITIATE AN APPEAL OF THIS ORDER, A NOTICE OF APPEAL MUST BE FILED WITH THE DEPARTMENT'S AGENCY CLERK, 2555 SHUMARD OAK BOULEVARD, TALLAHASSEE, FLORIDA 32399-2100, WITHIN 30 DAYS OF THE DAY THIS ORDER IS FILED WITH THE AGENCY CLERK. THE NOTICE OF APPEAL MUST BE SUBSTANTIALLY IN THE FORM PRESCRIBED BY FLORIDA RULE OF APPELLATE PROCEDURE 9.900(a). A COPY OF THE NOTICE OF APPEAL MUST BE FILED WITH THE APPROPRIATE DISTRICT COURT OF APPEAL AND MUST BE ACCOMPANIED BY THE FILING FEE SPECIFIED IN SECTION 35.22(3), FLORIDA STATUTES. YOU WAIVE YOUR RIGHT TO JUDICIAL REVIEW IF THE NOTICE OF APPEAL IS NOT TIMELY FILED WITH THE AGENCY CLERK AND THE APPROPRIATE DISTRICT COURT OF APPEAL. MEDIATION UNDER SECTION 120.573, FLA. STAT., IS NOT AVAILABLE WITH RESPECT TO THE ISSUES RESOLVED BY THIS ORDER. FINAL ORDER NO. DCA09-GM-383 CERTIFICATE OF FILING AND SERVICE I HEREBY CERTIFY that the original of the foregoing has been filed with the undersigned Agency Clerk of the Department of Community Affairs, and that true and corre copies have been furnished to the persons listed below in the manner described, on this Ve Paula Ford Agency Clerk Florida Department of Community Affairs 2555 Shumard Oak Boulevard Tallahassee, Florida 32399-2100 day of December, 2009. U.S. Mail: The Honorable D. R. Alexander Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-3060 Timothy J. McFarland, Esquire Gulf County Attorney 326 Reid Avenue Port St. Joe, Florida 32456-1826 Hand Delivery: Matthew Davis, Esquire Assistant General Counsel Department of Community Affairs 2555 Shumard Oak Blvd. Tallahassee, Florida 32399
The Issue The issue in this case is the amount of attorney's fees and costs Petitioner, Florida Cities Water Company, should be awarded pursuant to Section 120.595(5), Florida Statutes (Supp. 1996).
Findings Of Fact The Parties. Petitioner, Florida Cities Water Company (hereinafter referred to as "Florida Cities"), is a utility providing water and wastewater service to two communities in Florida. Respondent, the Florida Public Service Commission (hereinafter referred to as the "PSC"), has exclusive jurisdiction over water and wastewater service utility providers in Florida, including the determination of rates that utility providers may charge for their services. Section 367.011, Florida Statutes (1995). Florida Cities' 1992 Approved Rate. In arriving at an allowable rate which a water and wastewater service utility may charge, the PSC must determine, among other things, the amount of a utility's plant that is considered "used and useful." Section 367.081(2)(a), Florida Statutes (1995). In determining the amount of Florida Cities' plant that was considered "used and useful" in 1992, the PSC determined the amount of investment costs in its North Fort Myers, Florida, plant which was potentially recoverable. Recoverable costs are limited to those expenditures which are considered to be for the public benefit. Florida Cities' recoverable costs as of 1992 were determined to total $6,343,868.00. The amount of Florida Cities' recoverable costs was then multiplied by a fraction, the numerator of which was the average daily flow of the plant (calculated on a peak month basis) and the denominator of which was the capacity of the plant (this fraction is hereinafter referred to as the "Capacity Ratio"). In 1992, the average daily flow of the plant on a peak month basis was determined to be in excess of 1.0 million gallons per day (hereinafter referred to as "MGD"), and the capacity of the plant was determined to be 1.0 MGD. Therefore, the Capacity Ratio was determined to be 100 percent and Florida Cities' recoverable costs of $6,343,868.00 was determined to be 100 percent "used and useful." Florida Cities' "rate base" for 1992 was, therefore, determined to be $6,343,868.00. Florida Cities' 1995 Application for Rate Increase and the PSC's Reduction of Rate Base. Subsequent to the determination of Florida Cities' rate base and its approved utility rates in 1992, Florida Cities was required by the Florida Department of Environmental Protection (then known as the Florida Department of Environmental Regulation)(hereinafter referred to as "DEP"), to expand its North Fort Myers plant. As a result of DEP's action, Florida Cities incurred additional plant costs of approximately 1.6 million dollars. As a consequence of having incurred additional plant costs, Florida Cities requested that the PSC treat the additional costs, plus other costs incurred by Florida Cities since 1992, as recoverable costs and as an addition to its rate base. Florida Cities' application was filed in 1995. After consideration of Florida Cities' application for rate increase, the PSC issued a Notice of Proposed Agency Action Order Granting Final Rates and Charges on November 2, 1995. In this order the PSC essentially determined that all additional plant expansion costs incurred by Florida Cities constituted recoverable costs. The PSC also determined that Florida Cities' Capacity Ratio was 100 percent and, therefore, all of its recoverable costs was treated as "used and useful." The decision of the PSC resulted in an increase of Florida Cities' utility rate of approximately 17.89 percent. The proposed decision of the PSC was, however, challenged and proceeded to hearing before the PSC. On September 10, 1996, the PSC entered a Final Order Denying Application for Increased Wastewater Rates, Reducing Rates, Requiring Refund and Requiring Reports (hereinafter referred to as the "PSC Final Order"). In the PSC Final Order, the PSC treated all of the 1.6 million dollars in costs associated with the expansion of the plant required by the DEP as recoverable costs. The PSC, however, reduced the Capacity Formula to 65.9 percent. This resulted in a reduction in Florida Cities' rate base of approximately 2.4 million dollars. The reduction in the Capacity Formula to 65.9 percent was caused, in part, by the manner in which the PSC determined the numerator of the Capacity Formula. The PSC modified the manner in which it calculated the numerator of the Capacity Formula: Instead of using the average daily flow calculated on a peak month basis, it used the average daily flow calculted on an annual basis (to which it added a "reserve" of 4.58 percent) . . . . The reduction in the Capacity Formula from 1992 to 1995 was also caused by the plant capacity figure used by the PSC. The PSC used a permitted capacity of 1.5 MGD instead of the actually designed and built capacity of 1.25 MGD. Florida Cities had urged use of the 1.25 MGD actual capacity figure. As a result of the PSC's conclusion that only 65.9 percent of the amount of recoverable costs was used and useful, Florida Cities' rate base was reduced to $5,525,915.00, a decrease of Florida Cities' used and useful plant as determined in 1992 of over $800,000.00. Although the PSC included the additional costs incurred by Florida Cities in order to comply with DEP regulations, the PSC's use of a Capacity Ratio of 65.9 percent to determine the amount of the recoverable costs considered used and useful had a net effect of disallowing approximately 2.4 million dollars in proposed rate base (1.6 million dollars incurred to meet DEP regulations plus the $800,000.00 reduction of 1992 rate base). Florida Cities' Appeal of the PSC's Final Order. Florida Cities appealed the PSC Final Order to the District Court of Appeal, First District (hereinafter referred to as the "First District Court"). Florida Cities Water Company v. Florida Public Service Commission, 23 Fla. L. Weekly D238 (Fla. 1st DCA January 12, 1998). On appeal, Florida Cities raised two grounds for reversal of the PSC's Final Order: The Capacity Ratio used by the PSC to determine the amount of its recoverable costs which was considered used and useful was flawed. Florida Cities urged the First District Court to increase its Capacity Ratio to 100 percent; and The PSC should have included all costs Florida Cities had incurred in order to comply with DEP regulations as part of its rate base without regard to the Capacity Ratio. Florida Cities argued that the 1.6 million dollars it had incurred to comply with DEP regulations should be included as part of its rate base without regard to what the Capacity Ratio was determined to be. Florida Cities' challenge to the Capacity Ratio used by the PSC was based upon two alleged errors: The PSC's use of permitted capacity of 1.5 MGD was improper. Florida Cities argued that the PSC should have used actual plant capacity of 1.25 MGD; and The method elected by the PSC to determine the average daily flow of the plant was a novel and unexplained deviation from past PSC policies. Florida Cities argued that the PSC should have continued to determine average daily flows based upon a peak month basis rather than an annual basis. As to the 1.6 million dollars in costs Florida Cities sought to have included in its rate base, Florida Cities' two arguments were alternative theories advanced to support the same end: 100 percent inclusion of the 1.6 million