Findings Of Fact Petitioner is a resident of Florida and resides at 306 Sweetwater Cove Boulevard, North, Longwood, Florida 32779. Respondent, Department of Administration, Division of Retirement, is an agency of the State of Florida located at Cedars Executive Center, Building C, 2639 North Monroe Street, Tallahassee, Florida 32303. Intervenor is a resident of 5448 San Luis Drive, Orlando, Florida 32807. The agency action challenged by the Petition is the determination that the continuing monthly retirement benefit available under Option 4 of the Florida Highway Patrol Pension Plan, which provides for a continuing monthly benefit to the "spouse" of the retiree shall be paid to the person who was the spouse at the time of the retiree's retirement, not the individual who was the spouse of the retiree at the time of the retiree's death. Petitioner was not married to Florida Highway Patrol retiree Jack E. Walden on the date of his retirement, which was November 1, 1972, but was the legal spouse of Jack E. Walden at the time of his death on January 9, 1985. Florida Highway Patrol retiree Jack E. Walden was married to Barbara C. Walden on the date of his retirement; however, subsequently on January 22, 1976, Barbara Walden and Jack Walden were divorced. Thereafter, on February 6, 1976, Jack Walden married Marilyn S. Walden and she remained his spouse during the following nine years until his death. Petitioner has sought to be paid a "surviving spouse" or other benefit available from the Florida Highway Patrol pension plan, however, the Agency has determined that any benefit must be paid to the former spouse of Jack E. Walden, not Petitioner. Intervenor, Barbara C Yeater, was married to Jack E. Walden on January 19, 1949. She was his spouse during the entire time of his service with the Florida Highway Patrol, at the time of his retirement in 1972, and until dissolution of their marriage in 1976. In September, 1972, prior to his retirement, Jack E. Walden designated Barbara Walden as his beneficiary under the Highway Patrol Retirement System. (Exhibit 1)2 On June 27, 1975, Respondent received Exhibit 2,3 but did not respond to it. At the time Exhibit 2 was received by Respondent, it was the Division of Retirement policy that a retiree who had selected Option 4 under Chapter 321, F.S., could not change the previously selected recipient of survivor benefits subsequent to retirement and cashing of the first warrant. A copy of Exhibit 2 was not sent to Barbara Yeater. There was no further communication from Jack E. Walden to Respondent concerning changes in beneficiary or option selection after June 27, 1975. There was an exchange of correspondence between Respondent and Barbara Yeater (Exhibits 3, 4 and 5),4 but copies of that correspondence were not sent to Jack E. Walden. The Petition and final judgment of dissolution between Jack Walden and Barbara Yeater are Exhibits 7 and 8 in evidence. The subject retirement benefits were not disposed of in the final judgment of dissolution. The monthly benefit payable to Jack E. Walden's surviving spouse is $622.00 plus cost-of-living adjustments. Decedent retired with 21.60 years service, which produced an initial benefit of $475.91. Jack E. Walden believed, at the time of his death, that he had accomplished the change in beneficiary which he sought to carry out by filing Exhibit 2 with Respondent. This fact is based on the absence of any reply by Respondent rejecting the proposed change, by Decedent's failure to make other arrangements for Marilyn Walden, by not seeking to modify the alimony payments awarded to Intervenor, and by his statements to Petitioner and to his friend, George Watson, indicating his belief that the change had been effected, and, finally, by the fact that Respondent accepted and thereafter utilized the change of address contained in the change of beneficiary notice. Respondent relied on the Arnow case5 in its decision to award the continuing benefits to Intervenor on the death of Jack E. Walden (discussed below).
Recommendation From the foregoing, it is RECOMMENDED: That Respondent enter a Final Order awarding continuing retirement benefits to Petitioner. DONE and ENTERED this 29th day of August, 1985 in Tallahassee, Florida. R. T. CARPENTER 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 29th day of August, 1985.
The Issue The issue is whether Respondent discriminated against Petitioner based on marital status in determining his monthly retirement benefits in violation of the provisions of the Florida Civil Rights Act of 1992.
Findings Of Fact Petitioner Kenneth Fritz (Petitioner or Mr. Fritz) has been a firefighter with the City of Pembroke Pines (Respondent or the City) since 1991. His date of birth is June 6, 1948, and he entered the Deferred Retirement Option Program (DROP) on December 1, 2006, at age 58.5 years old. As Respondent's employee, Mr. Fritz participated in the City's Pension Plan for Firefighters and Police Officers (the Plan). The DROP option that Mr. Fritz chose allowed him to name a joint annuitant and contingent survivors. Mr. Fritz, who has been divorced since 1986, chose his daughter who on December 1, 2006, was 32.25 years old, and his son who was 29.333 years old, as his surviving beneficiaries. Each will receive a 50 percent share of the retirement income upon his death payable for the remainder of their lives. Mr. Fritz alleged that the pension fund benefit system discriminates against him based on marital status. There is no factual dispute that his benefits, with a 32-year-old daughter are $3,938.12 a month, as compared to $4,366.59 a month if he had a 32-year-old wife. The benefits are not affected by his having named his son as an additional beneficiary. Mr. Fritz brought his concerns to the attention of Patricia Shoemaker, the Benefits Administrator for Municipal Police Officers' and Firefighters' Retirement Funds for the State of Florida Department of Management Services. On January 29, 2008, March 17, 2008, July 9, 2008, and September 25, 2008, Ms. Shoemaker sent letters to Mr. Anthony Napolitano, Chairman of the Pembroke Pines Firefighter's Pension Plan, requesting an explanation of the apparent violation of the following statutory provisions: § 175.333. Discrimination in benefit formula prohibited; restrictions regarding designation of joint annuitants. For any municipality, special fire control district, chapter plan, local law municipality, local law special fire control district, or local law plan under this chapter: and (1) No plan shall discriminate in its benefit formula based on color, national origin, sex, or marital status. § 175.071(2) Any and all acts and decisions shall be effectuated by vote of a majority of the members of the board; however, no trustee shall take part in any action in connection with the trustee's own participation in the fund, and no unfair discrimination shall be shown to any individual firefighter participating in the fund. (Emphasis added.) In her letter of September 25, 2008, Ms. Shoemaker noted that she had received no responses to her previous letters and that "[W]hile state premium tax moneys were released this year based on our understanding that the Board was researching this matter, future state tax moneys will not be released unless the plan is determined to be in compliance with Chapters (sic) 175, F.S." On October 15, 2008, Deputy City Attorney Julie F. Klahr finally responded to Ms. Shoemaker as follows: Your letter to the Pembroke Pines Police and Fire Retirement Plan has been referred to this office for reply. The issue is whether a spouse only benefit is discriminatory on the basis of marital status. For the reasons which follow, the benefit is fully in compliance with Florida law. Section 175.333(2)(a), Florida Statutes, clearly recognizes the propriety of a plan offering a spouse only survivorship benefit that alone should resolve this issue. The benefit at issue in Pembroke Pines is a spouse-only benefit, which not only exceeds the minimums required by Chapter 175, but also pre-dates the enactment of Ch. 99-1, Laws of Florida (1999). The complaining employee sought to designate a child as a beneficiary but without an age appropriate actuarial reduction. Nothing in Chapter 175, or any other law, mandates a retirement plan to provide a costly, generation skipping benefit without providing for actuarial equivalence. To the extent that your view is that the plan provision must be altered, it is a "minimum benefit" which is required, only if unencumbered Chapter 175 insurance premium tax rebates are present to pay the full cost as provided in §175.351. The City does not concede this is a correct interpretation, nor does any such Chapter money exist. Any required action to the contrary is an improper unfunded mandate. Moreover, the provisions of the Internal Revenue Code and corresponding regulations of the Department of the Treasury mandated the use of the actuarial factors at issue. Nothing in Chapter 175, Florida Statutes, directs a plan to violate tax provisions necessary to maintain qualification. It is the City's position that according a benefit to a spouse of a deceased member, provided the plan otherwise exceeds minimum benefits under Chapter 175, is a matter reserved to the City under its home rule powers in the Florida Constitution and Chapter 166, Florida Statutes. If any member feels aggrieved by the structure of the Ordinance Code, that person may seek remedies under Chapter 760, Florida Statutes. It should be observed, however, that the status at issue is that of the purported survivor and not the member. As a result, no violation of Florida's civil rights law is presented. See, Donato v. AT & T, 767 So.2d 1146 (Fla. 2000). Further §760.10(8)(b), Florida Statutes, exempts bona fide retirement plans from coverage under this law. The first provision cited as support for the City's position is as follows: § 175.333(2)(a) If a plan offers a joint annuitant option and the member selects such option, or if a plan specifies that the member's spouse is to receive the benefits that continue to be payable upon the death of the member, then, in both of these cases, after retirement benefits have commenced, a retired member may change his or her designation of joint annuitant or beneficiary only twice. Although the Deputy City Attorney asserted that this section alone should resolve the matter, Mr. Fritz observed the subsection does not authorize discrimination based on marital status but only limits the number of times that a joint annuitant or beneficiary may be changed. The City also relied on the fact that the Plan predates Chapter 