dollars it had incurred as a result of meeting DEP regulations. While the two arguments were interrelated with regard to the starting point (it had spent 1.6 million dollars on plant) and the result Florida Cities was attempting to achieve (inclusion of 1.6 million dollars in rate base), the two arguments involved different methods of reaching the desired result: (a) direct inclusion; or (b) inclusion through an increase in the Capacity Ratio. As to the remaining $800,000.00 reduction in Florida Cities' rate base, only one of the arguments raised by Florida Cities applied to this amount: the argument that the Capacity Ratio utilized by the PSC was flawed. The First District Court's Decision. The First District Court agreed with Florida Cities' contention that the Capacity Ratio used by the PSC was flawed. The First District Court found that both the calculation of the numerator and the denominator of the Capacity Ratio by the PSC was in error. With regard to the numerator, the First District Court concluded that the PSC's determination of average daily flows by using annual flows constituted a shift in agency policy which was "'unsupported by expert testimony, documentary opinion, or other evidence appropriate to the nature of the issue involved.'" The First District Court remanded the matter to the PSC to "give a reasonable explanation, if it can, supported by record evidence (which all parties must have an opportunity to address) as to why average daily flow in the peak month was ignored." With regard to the denominator, the First District Court opined that "no competent evidence of any substance supports the PSC's determination" of plant capacity. The First District Court concluded that the denominator should be 1.25 MGD. The First District Court rejected Florida Cities' contention that amounts it had expended to comply with DEP regulations should be included in its rate base without regard to the Capacity Ratio. The First District Court concluded that the 1.6 million dollars spent to comply with DEP regulations could be included in rate base "only to the extent the improvements they effect or the facilities to which they relate are 'used and useful in the public service.'" The ultimate impact of the First District Court's decision depends upon what action the PSC takes on remand with regard to determine the appropriate numerator for the Capacity Formula. The PSC issued an Order of Remand on April 14, 1998. In the Order of Remand, the PSC indicated its position that the decision of the First District Court regarding flows was "an invitation" to take additional testimony and evidence on the issue. The PSC, therefore, reopened the record and scheduled a second evidentiary hearing to determine how average daily flows should be calculated. Florida Cities filed a Motion to Stay the PSC's second evidentiary hearing, pending resolution of an appeal of the PSC Order of Remand. Until a final determination is made concerning the intent of the First District Court in remanding the matter to the PSC, it cannot be absolutely concluded what the "result obtained" in this case will be. The parties have, however, assumed for purposes of the matter that the Capacity Ratio should be approximately 98.6 percent. That is the best "result" which can be obtained by Florida Cities in this matter. Florida Cities' Motion for Attorney's Fees. As part of its appeal, Florida Cities also filed a Motion for Attorney's Fees. Florida Cities sought an award of attorney's fees pursuant to Section 120.595(5), Florida Statutes (Supp. 1996). In particular, Florida Cities requested that the First District Court: Grant attorneys [sic] fees to Appellant for this appeal; Remand this case to the Division of Administrative Hearings to determine attorneys fees; and Grant such other relief as the Court may deem appropriate. The First District Court entered the following order on Florida Cities' Motion for Attorney's Fees: The motion by appellant for attorney's fee is granted. If the parties are unable to agree on an amount of attorney's fees, the question should be referred to the Division of Administrative Hearings. The Parties' Effort to Agree. Florida Cities submitted copies of invoices to the PSC documenting the attorney's fees and costs incurred by it in connection with the appeal of the PSC's Final Order. Florida Cities proposed several findings of fact, which are hereby accepted by reference, relating to the manner in which it determined attorney's fees and costs. Those findings of fact include paragraphs 27 through and including 32. The PSC reviewed the invoice copies submitted by Florida Cities and stipulated and agreed that the number of hours and the hourly rates attributable to the appeal of the PSC Final Order were reasonable. The parties stipulated that the total amount of attorney's fees and costs incurred by Florida Cities on the appeal of the PSC Final Order amounted to $74,648.14. On March 18, 1998, the PSC and Florida Cities filed a Joint Petition for Resolution of Attorney's Fees with the Division of Administrative Hearings. The parties stipulated in the joint petition that they had negotiated in good faith but were unable to agree on the amount of attorney's fees which should be paid to Florida Cities. The parties stipulated and agreed that $74,648.14 is the appropriate lodestar figure. The parties were unable to agree, however, whether the lodestar figure should be adjusted in light of the "results obtained" by Florida Cities on appeal. Therefore, consistent with the order of remand from the First District Court, the matter was referred to the Division of Administrative Hearings for the limited purpose of determining whether the agreed upon lodestar figure of $74,648.14 should be reduced based upon the "results obtained" by Florida Cities on appeal. The "Result Obtained" on Appeal. On appeal, Florida Cities argued that it was entitled to a total increase in its rate base of approximately 2.4 million dollars: (a) the 1.6 million dollars it expended to comply with DEP regulations; and (b) the $800,000.00 reduction in rate base which resulted from the PSC's modification of the Capacity Ratio. In effect, Florida Cities argued that it should be allowed to treat 100 percent of its recoverable costs as its rate base. As a result of the First District Court's decision and assuming a Capacity Ratio of 98.6 percent will be achieved, Florida Cities was successful on appeal in increasing its rate base by approximately 2.2 million dollars. Of this amount, approximately $879,000.00 was attributable to the First District Court's conclusion that the PSC had used the incorrect plant capacity. The remaining 1.3 million dollars was attributable to the First District Court's conclusion that the methodology used by the PSC to determine average annual daily flows was a policy change which was unsupported by the record. Had Florida Cities succeeded on both issues it raised on appeal, it would not have resulted in any appreciable increase in Florida Cities' rate base over the increase in rate base allowed by the First District Court. A utility plant cannot be treated as used and useful in excess of 100 percent of its costs. The two issues Florida Cities raised on appeal, at least as to the 1.6 million dollars it was required to expend to meet DEP regulations, were alternative theories for achieving the same result: total inclusion of the 1.6 million dollars in its rate base. Florida Cities contended that the 1.6 million dollars should have been included directly in its rate base because it was required to make the expenditure by a government agency. In the alternative, it argued that the Capacity Ratio used to determine the amount of recoverable costs considered used and useful should have been increased to 100 percent. This alternative argument would also have resulted in inclusion of the 1.6 million dollars in its rate base. Regardless of which argument was accepted by the First District Court or whether the First District Court had accepted both arguments, Florida Cities could not have achieved any substantially greater result than it did. As to the remaining $800,000.00 reduction in 1992 rate base, Florida Cities' argument concerning the direct inclusion of amounts required to be expended to comply with DEP regulations did not relate to this amount. Only Florida Cities' two-pronged argument concerning the Capacity Ratio supported Florida Cities' argument that its rate base should be increased by this amount. Florida Cities' arguments concerning this amount was successful. I. The Consequences of Florida Cities' Failure to Prevail on All Issues. Had Florida Cities prevailed in its contention that costs incurred as the result of meeting government requirements should be included directly in rate base, such a decision would have had significant consequences to most, if not all, utilities in Florida. Such a decision would also have probably had an impact on future rates approved for Florida Cities. Having failed to prevail