99-1, Laws of Florida, but the statement of legislative intent indicates that the law is applicable to existing plans, and reads as follows: Legislative declaration. It is hereby declared by the Legislature that firefighters, as hereinafter defined, perform state and municipal functions; . . . and that their activities are vital to the public safety. It is further declared that firefighters employed by special fire control districts serve under the same circumstances and perform the same duties as firefighters employed by municipalities and should therefore be entitled to the benefits available under this chapter. Therefore, the Legislature declares that it is a proper and legitimate state purpose to provide a uniform retirement system for the benefit of firefighters as hereinafter defined and intends, in implementing the provisions of s. 14, Art. X of the State Constitution as they relate to municipal and special district firefighters' pension trust fund systems and plans, that such retirement systems or plans be managed, administered, operated, and funded in such manner as to maximize the protection of the firefighters' pension trust funds . . . This chapter hereby establishes, for all municipal and special district pension plans existing now or hereafter under this chapter, including chapter plans and local law plans, minimum benefits and minimum standards for the operation and funding of such plans, hereinafter referred to as firefighters' pension trust funds. The minimum benefits and minimum standards set forth in this chapter may not be diminished by local charter, ordinance, or resolution or by special act of the Legislature, nor may the minimum benefits or minimum standards be reduced or offset by any other local, state, or federal law that may include firefighters in its operation, except as provided under s. 112.65. (Emphasis added.) The City claimed, but Ms. Shoemaker's reference in her letter to the release of state premium tax moneys appears to contradict its claim, that it does not have to pay minimum benefits required by Chapter 175, although not conceding its applicability, because it has no unencumbered insurance premium tax money, a prerequisite the imposition of the following requirement: § 175.351. Municipalities and special fire control districts having their own pension plans for firefighters. For any municipality, special fire control district, local law municipality, local law special fire control district, or local law plan under this chapter, in order for municipalities and special fire control districts with their own pension plans for firefighters, or for firefighters and police officers, where included, to participate in the distribution of the tax fund established pursuant to s. 175.101, local law plans must meet the minimum benefits and minimum standards set forth in this chapter. * * * However, local law plans in effect on October 1, 1998, shall be required to comply with the minimum benefit provisions of this chapter only to the extent that additional premium tax revenues become available to incrementally fund the cost of such compliance as provided in s. 175.162(2)(a). (Emphasis added.) Apparently, not satisfied with the answer, on January 20, 2009, Ms. Shoemaker wrote again, this time to Ms Klahr, as follows: Dear Ms. Klahr This is to acknowledge receipt of your October 15, 2008 letter in response to my July 9, 2008 letter to the Board of the Firefighters' Pension Plan. While we appreciate your response regarding the propriety of a plan offering a spousal benefit and the appropriateness of an age appropriate actuarial reduction, our question for the Board was a different one relating to the plan's compliance with the provisions of ss. 175.333(1) and 175.071(2), F. S. as they relate to discrimination based on marital status. Based on our understanding of the issue relating to the calculation of the member's benefits, Mr. Fritz does not have a spouse, but wishes to designate his daughter as his beneficiary. He understands and agrees that it is appropriate to actuarialty [sic] adjust his benefit based on the age of his daughter. The actuary provided two calculations, one based on a spouse that was his daughter's age and one based on a beneficiary that was his daughter's age. His benefit when calculated with a young age spouse was greater than his benefit when calculated with the same young age beneficiary. It appears that the only difference in the two calculations is the marital status of the member and not the age of the joint annuitant. If our understanding of the facts relating to this issue are incorrect, please let me know. We have asked that the Board review the plan provisions with their plan attorney and actuary and provide an explanation as to how the plan meets the statutory provisions, specifically ss. 175.333(1) and 175.071 (2), F. S. Mr. Fritz pointed out that, in addition to the statutory provisions cited in Ms. Shoemaker's letter and various others that he cited, the City's Employee Handbook also includes a statement that the City does not discriminate based on marital status. The City's actuary noted that, however outdated, the additional benefit is based on the assumption that a firefighter's spouse is more dependent on the employee's income and pension then any other adult relative. In addition, the deputy city attorney testified that the Plan was adopted in the firefighters' collective bargaining agreement.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law it is RECOMMENDED that the FCHR issue a final order finding that Respondent did not commit an unlawful employment practice. DONE AND ENTERED this 1st day of September, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER 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 1st day of September, 2009. COPIES FURNISHED: James A. Cherof, Esquire Goren, Cherof, Doody & Ezrol, P.A. 3099 East Commercial Boulevard Fort Lauderdale, Florida 33308 Kenneth R. Fritz 16389 Malibu Drive Fort Lauderdale, Florida 33326 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Larry Kranert, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
The Issue Whether Respondent owes $1,568,399.00 or $2,323,765.60 as a penalty for failing to secure workers' compensation insurance for its employees, as required by Florida law.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the sweeping factual stipulations set forth in the parties' June 1, 2005, Joint Stipulation3: Legislative History of the "Penalty Calculation" Provisions of Section 440.107(7), Florida Statutes Since October 1, 2003, the effective date of Chapter 2003-412, Laws of Florida, Section 440.107(7)(d)1., Florida Statutes, has provided as follows: In addition to any penalty, stop-work order, or injunction, the department shall assess against any employer who has failed to secure the payment of compensation as required by this chapter a penalty equal to 1.5 times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during periods for which it failed to secure the payment of workers' compensation required by this chapter within the preceding 3-year period or $1,000, whichever is greater. Prior to its being amended by Chapter 2003-412, Laws of Florida, Section 440.107(7), Florida Statutes, read, in pertinent part, as follows: In addition to any penalty, stop-work order, or injunction, the department shall assess against any employer, who has failed to secure the payment of compensation as required by this chapter, a penalty in the following amount: An amount equal to at least the amount that the employer would have paid or up to twice the amount the employer would have paid during periods it illegally failed to secure payment of compensation in the preceding 3-year period based on the employer's payroll during the preceding 3- year period; or One thousand dollars, whichever is greater. The Senate Staff Analysis and Economic Analysis for the senate bill that ultimately became Chapter 2003-412, Laws of Florida, contained the following explanation of the "change" the bill would make to the foregoing "penalty calculation" provisions of Section 440.107(7), Florida Statutes4: The department is required to assess an employer that fails to secure the payment of compensation an amount equal to 1.5 times, rather than 2 times, the amount the employer would have paid in the preceding three years or $1,000, which is greater. There was no mention in the staff analysis of any other "change" to these provisions. The NCCI Basic Manual The National Council on Compensation Insurance, Inc. (NCCI) is a licensed rating organization that makes rate filings in Florida on behalf of workers' compensation insurers (who are bound by these filings if the filings are approved by Florida's Office of Insurance Regulation, unless a "deviation" is permitted pursuant to Section 627.11, Florida Statutes). The NCCI publishes and submits to the Office of Insurance Regulation for approval a Basic Manual that contains standard workers' compensation premium rates for specified payroll code classifications, as well as a methodology for calculating the amount of workers' compensation insurance premiums employers may be charged. This methodology is referred to in the Basic Manual as the "Florida Workers Compensation Premium Algorithm" (Algorithm). According to the Algorithm, the first step in the premium calculating process is to determine the employer's "manual premium," which is accomplished by applying the rates set forth in the manual (or manual rates) to the employer's payroll as follows (for each payroll code classification): "(PAYROLL/100) x RATE)." Adjustments to the "manual premium" are then made, as appropriate, before a final premium is calculated. Among the factors taken into consideration in determining the extent of any such adjustments to the "manual premium" in a particular case are the employer's loss experience, deductible amounts, premium size (with employers who pay "larger premium[s]" entitled to a "Premium Discount"), and, in the case of a "policy that contains one or more contracting classifications," the wages the employer pays its employees in these classifications (with employers "paying their employees a better wage" entitled to a "Contracting Classification Premium Adjustment Program" credit). Petitioner's Construction of the "Penalty Calculation" Provisions of Section 440.107(7), Florida Statutes In discharging its responsibility under Section 440.107(7), Florida Statutes, to assess a penalty "against any employer who has failed to secure the payment of compensation as required," Petitioner has consistently construed the language in the statute, "the amount the employer would have paid," as meaning the aggregate of the "manual premiums" for each applicable payroll code classification, calculated as described in the NCCI Basic Manual. It has done so under both the pre- and post-Chapter 2003-412, Laws of Florida, versions of Section 440.107(7). This construction is incorporated in Petitioner's "Penalty Calculation Worksheet," which Florida Administrative Code Rule 69L-6.027 provides Petitioner "shall use" when "calculating penalties to be assessed against employers pursuant to Section 440.107, F.S." (Florida Administrative Code Rule 69L-6.027 first took effect on December 29, 2004.) Penalty Calculation in the Instant Case In the instant case, "1.5 times the amount the [Respondent] would have paid in premium when applying approved manual rates to [Respondent's] payroll during periods for which it failed to secure the payment of workers' compensation" equals $2,323,765.60.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner order Respondent to pay a $2,323,765.60 penalty for failing to secure workers' compensation insurance for its employees. DONE AND ENTERED this 5th day of August, 2005, in Tallahassee, Leon County, Florida. S STUART M. LERNER 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 5th day of August, 2005.
The Issue Whether Petitioner is entitled to receive retroactive retiree health insurance subsidy benefit payments in addition to those already received.