on this issue, however, prevented the application of this theory by other utilities in Florida to the determination of their rate bases and to the determination of the appropriate rate base for Florida Cities in the future. The loss of the benefit to other utilities and Florida Cities in future rate cases, which would have occurred had Florida Cities prevailed, did not have any impact on the "results obtained" by Florida Cities in the immediate proceedings. While the failure of the argument and the avoidance of the impact on rate-making, which would have resulted had Florida Cities prevailed, was of great consequence to the PSC, the rejection of the argument by the First District Court did not reduce the result Florida Cities hoped to have obtained on appeal. J. Attorney's Fees and Costs of Proceedings Before the Division of Administrative Hearings. Florida Cities incurred attorney's fees and costs in the instant proceeding before the Division of Administrative Hearings. Florida Cities has sought recovery of those fees and costs. The parties have not agreed upon the appropriateness of the inclusion of such fees and costs. Mr. Schiefelbein acted as lead counsel during the attorney's fees phase of this matter. As of April 23, 1998, four days before the hearing before the Division of Administrative Hearings, Florida Cities had incurred the following attorney's fees during the attorney's fees phase of this matter: Attorney Hourly Rate Total Fees Mr. Schiefelbein $150.00 $6,135.00 Mr. Gatlin $175.00 490.00 Ms. Cowdery $150.00 37.50 Total $6,662.50 It was estimated that an additional 22 hours of Mr. Shiefelbein's time would result in an additional $3,300.00 of fees attributable to completion of the attorney's fees phase of this proceeding "through a Final Order of the Administrative Law Judge." This estimate was based upon 4 hours for witness preparation, 4 hours for other hearing preparation, 4 hours to attend the hearing, and 10 hours for review of the hearing transcript and submittal of a proposed order. The hourly rate charged by counsel for Florida Cities for the attorney's fees phase of this proceeding was reasonable and a combined total of 66 hours to complete this phase of the proceeding was a reasonable number of hours to pursue this matter. Mr. Melson, an expert witness for Florida Cities in this proceeding, charged $220.00 per hour for his preparation for and attendance at the hearing before the Division of Administrative Hearings. Mr. Melson spent 2.6 hours preparing for the hearing and 2.5 hours attending the hearing. Mr. Melson's fee amounted to $1,122.00. Mr. Seidman, another expert witness for Florida Cities, charged an hourly rate of $90.00 and spent 20.75 hours in preparing for and attending the hearing. It was stipulated that Mr. Seidman's total fee of $1,867.50 was reasonable. Although Florida Cities did not argue that all fees and costs incurred by it during the attorney's fees phase of this proceeding should be recovered, it did seek recovery of the foregoing fees and costs. Those fees and costs totaled $12,952.00.
The Issue The issue in this case is whether Respondent, Michael Dean Mastin, committed the offenses alleged in an Administrative Complaint issued by Petitioner, the Department of Financial Services, on July 6, 2004, and, if so, what penalty should be imposed.
Findings Of Fact The Parties. Petitioner, the Department of Financial Services (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for, among other things, the investigation and prosecution of complaints against individuals licensed to conduct insurance business in Florida. Ch. 626, Fla. Stat. (2004).1 Respondent, Michael Dean Mastin, is currently, and was at all times pertinent to this matter, licensed in Florida as a Life (2-16) and Life & Health (2-18) Agent. The Department, therefore, had, at all times relevant this matter, jurisdiction over his licenses and appointments. Mr. Mastin's license identification number is A167869. During the times relevant, Mr. Mastin conducted insurance business as a sole proprietor, using the fictitious name "AIT." He also conducted accounting services, including the preparation of Federal income tax returns for individuals (hereinafter referred to as "Tax Returns"). Tax Return Preparations. During the early part of 1998, in response to an advertisement concerning Tax Return preparation and investment advice carried in a local newspaper, Ervin "Augie" Augustine or Rhoda Augustine telephoned Mr. Mastin. At the time of this first contact, Mr. Augustine was approximately 85 or 86 years of age2 and Mrs. Augustine was 71 or 72 years of age.3 Mr. Augustine, who died on August 18, 2000, had been diagnosed with Alzheimer's in 1997. Mr. Augustine continued to handle most of the business affairs of the Augustines until early 2000. Mr. Mastin visited the Augustines at their home after they telephoned him. It was agreed during the meeting that Mr. Mastin would prepare the Augustine's 1997 Tax Return. Mr. Mastin subsequently prepared the Augustine's 1997 Tax Return. See Petitioner's Exhibit 7. That return was filed by the Augustines with the Internal Revenue Service during the spring of 1998. The Augustines, who maintained their important documents in files which they maintained at their home, filed a copy of the 1997 Tax Return prepared by Mr. Mastin. The copy of the 1997 Tax Return maintained by the Augustines did not include a "Schedule A." Schedule A is used by individual Federal income taxpayers to "itemize" deductions which may be taken against taxable income in computing the amount of income tax they must pay. In lieu of itemizing deductions, individual Federal income taxpayers may take the "standard" deduction, a statutorily established deductible amount. For the 1997 tax year, the standard deduction for married taxpayers 65 years of age or older filing a joint return was $8,500.00.4 The 1997 Tax Return prepared by Mr. Mastin and filed by the Augustines claimed a standard deduction of $8,500.00. At the time that Mr. Mastin prepared the Augustines' 1997 Tax Return, Mr. Mastin told them that he would waive his normal fee for the preparation of their 1997 Tax Return if they would purchase insurance-investment products from him. They agreed, and consequently, Mr. Mastin did not charge the Augustines any fee for preparing their 1997 Tax Return in anticipation of their purchase of insurance-investment products from him. Mr. Mastin subsequently gave the Augustines a presentation on insurance-investment products he wished to sell them, but they made no purchase at that time. During the spring of 1999, Mr. Mastin prepared the Augustine's 1998 Tax Return. See Petitioner's Exhibit 8. Again, Mr. Mastin did not charge the Augustines for his services. The Augustines kept a copy of the 1998 Tax Return prepared by Mr. Mastin. Like the 1997 Tax Return, the copy of the 1998 Tax Return maintained by the Augustines did not include a "Schedule A." Again like the 1997 Tax Return, the 1998 Tax Return prepared by Mr. Mastin and filed by the Augustines claimed a standard deduction, this time in the amount of $8,900.00, which was the amount of the standard deduction for married taxpayers 65 years of age or older filing a joint return for the 1998 tax year.5 On or about May 4, 1999, Mr. Mastin sold an annuity contract to the Augustines. The Augustines paid $30,000.00 for the annuity, for which Mr. Mastin earned a commission of $2,160.00. This purchase fulfilled the agreement between Mr. Mastin and the Augustines as to the waiver of his fees for Tax Return preparation. By letter dated June 1, 1999, Mr. Mastin memorialized his agreement with the Augustines concerning the waiver of his fees for Tax Return preparation in exchange for the Augustines purchasing the annuity contract through him. The letter (hereinafter referred to as the "Fee Waiver Letter"), which was signed by Mr. Mastin as "Accountant", and acknowledged by the Augustines, provides the following: This is to represent [sic] that an exchange for the tax return preparation for 1997 and 1998 and the extensive financial planning be in place of the commissions received under the American national [sic] annuity. If the annuity would not be taken [six] then the charge for the tax returns and financial planning will [sic] be the same as the commission and will [sic] be billed. Petitioner's Exhibit 11. This letter, which contains several errors in spelling and punctuation, and is also not worded very professionally, contains the initials "MM/mm" at the bottom of the letter under Mr. Mastin's signature. It is inferred that this refers to Michael Mastin as the author and, either himself or his wife, Mary Mastin, as the typist. The Augustines purchased additional annuity contracts from Mr. Mastin on September 8, 1999, October 8, 1999, and January 19, 2000. Mr. Mastin received commissions of $917.37, $2,160.00 and $10,500.00 respectively for these sales. On February 9, 2001, Mrs. Augustine made an additional payment on one of the previously purchased