Findings Of Fact Respondent is charged with managing, governing, and administering the Florida Retirement System (FRS). The FRS is a state-administered retirement system as defined by Florida law. The health insurance subsidy (HIS) benefit is a program provided by Florida Statutes to help offset the cost of a retiree's monthly medical insurance premiums. Currently, the amount paid is $5 times the years of creditable state service at the time of the retirement calculations. Only those people who were members of the FRS, who apply for and receive monthly retirement benefits are eligible for the HIS. Ms. Shaul worked for the Florida Department of Children and Families (DCF), and its predecessor, the Department of Health and Rehabilitative Services, for 35 years. She was enrolled in the defined benefit plan of the FRS and earned creditable service in the FRS. In October 2001, Ms. Shaul began her participation in the FRS Deferred Retirement Option Program (DROP). In June 2006, the Division provided Ms. Shaul certain forms, brochures and informational material relevant to her DROP participation termination. Via the cover letter, Ms. Shaul was advised in pertinent part: When your name is added to the retired payroll, you will receive a "retiree packet" that contains an information letter, "After you Retire" booklet, W-4P "Withholding Certificate for Pension Payments," Health Insurance Subsidy application, and Direct Deposit Authorization. The retiree packet is mailed approximately one week before you receive your first monthly benefit. In September 2006, Ms. Shaul completed the DROP termination forms and returned them to the Division. On October 1, 2006, Ms. Shaul retired from her state position. As a prior state employee, Ms. Shaul is a member of the FRS. In mid-October 2006, the Division paid Ms. Shaul her DROP payout. At the end of October 2006, the Division paid Ms. Shaul her first monthly service retirement benefit. A copy of the retiree packet sent to Ms. Shaul is not reflected in her file, as the Division did (and does) not place copies of forms or booklets sent automatically. It is the Division's practice to send each retiree added to the system a retiree packet that includes, among other things, an application for the HIS and an explanation of the subsidy, as well as a booklet containing an explanation of all of the benefits available to retirees and beneficiaries under the FRS. There was no evidence that these forms or booklets were not automatically sent to Ms. Shaul. It is the responsibility of an FRS retiree to apply for the HIS benefit. In the event an FRS retiree does not apply for the HIS benefit, the Division will send a reminder memorandum notifying each retiree that their HIS application has not been received and encouraging them to file for it. In January or early February 2007, Ms. Shaul received a statement indicating that her HIS benefits were not being paid. Ms. Shaul contacted the Division and requested that the appropriate application form be provided to her. Ms. Shaul received the application and completed it; however, she did not return the application in a manner that could be traced, i.e., via certified or registered mail. The Division has no record of receiving this 2007 application. For the next several years, Ms. Shaul did not follow up on the HIS benefit to ensure that she was being properly reimbursed. Each year she would receive her financial statement from the State and immediately provide it to her accountant for tax preparation. In January 2010, Ms. Shaul telephoned the Division to inquire about the HIS benefit. During the 2007-2012 period, the Division sent out newsletters and other notices to all retirees specifically referencing the HIS.2/ The Division reviewed Ms. Shaul's service folder via its Integrated Retirement Information System. The Division established Ms. Shaul's HIS benefit effective date as July 1, 2009, based on her January 2010 telephone call to the Division, and the fact that her health insurance premiums were being deducted from her monthly service retirement benefit payment. The Division's record substantiates that Ms. Shaul was paid HIS benefits totaling $1,200.00 ($300 for the months of January and February 2010, and $900 for the six months of retroactive benefits from July 1, 2009, through December 2009).3/ The Division issued a notice of final agency action on October 24, 2012, wherein Ms. Shaul was advised that her verbal application for the HIS benefit during the January 2010 telephone call was the earliest record of a HIS benefit being requested on her behalf. The issue is not whether Ms. Shaul remembers completing the HIS benefit application, but when the Division received the application. The credible, persuasive evidence in the record establishes that Ms. Shaul contacted the Division in January 2010 and received the HIS benefit payment for the prior six months.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of Retirement, issue a final order denying Ms. Shaul's request for additional HIS benefits retroactive to the date of her termination of DROP. DONE AND ENTERED this 5th day of June, 2013, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK 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 5th day of June, 2013.
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)
The Issue The primary issue to be decided in this proceeding is whether Respondent's backdated, retroactive workers' compensation policy complied with the requirements of chapter 440, Florida Statutes. If not, was the penalty properly assessed.