annuity contracts, for which Mr. Mastin received a commission of $1,350.00. Mr. Mastin prepared the 1999 and 2000 Tax Returns for the Augustines.6 See Petitioner's Exhibits 8 and 9. Again, Mr. Mastin did not charge for his Tax Return preparation services. The Augustines kept a copy of the 1999 Tax Return and Mrs. Augustine kept a copy of the 2000 Tax Return. Like the 1997 and 1998 Tax Returns, the copy of the 1999 and 2000 Tax Returns maintained by the Mrs. Augustine did not include a "Schedule A." Again like the 1997 and 1998 Tax Returns, the 1999 and 2000 Tax Returns prepared by Mr. Mastin claimed the standard deduction. For 1999, the amount of the claimed deduction was $8,900.00, which was the amount of the standard deduction for married taxpayers 65 years of age or older filing a joint return for the 1999 tax year.7 For 2000, the amount of the claimed deduction was $9,050.00, which was the amount of the standard deduction for married taxpayers 65 years of age or older filing a joint return for the 2000 tax year.8 Other than the commissions which Mr. Mastin earned for the annuity contracts he sold to the Augustines, Mr. Mastin, consistent with his initial verbal agreement and subsequently the Fee Waiver Letter, did not bill or charge the Augustines for the preparation of their 1997, 1998, 1999, and 2000 Tax Returns. Nor did they directly pay him for his Tax Return preparation services. Mr. Mastin's Unconvincing Position. Mr. Mastin asserted through his testimony that he charged the Augustines for Tax Return preparation services he provided them and that they did indeed pay him. His testimony is rejected for its lack of credibility. In support of his argument that he was paid for his Tax Return preparation services, Mr. Mastin asserted unconvincingly the following: That he received a check in 1999 in the amount of $100.00 for his preparation of the 1997 and 1998 Tax Returns, $45.00 cash in the spring of 2000 from Mr. Augustine for the 1999 Tax Return, and $50.00 cash in the spring of 2001 from Mrs. Augustine for the 2000 Tax Return; That the Tax Returns he prepared for the Augustines contained a Schedule A and that a deduction for the amount of the tax preparation fees which they paid him was claimed thereon. A copy of the alleged Schedule A's was admitted as Respondent's Exhibits 13 through, and including, 16; That invoices, admitted as Respondent's Exhibit 12, were sent to the Augustines for his Tax Return preparation services; and That he revoked the Fee Waiver Letter the day after he wrote it. Mr. Mastin's testimony and the evidence he offered in support of his assertion that he received three payments for his Tax Return preparation services to the Augustines was unconvincing for a number of reasons: The ultimate facts of this case taken as a whole, do not support Mr. Mastin's testimony; Mrs. Augustine, whose was more credible despite the occasional confusion in her testimony, denied that any payments were ever made to Mr. Mastin for his services; The $100.00 check, Respondent's Exhibit 11, was payable to Mr. Mastin, was signed by Mr. Augustine and was dated October 6, 1999. Although the evidence failed to prove what the check to Mr. Mastin was for, more importantly, the evidence failed to prove it was made in payment for any Tax Return preparations. The check was written during the time when the Augustines had purchased two annuity contracts and immediately prior to their purchase of a third. More importantly, this alleged payment of Tax Return preparation fees is inconsistent with the Fee Waiver Letter prepared by or on behalf of Mr. Mastin and signed by him. Finally, the date of the check is inconsistent with Mr. Mastin's deposition testimony that the Augustines paid him for the 1997 and 1998 Tax Returns when he took the 1998 Tax Return to them to be signed, which was some time during the spring of 1999, not October 1999; Mr. Mastin's assertion that he received cash for the 1999 Tax Return preparation and that the Augustines gave him only $45.00 because that was all the cash they had at the time is inconsistent with the fact that the Augustine's usual custom was to pay for expenses by check so that they would have a record of the transaction. There simply was no reason for them not to have followed this custom in paying for the preparation of their 1999 Tax Return. Additionally, if they had for some unexplained reason paid Mr. Mastin with cash, it is unlikely that the Augustines would not have had sufficient cash to pay the entire fee. There is also no reason, even if it were assumed that the Augustines did not have $50.00 in cash, that they wouldn't have used a check to pay the full amount of the asserted charge; and Mr. Mastin's testimony concerning the 2000 Tax Return fee he asserted Mrs. Augustine paid him is rejected for essentially the same reasons Mr. Mastin's testimony concerning the payment for the 1999 Tax Return has been rejected. Mr. Mastin's testimony and the evidence he offered in support of his assertion that he included a deduction on the Augustine's Tax Returns for the amount of the fee he received from them was unconvincing for a number of reasons: The ultimate facts of this case taken as a whole, do not support Mr. Mastin's testimony; The Schedule A's admitted as part of Respondent's Exhibits 14 through 16, while reflecting a deduction for the $100.00 he testified he received in 1999 and the $45.00 cash he received in 2000, were not included with the copy of the 1997 through 2000 Tax Returns maintained by the Augustines; and The amount of the total itemized deductions listed on the Schedule A's offered in evidence by Mr. Mastin unrealistically and unconvincingly equal the exact amount of the standard deduction reflected by the Augustine's copy of the Tax Returns filed by them for those years. The likelihood that the Augustine's itemized deductions would be exactly the same as the standard deduction four years in a row is ridiculously low.9 Mr. Mastin testified unconvincingly that invoices were provided to the Augustines for his services. The Augustines did not have a copy of those invoices in their files and their existence is inconsistent with the ultimate facts of this case and Mrs. Augustine's testimony that she never received them and had no copy of them in her files. Finally, Mr. Mastin's testified unconvincingly that he spoke to Mrs. Augustine immediately after the Fee Waiver Letter had been executed and mailed a letter the next day, June 2, 1999, to Mrs. Augustine revoking the Fee Waiver Letter. A copy of the June 2, 1999 letter (hereinafter referred to as the "Fee Waiver Revocation Letter), was admitted as Petitioner's Exhibit 26. According to Mr. Mastin, he spoke to Mrs. Augustine and sent the Fee Waiver Revocation Letter because he was concerned that the Fee Waiver Agreement violated the laws governing his conduct as a licensed insurance agent in Florida. The authenticity of the Fee Waiver Revocation Letter and Mr. Mastin's testimony concerning it are rejected for several reasons: The ultimate facts of this case taken as a whole, do not support Mr. Mastin's testimony or the authenticity of the Fee Waiver Revocation Letter; Mrs. Augustine denied ever receiving a telephone call from Mr. Mastin revocating the Fee Waiver Letter and denied receiving the Fee Waiver Revocation Letter. Mrs. Augustine did not have a copy of the Fee Waiver Revocation Letter in her files; The Fee Waiver Revocation Letter was addressed only to Mrs. Augustine. It was not addressed to Mr. Augustine, although he was still alive at the time the letter was alleged to have been written and mailed. Because of the failure to address the letter to both Mr. and Mrs. Augustine, as the Fee Waiver Letter was, it is concluded that the Fee Waiver Revocation Letter was prepared after this dispute arose, which was after Mr. Augustine had died; Although Mr. Mastin had had Mr. and Mrs. Augustine sign the Fee Waiver Letter, he did not take this precaution with the Fee Waiver Revocation Letter which was purportedly written in order for Mr. Mastin to avoid a possible violation of the laws governing his insurance practice; The initials at the bottom of the Fee Waiver Revocation Letter, indicating who had written the letter and who had typed it, are "MM/DEK." "DEK" are the initials of Mr. Mastin's secretary, Deborah Elfast Kelly. Ms. Kelly, however, testified that she did not remember typing the letter,10 that it is her custom to type her initials, not capitalized as the her initials appear on the Fee Waiver Revocation Letter, but in lower case; The spelling and punctuation in the Fee Waiver Revocation Letter, and the unprofessional language thereof, are consistent with other documents which were authored by Mr. Mastin and typed either by him or his wife and not someone employed as a secretary, like Ms. Kelly, who also provides secretarial services to a lawyer; and Finally, the Fee Waiver Revocation Letter was not provided by Mr. Mastin to any of the employees of the Department who initially