Findings Of Fact The undersigned makes the following findings of fact: Petitioner is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees. § 440.107, Fla. Stat.; Pet. Exs. 1, 2, 3. Respondent is a corporation in the State of Florida and was formed on March 6, 1996. Pet. Ex. 4. Respondent operates a preschool located at 15 Northwest 5th Avenue, Hallandale, Florida 33309, known as Hallandale Academy. Pet. Ex. 13 at 4:11-25, 5:1-5. Respondent obtained a workers' compensation policy AWC1098385 through Associated Industries Insurance Company, an insurance carrier authorized to write workers' compensation policies in the State of Florida. Respondent's workers' compensation policy was effective from February 5, 2018, to March 11, 2018. Pet. Exs. 9 and 14. On or about February 28, 2018, Respondent received notification of cancellation of its policy from its insurance carrier. § 440.42(3), Fla. Stat.; Pet. Ex. 9. Respondent's workers' compensation policy was cancelled by Associated Industries Insurance Company on March 11, 2018, at 12:01 a.m. due to nonpayment of the premium. Pet. Exs. 8, 9, 10, and 11. On or about March 11, 2018, Associated Industries Insurance Company notified the Department of the cancelled policy. § 440.185(6), Fla. Stat.; Pet. Ex. 14. On March 16, 2018, Workers' Compensation Compliance Investigators Faline Moeses ("Moeses") and Emily Metzenheim ("Metzenheim") conducted a routine workers' compensation compliance investigation of Respondent's preschool. Pet. Ex. 8. Moeses confirmed that Respondent had no workers' compensation coverage through the Department's internal database, Coverage and Compliance Automated System ("CCAS".)3/ Pet. Exs. 8 and 14. Moeses confirmed that her findings in CCAS matched the information found on the National Council on Compensation Insurance ("NCCI") website.4/ Pet. Ex. 8. Both CCAS and NCCI confirmed that Respondent did not have an active workers' compensation insurance policy on March 16, 2018, when Moeses visited. Pet. Ex. 8. On March 16, 2018, while at Respondent's place of business, Moeses called Respondent's insurance carrier, Associated Industries Insurance Company, and received additional confirmation that Respondent's workers' compensation insurance policy had been cancelled and was not in effect due to nonpayment of premium. Pet. Exs. 8 and 9. Moeses contacted Respondent's corporate officer, Davain Baldeo ("Mr. Baldeo"), by phone. He identified himself as the owner of Baldeo Enterprises, Inc. Pet. Ex. 8. Moeses provided information to Mr. Baldeo about the purpose of the investigation. Pet. Ex. 8. Moeses requested to meet with Mr. Baldeo in person to discuss the investigation. Mr. Baldeo refused the request to meet and asked that Moeses cease speaking with his employees and send all communications by mail.5/ Pet. Exs. 8. On March 19, 2018, a Request for Production of Business Records was sent via certified mail to Respondent. Pet. Exs. 1 and 8. The Request for Production of Business Records requested several categories of business records from Respondent for the period of December 15, 2017, through March 16, 2018. See Petitioner's Exhibit 1 for a detailed description of the records requested. Respondent submitted sufficient business records to the Department in response to the Request for Production of Business Records, to allow it to complete its investigation. Pet. Ex. 5. The records submitted by Respondent confirmed that Respondent employed four or more regular and customary employees during the period of December 15, 2017, through March 16, 2018. Pet. Exs. 5 and 8. On March 19, 2018, Associated Industries Insurance Company, reinstated Respondent's workers' compensation policy and it backdated the policy to March 11, 2018. Pet. Exs. 8, 9, 10, and 11. On April 6, 2018, the Request for Production of Business Records was converted into a BRR based on the lapse in Respondent's workers' compensation insurance coverage between March 11 and March 19, 2018. Pet. Ex. 2. On April 19, 2018, the BRR was served on Respondent. Pet. Ex. 8. Respondent did not provide any additional documents in response to the BRR. Pet. Ex. 8. Department Auditor Christopher Collins was assigned to calculate a penalty for Respondent's noncompliance with Florida's Workers' Compensation Law. Pet. Ex. 8. Respondent's business records were sufficient for the Department to determine Respondent's payroll for the audit review period. The Department assessed a penalty against Respondent for its noncompliance with chapter 440, Florida Statutes. Pet. Ex. 3 and 5. The Department served Respondent with an Order of Penalty Assessment totaling $1,000.00. Pet. Exs. 3 and 11. Respondent's period of noncompliance was March 11 through March 18, 2018, as Respondent failed to secure workers' compensation insurance coverage for this period. Pet. Exs. 8, 9, 10, and 11. Based on Respondent's records, the Department determined Respondent's gross payroll during the period of noncompliance was $3,423.99. Pet. Ex. 11. Respondent's unsecured gross payroll was then divided by 100 so that it could be multiplied by the approved manual rate in order to determine the premium due. Pet. Ex. 11. The approved manual rates are drafted by NCCI and then approved by the Florida Office of Insurance Regulation. § 627.091(4), Fla. Stat. The approved manual rates represent the risk factor associated with each NCCI class code and are critical to calculating a premium. Pet. Ex. 7. The calculations reveal that Respondent would have paid $62.32 in workers' compensation premium for its unsecured gross payroll, had coverage been in place, and not lapsed during the period of March 11 through March 18, 2018. Pet. Ex. 11. The Department demonstrated by clear and convincing evidence that Respondent violated Florida's Workers' Compensation Law by employing four or more employees without securing the payment of workers' compensation from March 11 through March 18, 2018, or a proper exemption. This violation required the issuance of the BRR and OPA to Respondent. Petitioner provided clear and convincing evidence that its penalty calculation was correct.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order imposing and assessing the proposed Order of Penalty Assessment against Respondent. DONE AND ENTERED this 7th day of January, 2019, in Tallahassee, Leon County, Florida. S ROBERT L. 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 7th day of January, 2019.
The Issue Whether the Petitioner, Kellie Brown, on behalf of her minor son, Brandon Brown, is entitled to payment of the Health Insurance Subsidy on the retirement account of Corporal Arthur "Donnie" Brown, deceased, for the period of February 1, 1994, through and including September 1996.
Findings Of Fact Kellie M. Brown (Petitioner) is the natural mother and guardian of Brandon D. Brown, a minor child, whose deceased father was Donnie Brown. At the relevant times, Donnie Brown was employed by the Orange County Sheriff's Office (Sheriff's Office) as a deputy with the rank of Corporal, and was a compulsory member of the Florida Retirement System (FRS). On or about January 16, 1994, Cpl. Brown disappeared from public view and did not report for duty with the Sheriff's office. His last day of work was listed as January 15, 1994. He was subsequently terminated from his position for failure to report for duty. His body was later found on March 15, 1994, and after examination by the county medical examiner, it was determined that his date of death was January 15, 1994. Based on this determination, survivorship benefits became available to Brandon Brown as if his father had died while still employed with the sheriff's office. The Petitioner is the former spouse of the deceased. After the discovery of the body, the Sheriff's office offered to assist Petitioner in the completion and transmission of the necessary paperwork to obtain available benefits. The Sheriff's Office enrolled Brandon under its health insurance plan for one year at no cost to the Petitioner. In March 1994, Petitioner visited the personnel office of the Sheriff's Office. She was given many forms and applications to sign in order to obtain benefits for her son. Petitioner testified that one of the forms in the packet of material was the Health Insurance Subsidy (HIS) application form of the Respondent. She claimed it was given to her in a manila folder by Barbara Hill, a personnel specialist with the Sheriff's Office. Petitioner later had another conversation with Ms. Hill in which the Petitioner wanted to know where the completed form was and insisted that the HIS form was in the material given to her by Ms. Hill. Petitioner then stated that Ms. Hill called the offices of the Respondent in Tallahassee and was told that her son was not eligible for the HIS payment. Thereafter, Petitioner stated that she did not pursue the issue. On behalf of her minor son, the Petitioner applied for and began receiving a FRS retirement benefit on the account of Cpl. Brown, effective July 1994 and retroactive to February 1994. After Brandon's name was added to the retired payroll, in July 1994, Petitioner was notified by mail from the Respondent that Brandon was also eligible for payment of a HIS, which is a benefit separate from the retirement benefit that is paid to retirees and their beneficiaries to help offset the cost of health insurance. Petitioner did not return the HIS application form. Notification of new retirees after their name has been added to the retired payroll about their eligibility for the HIS is the normal and customary practice of Respondent. The HIS application form of Respondent is not given to the employing agency. Therefore, the Sheriff's office would not have a copy of the form to give to Petitioner. Instead, the HIS form is sent by the Respondent directly to the retired member or the beneficiary after the actual retirement. The form is sent out at the same time or shortly after the notice to the retiree that he or she has been placed on the retired payroll. Brandon Brown was added to the retired payroll in July 1994, retroactive to February 1994, and the notification letter form was sent to Petitioner in July 1994. The HIS form would have been sent at that time or shortly thereafter. In early 1997, Barbara Hill reviewed the roll of retirees because of a reengineering program instituted by the Sheriff's office. She found three widows who were not being paid the HIS benefits by Respondent, including Petitioner. She contacted all three women at the request of the Sheriff's office. Respondent sent information about the program to the women. As the result of conversations between Petitioner and Barbara Hill of the Sheriff's office, Petitioner was sent an HIS application form by Respondent, which she completed and returned to the Division on April 23, 1997. Brandon was added to the HIS payroll retroactive to October 1996. The amount of the benefit is $51.99 per month. The Sheriff's office has a health insurance subsidy program for its retired members that is similar to the FRS HIS program and is the same dollar amount as the HIS benefit paid by FRS. However, it is paid only to members and not to beneficiaries so that a beneficiary like Brandon would receive the FRS HIS payment but would not receive the Sheriff's Office HIS payment. The Respondent makes regular efforts to notify retirees of the various benefits offered to them under FRS. As it applies to this case, the Respondent issues a pamphlet entitled "After You Retire" on a periodic and ongoing basis. The then current edition was issued in October 1993, and provided on page 7, information about the HIS. The pamphlet stated as follows: The health insurance subsidy (HIS) is a monthly supplemental payment that you may be eligible to receive if you have health insurance coverage. This monthly payment, which you must apply for, is figured by multiplying your total years of creditable service at retirement (up to a maximum of 30 years) by $3. The minimum monthly subsidy is $30 and the maximum is $90. After your name is added to the retired payroll, an application for the health insurance subsidy, Form HIS-1, will be mailed to you. The completed application must be returned to the Division of Retirement within six (6) months of the date your retirement benefits commenced if you wish to receive the subsidy retroactive to your retirement date. If you fail to return the form within six (6) months, retroactive subsidy payments will be limited to a maximum of six (6) months. It is your responsibility to obtain certification of health insurance coverage and apply for the health insurance subsidy. (emphasis in quoted material) The Respondent also issued a "Retiree Newsletter" in December 1994, and informed all retirees about updates to the HIS program. On page 3, the Newsletter stated: The Health Insurance Subsidy (HIS) is an extra payment that is added to your monthly retirement benefit to help you pay the cost of health insurance. To be eligible for receive the HIS payment, retirees must have health insurance, Medicare or Champus. The subsidy payment which you must apply for, is $3 per month for each year of creditable service you had earned at retirement. The minimum monthly subsidy is $30 and the maximum is $90. If you believe you are eligible for the subsidy but are not currently receiving it, you should call or write the Disbursement Section and request Form HIS-1, Health Insurance Subsidy Certification. If you apply for the HIS after you retire, you will receive retroactive HIS payments limited to a maximum of six months, or the number of months you have been retired, if less than six months. (emphasis in quoted material) Petitioner was mistaken in her belief that the application form for FRS HIS benefits was provided to her by the Sheriff's Office in March 1994.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be issued by the Division of Retirement determining that the Petitioner, Kellie Brown, is not entitled to the payment of the Health Insurance Subsidy for her minor son on the retirement account of Corporal Arthur "Donnie" Brown, deceased, for the period of February 1, 1994, through and including September 1996. RECOMMENDED this 17th day of November, 1997, at Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 17th day of November, 1997. COPIES FURNISHED: Kellie M. Brown, pro se 12868 Downstream Circle Orlando, Florida 32828 Stanley M. Danek, Senior Attorney Department of Management Services Division of Retirement 2639 North Monroe Street, Building C Tallahassee, Florida 32399 Thomas J. Pilacek, Esquire Thomas J. Pilacek & Associates 601 South Lake Destiny Road Maitland, Florida 32751 Paul A. Rowell, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 A. J. McMullian, III, Director Department of Management Services Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560