investigated this matter and requested information concerning Mr. Mastin's business relationship with the Augustines until discovery had commenced. Such a letter could have resolved at least one of the charges Mr. Mastin faces in this case in his favor had he produced it earlier. The fact that it was not produced until this case began in earnest suggests that it is a recent creation. The Agent of Record Letter. Some time prior to 2002, Mrs. Augustine became interested in purchasing an additional annuity contract. After making several unsuccessful attempts to contact Mr. Mastin, she contacted another insurance agent and purchased annuity products from that agent. In early February or late January 2002, Mr. Mastin contacted Mrs. Augustine for the first time since preparing the Augustine's 2000 Tax Return. He telephoned her to determine whether she wished for him to prepare her 2001 Tax Return. During this conversation, in response to an inquiry from Mr. Mastin, Mrs. Augustine informed Mr. Mastin that she had purchased annuity products from another insurance agent. Mr. Mastin became very upset and angry with Mrs. Augustine. Shortly after their telephone conversation, Mrs. Augustine received a letter dated February 14, 2002, from Mr. Mastin. Petitioner's Exhibit 18. Mr. Mastin unreasonably criticized Mrs. Augustine for what he perceived as her lack of loyalty to him after all he thought he had done for her. He also told her that he had had "a chance to review [her] file", and informed her he was enclosing a "copy of an agreement that I found in the file that you signed on February 17, 2000, which should be self explanatory." He went on to state: I remember the exact time and sayings that you and Augie made [sic] that morning. This is a standardized legal document that has been and still is used widely over the country in this area [sic] and has been very successful [sic] in being enforceable. It is not my intend [sic] to get an attorney to handle this matter as I hope we can work this out like honorable adults. If I don’t' hear from you in 30 days, I will assume you will not be willing to honor the agreement. The February 14, 2002, letter contains the initials "MM/mm" under Mr. Mastin's signature. The spelling and punctuation in the letter, and the unprofessional language thereof, are consistent with other documents which were authored by Mr. Mastin and typed either by him or his wife and not someone employed as a secretary. Attached to the February 14, 2002, letter was a copy of what purported to be an agent of record letter. The Augustine's signatures appear at the bottom of the page. Mr. Mastin's signature appears, without any underlining, to the write of the signatures of the Augustines and, under his signature it is "DATED 02/17/00" (hereinafter referred to as the "Agent of Record Letter"). The Agent of Record Letter states the following: This is to certify that the firm Ait/Michael Mastin will be considered agent of record on all life insurance and or annuity products purchased from Ervin Augustine and or Rhoda Augustine. This agreement will begin February 17, 2000 and will terminate on February 17, 2003, unless a new agreement is signed by Ait. If the above products are purchased through another agency or broker, agent or direct [sic] all commissions that would have been paid in full shall be payable to Ait/Michael d. Mastin by either the life Insurance [sic] company, agency, broker, agent or owner or beneficiary of the policy or policies. If this action requires a court action or the hiring of an attorney to reach a settlement the above named persons or company shall be responsible for all attorney fees and court and related costs related to this matter for the execution of this agreement. Mrs. Augustine, who was almost 77 years of age when she received Mr. Mastin's letter and the Agent of Record Letter, became very upset about what she perceived to be the threatening tone of Mr. Mastin's letter and the consequence of having possibly violated the Agent of Record Letter. While she did not recall ever having seen, much less, signed the Agent of Record Letter, she recognized the signatures on the document to be her's and her husband's and, therefore, assumed in her panic that she had indeed signed it. Mrs. Augustine telephoned Mr. Mastin shortly after receiving his letter and the Agent of Record Letter in an unsuccessful effort to resolve the matter. After unsuccessfully attempting to work things out with Mr. Mastin, Mrs. Augustine, who was worried about having to pay Mr. Mastin the commissions earned by the insurance agent she had dealt with in what she afraid was a violation of the Agent of Record Letter, as well as any legal fees incurred by Mr. Mastin, went to the Department's Plantation, Florida, office on March 1, 3002, seeking assistance. Mrs. Augustine met with Debbie Brown, a Senior Manager, Analyst 1, in the Department's Bureau of Outreach, Division of Community Service. Mrs. Augustine completed a Consumer Assistance Report, in which she wrote the following: In the year 2000, the agent, Michael Mastin, had my husband sign the form, Agent of Record letter. My husband was diagnosed with Alzheimers in 1997 and so he signed the form. I was afraid of my husband's outburst & so I also signed. . . . Any life insurance or annuity that was purchased until the year 2003, even though he did not sell the products, I will have to pay him the commissions. Petitioner's Exhibit 17. Mrs. Augustine, having given the Agent of Record Letter more thought, could not remember having signed it, but due to the fact that it was her signature and that of her husband at the bottom of the document Mr. Mastin had sent, she believed that she must have signed it. Questioning why she did not remember signing the Agent of Record Letter and, likely, looking for a justification for not complying with its terms, she suggested that she had done so because Mr. Augustine, during an outburst of anger, had made her. Mrs. Augustine gave a copy of the February 1, 2002, letter and a copy of the Agent of Record Letter Mr. Mastin had sent her to Ms. Brown, who maintained possession and control of both in her office. Ms. Brown gave Mrs. Augustine a receipt for the documents. Although not kept under lock and key, the evidence in this case failed to prove that anyone had any reason to access either document. Shortly after her visit with Ms. Brown, Mrs. Augustine wrote the following letter to Mr. Mastin: Mike; Since I was given a 30day [sic] time limit, I thought I should send you this letter, to confirm the fact that I am responding to you. Some of the things that you wrote in your letter are incorrect, never the less [sic] I contacted the state insurance department, and you will hear from them. I was so stressed out with Augie's condition, I will never understand how you can do this to me. You know he had Alzeimer's [sic] and I signed the form to avoid an outburst from him. You have seen him during one of these episodes. Petitioner's Exhibit 49. Mrs. Augustine again indicated that she had signed the Agent of Record Letter for the same reasons she indicated she signed it in the Consumer Assistance Request she made with the Department. Ms. Brown informed Mr. Mastin of the filing of the Consumer Assistance Request by letter dated March 4, 2002. Mr. Mastin responded to that letter by letter dated March 8, 2002. Not satisfied with his response, Ms. Brown forwarded the matter to the Department's Bureau of Investigation, where it was assigned to Special Investigator Linda L. Grant. As part of her investigation, Ms. Grant met with Mrs. Augustine on April 9, 2002. After fully discussing the matter with Ms. Grant, Mrs. Augustine wrote a nine-page narrative explaining her involvement with Mr. Mastin. Parts of the narrative, such as policy numbers and other specific facts which Mrs. Augustine could not recall, had to be looked up. Ms. Grant assisted Mrs. Augustine by ensuring that information that Mrs. Augustine could not recall but could be found in other sources was obtained and included in the narrative. Ms. Grant also typed Mrs. Augustine's hand-written narrative. Mrs. Augustine was asked by Ms. Grant to read both her hand- written and the typed versions to ensure accuracy, and after she complied, both were sworn to by Mrs. Augustine. With regard to the Agent of Record Letter, Mrs. Augustine swore to the following: I later received a letter dated 2/14/02 from Mastin expressing his anger over the matter and stating he found an agreement in his file that I signed on 2/17/00 that is a legal[sic] enforceable document. He enclosed a copy of the alleged 2/17/00 agent of record letter. I was shocked because I had no recollection of the form and I did not have a copy of the agent of record letter in my files. The signatures on the letter appears [sic] to be mine and that of my late husband. I have no recollection of Mastin discussing the contents of the letter or any agreement regarding future commissions belonging to him through 2/17/03. In most of my purchases from Mastin he filled out all the paperwork and gave me and my husband a stack to sign without reading. We both trusted him. . . . Petitioner's Exhibit 48. Mrs. Augustine gave Ms. Grant the actual copy of the February 14, 2002, letter and the attached Agent of Record Letter which Mr. Mastin had sent to her. Ms. Grant's conduct with Mrs. Augustine during her meeting with her on April 9, 2002, was professional and ethical. The information she obtained in the affidavit completed and signed by Mrs. Augustine was in no way unduly influenced by the assistance, which was intended to ensure that the narrative contained accurate and detailed information, which was given by Ms. Grant to Mrs. Augustine. Between the assignment of the matter to her and September 2002, Ms. Grant spoke with and met with Mr. Mastin on several occasions as part of her investigation. She acted professionally and with due regard for Mr. Mastin's rights throughout her dealings with him. Mr. Mastin wrote two letters to Mrs. Augustine, both dated September 19, 2002. Both letters essentially threaten Mrs. Augustine that he would seek fees from her if she continued to pursue her complaint against him with the Department. See Petitioner's Exhibits 21 and 22. The more Mrs. Augustine thought about the whole matter and with Ms. Grant's reasonable prodding of her memory, the more Mrs. Augustine began to doubt having signed the Agent of Record Letter. Mrs. Augustine eventually concluded that she simply had no memory of having signed the Agent of Record Letter. Consequently, on April 24, 2002, she returned to Ms. Grant's office and completed and signed a hand-written and typed four page supplement to her April 9, 2002, affidavit. In pertinent part, Mrs. Augustine wrote the following in her affidavit supplement: . . . . I have inspected a document dated Feb. 17, 2000 listing Parts I, II & III of a retainer agreement, and I have never seen this document. To my recollection, there was no written retainer agreement between Michael Mastin, myself and my late husband Ervin Augustine. I reaffirm that I never received or had knowledge of any Feb. 17, 2000 Agent of Record letter prior to Michael Mastin sending me a copy in his correspondence dated Feb. 14, 2002. . . . Petitioner's Exhibit 47. Mrs. Augustine goes on in the affidavit supplement to describe what she reasonably considered to be the threatening correspondence she had received from Mr. Mastin since she filed the Consumer Assistance Report with the Department. Again, Ms. Grant's conduct with Mrs. Augustine during her meeting with her on September 24, 2002, was professional and ethical. The information she obtained in the affidavit supplement completed and signed by Mrs. Augustine was in no way unduly influenced by the assistance, intended to ensure that the narrative supplement contained accurate and detailed information, which was given by Ms. Grant to Mrs. Augustine. On September 23, 2002, Ms. Grant and her immediate supervisor, Robert Keegan, met with Mr. Mastin. During this meeting Mr. Mastin gave copies of a number of documents pertaining to this matter to Ms. Grant and Mr. Keegan. One of the documents was a copy of an annuity contract application (hereinafter referred to as the "Application") that had been signed by the Augustines. Petitioner's Exhibit 42. Ms. Grant, who had astutely doubted the authenticity of the Agent of Record Letter due to Mrs. Augustine's confusion about the document, compared the signatures on the Application with the signatures on the Agent of Record Letter. Because of what Ms. Grant concluded were suspicious similarities between the signatures on the Application and Agent of Record Letter, both documents were submitted to the Crime Lab of the Broward County Sheriff's Office for analysis of Mrs. Augustine's signature. Howard Seiden, a forensic document examinter, who was accepted as an expert in this matter, examined Mrs. Augustine's signature on the Application and the Agent of Record Letter. He concluded the following: After examination of the submitted documents, it is the finding of this examiner that, the questioned Rhoda Augustine signature on the [Agent of Record Letter] is a reproduction of the Rhoda Augustine signature found on the [Application]. The most likely mechanism for this, is that the signature on the original document or a copy thereof of in [the Application] was copied, then cut from the copy and placed in position of the original document in [the Agent of Record Letter] and the entire document copied again. An alternate mechanism that may have been utilized is to scan the known signature in [the Application] and using computer software transfer that signature onto a scanned document of [the Agent of Record Letter]. This document could then be printed. After Mr. Mastin wrongfully suggested that the fabricated signature on the Agent of Record Letter provided to Mr. Seiden had been created by Ms. Grant, the copy of the Agent of Record Letter which Mrs. Augustine had provided to Ms. Brown when she first complained to the Department and which had been continuously maintained in the custody of Ms. Brown since Mrs. Augustine had provided it to her, was retrieved by Dennis Adams, a Special Investigator for the Department's Bureau of Investigation, and delivered directly to Mr. Seiden for analysis. At no time did the copy of Agent of Record Letter come into the possession of Ms. Grant. More importantly, no credible evidence was presented in this proceeding to suggest that Ms. Grant or anyone other than Mr. Mastin had anything to do with the fabrication of Mrs. Augustine's signature on the Agent of Record Letter. Mr. Seiden, after analyzing the copy of Agent of Record Letter maintained by Ms. Brown concluded that Mrs. Augustine's signature was an exact copy of the signature which had been reproduced from the Application onto the Agent of Record Letter sent by Mr. Mastin to Mrs. Augustine. Mr. Seiden's expert opinion explains why Mrs. Augustine was so confused when she received the Agent of Record Letter. The signature on it was indeed her signature, as she concluded it was. What she did not realize, however, was that her signature had been placed there, not by her, but by Mr. Mastin. Mr. Seiden's opinion also vindicates Ms. Grant's suspicion concerning the authenticity of the Agent of Record Letter. In summary, Mrs. Augustine did not sign the Agent of Record Letter. Instead, her signature had been cut and pasted from her actual signature on the Application. It is inferred that Mrs. Augustine's signature on the Agent of Record Letter was fabricated by Mr. Mastin or someone under his direction. Mr. Mastin's Unconvincing Position. Mr. Mastin asserted through his testimony and other evidence that he did not fabricate the Agent of Record Letter. In support of his position, while he did not dispute that the Agent of Record Letter had been fabricated, he suggested, unconvincingly, the following: Ms. Grant fabricated the Agent of Record Letter in an effort to bolster her career at the Department; and He has a copy of an agent of record letter with the Augustine's signatures on it which has not been proved to be a fabrication. Mr. Mastin's testimony and the evidence he offered in support of his assertion that he did not fabricate the Agent of Record Letter was unconvincing for a number of reasons: The ultimate facts of this case taken as a whole, do not support Mr. Mastin's testimony; Mrs. Augustine's prior inconsistent statements were adequately explained. She was sent a document by Mr. Mastin which, although it had never been signed by her, did in fact include a copy of her actual signature on it. Seeing her signature, she simply concluded that, although she did not remember signing it, she must have done so. Ultimately, the evidence proved that she did not sign the very document Mr. Mastin sent to her; Mr. Mastin's assertion that the fabricated document was created by Ms. Grant deserves no more discussion. This wrongful and malicious assertion is not supported by any credible evidence; and Finally, Mr. Mastin's assertion that he has a copy of an agent of record letter signed by the Augustines which has not been proved to be a fabrication is not supported by the weight of the evidence. Mr. Mastin' did have admitted an agent of record letter which was not proved to be a fabrication. He argues, therefore, that he had no reason to send a copy of a fabricated document. This argument is rejected. The copy of the agent of record letter admitted by Mr. Mastin could not be shown to be a fabrication without having the document or a copy thereof from which an actual signature would have been transferred to the copy of the document admitted by Mr. Mastin. Given this reasonable explanation for why the document has not been proved to be false, it cannot be concluded that it has not been fabricated. This is especially true in light of the fact that it has been proven that there is a fabricated Agent of Record Letter. This fact sheds sufficient doubt on the authenticity of the copy of the agent of record letter admitted by Mr. Mastin to reject its authenticity also. D. Primary Agent Designation. Mr. Mastin failed to designate himself as the primary agent for AIT, the factitious name he conducted insurance business under.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department finding that Michael Dean Mastin violated the provision of Chapter 626, Florida Statutes, described, supra., and revoking his license. DONE AND ENTERED this 2nd of August, 2005, in Tallahassee, Leon County, Florida. S LARRY J. SARTIN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of August, 2005.
The Issue The issues are whether Petitioner effectively elected to move her retirement account from the Florida Retirement System (“FRS”) Pension Plan to the FRS Investment Plan prior to her retirement from state employment or, if not, whether Respondent, State Board of Administration (“SBA”) is estopped from claiming that Petitioner did not successfully elect to move her retirement account into the FRS Investment Plan.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Petitioner, Adrian Wagner began her state employment on April 22, 1994, with the Department of Health and Rehabilitative Services, which was renamed the Department of Children and Family Services after a 1996 reorganization. Since 2012, the agency has been named the Department of Children and Families. Upon her hiring, Ms. Wagner was enrolled in the Pension Plan, which was the only retirement program available for eligible employees in 1994. In 2002, the Investment Plan was made available for employees participating in the FRS. Ms. Wagner was provided a three month window, from December 1, 2002, through February 28, 2003, to switch to the Investment Plan. The Plan Choice Administrator did not receive an election from Ms. Wagner during the three month period. Therefore, Ms. Wagner remained in the Pension Plan by statutory default. See § 121.4501(4)(a), Fla. Stat. Ms. Wagner changed employers but remained in the FRS system until her last day of employment on April 3, 2019. At the time of her retirement from FRS-eligible employment, Ms. Wagner was working for the Alachua County Sheriff’s Office. On March 4, 2019, Ms. Wagner logged onto the FRS website, MyFRS.com, from her home computer. Her intention was to use the second election opportunity afforded by section 121.4501(4)(f), Florida Statutes, to move from the Pension Plan to the Investment Plan. Ms. Wagner recalled clicking a green button to change her plan, which took her to a page that read, “ready to make a decision” to change from the Pension Plan to the Investment Plan. It set out the steps needed to make the change. Ms. Wagner testified that she clicked on a green arrow that said, “change your plan,” which took her to a page that set forth the amount of money she would have in the Investment Plan. She continued to a page showing the different plans available to participants in the Investment Plan. The website advised her to contact an Ernst and Young (“EY”) financial planner to discuss her plan options. Ms. Wagner testified that a few minutes later she used the phone number provided by the MyFRS.com website to contact the EY financial planners. She testified that the EY planner with whom she spoke was named “Josh.” The EY call summary log for Ms. Wagner was entered into evidence. The log is a record of every phone call between EY and Ms. Wagner. It includes the date and time of the call, the name of the EY employee who spoke to Ms. Wagner, and a brief summary of their discussion. The EY call summary log identified the EY planner who spoke with Ms. Wagner at 12:10 p.m., on March 4, 2019, as Joshua Kantrowitz. Ms. Wagner testified that Mr. Kantrowitz told her that he could not see in his computer that she had made the switch to the Investment Plan. While Mr. Kantrowitz waited, Ms. Wagner clicked several “back” buttons on the MyFRS.com website. She then went through the same page progression she had done previously to make her plan selection. Ms. Wagner recalled finalizing her decision by clicking a button that read “send,” or “submit,” or “continue.” Ms. Wagner testified that Mr. Kantrowitz told her that he could now see that she had elected to change her retirement from the Pension Plan to the Investment Plan. They discussed fund options, tax questions, and penalties for taking funds out of the Investment Plan. Mr. Kantrowitz verified Ms. Wagner’s email address so that he could send her an FRS Investment Beneficiary Form. Ms. Wagner understood Mr. Kantrowitz to say that she would not be able to see that she had changed to the Investment Plan on the website for about a month. The conversation was interrupted when the phone connection was lost. Ms. Wagner testified that it was her understanding that she had successfully changed her retirement from the Pension Plan to the Investment Plan, and that this change had been confirmed by Mr. Kantrowitz. A transcript of the conversation between Ms. Wagner and Mr. Kantrowitz was entered into evidence. The transcript does not confirm every aspect of Ms. Wagner’s recollection. The transcript records that Ms. Wagner told Mr. Kantrowitz that she “just switched over from the FRS Pension Plan to the Investment Plan.” Mr. Kantrowitz asked when she made the switch. Ms. Wagner responded, “I just hit it today. Did it today.” She added that she made the election “about ten minutes ago.” The transcript clarifies that Mr. Kantrowitz accepted, but did not confirm, Ms. Wagner’s statement that she made the switch to the Investment Plan. After Ms. Wagner told him that she made the switch only 10 minutes ago, Mr. Kantrowitz stated: Okay. And you did it by--basically, you know, if you do--you know, it’s still being processed at the moment. Basically, you know, in the next month, it’s going to make that conversion. In order to, you know, switch and make that choice, you know, the types of investments you’re putting into. Okay. So I do want to keep you aware of that if you did fill it out today, okay. Mr. Kantrowitz never confirmed that the second election had been completed nor did he state whether he could or could not see the change on his computer. Mr. Kantrowitz simply accepted Ms. Wagner’s word and went on to tell her what would happen next if she indeed made the change. Mr. Kantrowitz did state that the conversion would be made in the next month, confirming in part Ms. Wagner’s recollection that she was told that it would be a month before she could see the switch to the Investment Plan on the website. Again, however, this statement was contingent: if Ms. Wagner made the change, the conversion would take about a month. The EY call summary log entry for the March 4, 2019, conversation, presumably completed by Mr. Kantrowitz, records Ms. Wagner’s “Question or Problem” as “made a switch to the FRS IP. [D]oesn’t plan to work in the FRS anymore.” The log records the “Resolution” with a series of four bullet points: talked about IP. taxation, timelines, HIS. says she spoke with admin and they said she would hit NRA at April 1 for 25 YOS SR. she did the 2nd election online and was defaulted into the FRS RDF. needs to set up beneficiaries sending out beneficiary form It could be argued that the second bullet point confirms that Ms. Wagner successfully completed the second election into the Investment Plan. However, when read in tandem with the transcript, Mr. Kantrowitz’s notes clearly set forth his summary of the conversation as it occurred, not his independent conclusion that Ms. Wagner had completed the second election. After the call with Mr. Kantrowitz was dropped, Ms. Wagner called back to inquire as to her exact retirement date. She spoke briefly with another EY planner, Zach Brown, who told her that the Division of Retirement keeps the record of official years of service for employees. Mr. Brown transferred the call to the Division of Retirement. The transcript indicates that Ms. Wagner remained on hold for some time, then hung up before speaking with a Division of Retirement representative. Ms. Wagner testified that on March 18, 2019, she again contacted the EY financial planners. She spoke for roughly a half-hour with a woman whose name she did not recall. The woman verified Ms. Wagner’s personal account information. After being verified, Ms. Wagner asked tax and health care subsidy questions and stated that she planned eventually to move her Investment Plan account from EY to an outside investment firm. Ms. Wagner testified that the EY planner never stated that she was not enrolled in the Investment Plan. The EY call summary log does not show a phone call from Ms. Wagner on March 18, 2019. Ms. Wagner testified that on March 19, 2019, she met with Shawn Powers, the human resources manager for the Alachua County Sheriff’s Office, to discuss Ms. Wagner’s impending retirement. As Ms. Powers filled out a retiree insurance data sheet, Ms. Wagner told her that she had enrolled in the Investment Plan. Ms. Powers cautioned her about the risks involved in the Investment Plan. Ms. Wagner assured her that she understood the risks. Ms. Powers checked the “Investment Plan” box on the insurance form. Ms. Wagner signed the form, attesting to her understanding that she had made the election to move from the Pension Plan to the Investment Plan. Ms. Wagner testified that, after the March 4, 2019, conversation with Mr. Kantrowitz, she received several emails from EY financial planners. She understood these emails as indirect confirmation that she had successfully elected to move to the Investment Plan. During cross-examination, Ms. Wagner conceded that none of these communications affirmatively stated that she was now in the Investment Plan. The third-party Plan Choice Administrator for the Investment Plan is Alight Solutions. FRS members who wish to utilize their second election have multiple options: they may complete and mail in a hard copy form; they may submit a second election form on the MyFRS.com website; or they may log into their account on the MyFRS.com website and go through the process of submitting and confirming their second election online. Fla. Admin. Code R. 19-11.007(3). If an FRS member successfully utilizes the online MyFRS.com process for submitting a second election, an “election confirmation” page appears that informs the member that the election has been received by Alight Solutions. Ms. Wagner had no specific recollection of receiving an electronic confirmation that her election to move to the Investment Plan had been successfully submitted or that it had been received by Alight Solutions. If an FRS member successfully submits an election form to Alight Solutions, a hard copy letter is mailed to the member confirming receipt. Ms. Wagner had no specific recollection of receiving any type of correspondence confirming receipt of her Investment Plan election via conventional mail. Ms. Wagner retired from the Alachua County Sheriff’s Office on April 3, 2019. The parties stipulated that the SBA has no record of receiving a second election from Ms. Wagner during her term of employment with an FRS-participating employer. On April 8, 2019, Ms. Wagner logged onto the MyFRS.com website and saw that she was still enrolled in the Pension Plan. Ms. Wagner immediately phoned the number for the EY financial planners and was transferred to a “solutions person” named Nichole. Ms. Wagner explained to Nichole that on March 4, 2019, she had elected to move her retirement account from the Pension Plan to the Investment Plan via the MyFRS.com website. She provided Nichole with the chronology of events from March 2019 as she remembered them. Nichole told Ms. Wagner that she would research the matter and get back to her within two weeks. Ms. Wagner testified that on or about April 22, 2019, Nichole phoned her to say that she could find no record of anything Ms. Wagner claimed to have done on the MyFRS.com website. Nicole told Ms. Wagner that she would need more time, possibly another two weeks, to do further research on the matter. Ms. Wagner told Nichole how upset she was. Nichole assured Ms. Wagner that she would do her best to find out what happened. Nichole also stated that she would send Ms. Wagner a form to request that the SBA intervene. Ms. Wagner subsequently filed a Request for Intervention, which was received by the SBA on May 17, 2019. Ms. Wagner testified that after she filed her Request for Intervention, but before the SBA responded, she attempted to contact Nichole. Her call was answered by an unnamed EY planner who stated that he would remain on the line while putting her through to a solutions person. Ms. Wagner began speaking with the solutions person but was interrupted by the EY financial planner, who stated that he had found notes by Mr. Kantrowitz indicating that she had changed from the Pension Plan to the Investment Plan. It is highly likely that the unnamed EY financial planner was referencing the EY call summary log notes quoted at Finding of Fact 18. As found above, Mr. Kantrowitz’s contemporary notes reflected what he was told by Ms. Wagner. The notes do not constitute an independent confirmation that Ms. Wagner successfully completed her second election. The SBA submitted into evidence a spreadsheet titled “Participant Web Activity Detail.” SBA witness Allison Olson testified that this document was produced by Alight Solutions in response to her request for all records of Ms. Wagner’s March 4, 2019, activity on the MyFRS.com website. Ms. Olson is the Director of Policy, Risk Management, and Compliance in the Office of Defined Contribution Programs. She credibly testified that she is familiar with reading the Alight Solutions spreadsheets and that she saw nothing on Ms. Wagner’s page indicating that Alight Solutions received her Investment Plan election. Petitioner’s information technology expert, Philip Schwartz, testified that the document provided by Alight Solutions was a “program log,” a high level program that runs to handle a particular task such as an accounting function. Mr. Schwartz testified that he suggested to his client that she request the “server log” for the relevant date. The server log captures every keystroke and click made by a user such as Ms. Wagner, even in situations in which the server is too busy to complete the requested function. Mr. Schwartz believed the program log was insufficient because it showed only which page of the website Ms. Wagner was on at a given moment, not which buttons she clicked or whether she had hit the “send” button. Mr. Schwartz’s suggestion was that Ms. Wagner might have done everything necessary to complete the second election but that the MyFRS.com server may not have recorded her election. The server log would have provided a more accurate representation of Ms. Wagner’s intentions. Ms. Olson testified that, after an informal hearing attempting to resolve the case, she requested a server log from Alight Solutions. The company responded that it did not have the server log. Ms. Olson testified that the program log would indicate the second election had it been completed by Ms. Wagner. Ms. Olson stated that FRS members are always advised to follow through and make sure their election has been received. Mr. Schwartz testified that there is no industry standard as to the length of time a program log should be kept. He has known companies to hold them for as long as a year, but has also known companies to keep them for only 90 days. Mr. Schwartz testified that there is no legal requirement for a company such as Alight Solutions to maintain a program log at all. Mr. Schwartz testified that he did not have enough knowledge of Alight Solutions’ terminology to state whether the program log indicated that Ms. Wagner’s election had been received. Thus, there is no evidence to contradict Ms. Olson’s credible testimony that the Alight Solutions program log did not indicate receipt of Ms. Wagner’s Investment Plan election. The preponderance of the evidence establishes that Ms. Wagner intended to make her second election on March 4, 2019, and to move her retirement account from the Pension Plan to the Investment Plan. The preponderance of the evidence also establishes that Ms. Wagner failed to complete her second election and that Alight Solutions, the Plan Choice Administrator for the Investment Plan, did not receive her election.1/ The evidence was insufficient to show that the SBA or any entity or person acting on its behalf or as its agent made any representation to Ms. Wagner that her second election had been received by the Plan Choice Administrator.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the State Board of Administration enter a final order dismissing Petitioner’s Florida Retirement System Investment Plan Petition for Hearing. DONE AND ENTERED this 8th day of January, 2020, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 8th day of January, 2020.
Appeal For This Case This order is final agency action. Any party who is adversely affected by this order has the right to seek judicial review pursuant to Section 120.68, Florida Statutes, by filing a notice of administrative appeal pursuant to Rule 9.110, Florida Rules of Appellate Procedure, with the Clerk of the Florida Elections Commission at 107 West Gaines Street, Suite 224, Collins Building, Tallahassee, Florida 32399-1050 and by filing a copy of the notice of appeal with the appropriate district court of appeal. The party must attach to the notice of appeal a copy of this order and include with the notice of appeal filed with the district court of appeal the applicable filing fees. The notice of administrative appeal must be filed within 30 days of the date of this order is filed with the Commission. The date this order was filed appears in the upper right-hand corner of the first page of the order. ; Copies furnished to: Eric M. Lipman Assistant General Counsel Eric Ruiz, Respondent (certified mail) Division of Elections, Filing Officer