Findings Of Fact The Alarm Association of Florida, Inc. ("Association") is a trade association that was incorporated on July 12, 1976, as a Florida not-for-profit corporation. The Association was organized to provide an opportunity for its members to exchange ideas and share information concerning trade practices, business conditions, technical developments, and related subjects concerning the electrical protection industry. The Association has two primary types of membership. Regular Membership is open to any individual, partnership, firm, or corporation engaged in the business of installing or providing alarm service in the electrical protection field for one year preceding the application. Associate Membership is open to any individual, partnership, firm, or corporation that is not engaged directly in the electrical protection business, but may supply goods or services to Regular Members. Officers and directors of the Association are selected by the voting members, which are limited to Regular Members. About 25 percent of the Association membership consists of nonvoting members. Sometime prior to November 1, 1985, a representative or representatives of the Association requested Dealers Association Plan ("DAP") to make a presentation concerning an employee benefit plan that the Association was considering establishing. The Association had previously formed a committee to investigate the feasibility of sponsoring such a plan, which its members could join. DAP is licensed in Florida to administer self-insured and insured health insurance programs, including the type in which the Association was interested. The Association thereafter decided to sponsor an employee benefit plan and use DAP as the plan administrator. DAP prepared or caused to be prepared the necessary documents. These documents included a trust agreement between Ronald D. LaFontaine, John Black, Robert Neely, Robert Adams, and Terry Akins, as trustees ("Trustees"), and the Association ("Trust," or "Trust Agreement"); the Alarm Association of Florida Health and Welfare Benefit Plan ("Plan"); and the Administrator Agreement between the Association and DAP. Each document was executed and delivered on November 1, 1985. The Trust Agreement states that the Trust was to be funded by the contributions made by the members of the Plan and the Trust funds would be maintained as a reserve against claims by Plan participants. The Trust Agreement provides that the Association may remove a Trustee at anytime and replace a Trustee who has resigned or been removed. The Trust Agreement states that the Plan Administrator, which was designated as DAP, shall administer the day-to-day operations of the Trust, including the payment of claims, providing of "consulting and actuarial services necessary for the continuing successful operation of the Plan," and establishment of procedures for "Employee Contributions." "Employees" are "all qualified members of the Association and their employees." The Administrator Agreement, which is authorized by the Trust Agreement, provides that DAP could use the Trust funds to review and pay claims and pay premiums on policies purchased by the Plan or Trustees. The Administrator Agreement authorizes DAP to negotiate and purchase reinsurance contracts to provide stop-loss coverage or avoid catastrophic losses, as well as spread the risk of excessive claims. The Administrator Agreement states that DAP is to receive 20 percent of the monthly contributions as its administrative fee. The Plan provides a detailed statement of the available benefits and various administrative matters, including claim procedures. In general, the Plan covers a wide range of medical, accident, and dental expenses. In capital letters on the first page, the Plan states: This is a self-funded, trade association member employee benefit plan established under Public Law 93-406 [Employee Retirement Income Security Act ("ERISA")], available only to qualified participating employers and their qualified employee participants. It is not available for individual coverage. The Trust Agreement likewise states that it "shall be interpreted in a manner consistent with its being ... a Welfare Benefit Plan pursuant to ... ERISA..." Each Association member enrolled in the Plan makes a monthly contribution, which is paid to DAP. The contribution is equal to the number of employees of the enrollee who have elected to participate in the Plan multiplied by the contribution rate. The Trustees set the contribution rate based upon the advice of DAP. On at least one occasion, the Trustees increased the rate upon the advice of DAP. At all times, the Trustees and DAP have intended to keep the Plan and Trust actuarially sound. DAP uses the contributions to pay claims that it has received. As long as DAP has determined that the claims are valid, the Trustees do not review the claims. The Trustees consider a claim only when a participant appeals a rejected claim. DAP uses the contributions to pay itself its 20 percent administrative fee. DAP pays any remaining funds to the Trustees, who hold such funds in the Trust as reserves against future claims. The Trust is liable for all claims. If the valid claims presented to DAP exceed the contributions received for that month, the Trust provides the difference. However, the Trustees have reinsurance under which third-party insurers are liable to pay any claim in excess of $25,000, but not more than $1,000,000. Since the Plan has been adopted, DAP and the Association have solicited enrollees. The most important source of solicitation has been by direct mail, for which DAP is responsible. In the case of new enrollees that are not already members of the Association, DAP may take a Plan application and Association membership application at the same time. In April, 1988, the Association comprised 425-450 members. A couple of years ago, the Association had only about 65 members. About 85 members have enrolled in the Plan. These enrollees are all employers. About 300 employees participate in the Plan. All of these employees are employed by enrolled employers. The record fails to disclose whether all of the enrollees are voting members of the Association. Petitioner's Exhibit Number 5 lists the names of the enrollees. It appears from the names of the businesses that all, or nearly all, of them qualify for voting membership in the Association. The Plan has never obtained a certificate of authority from Petitioner, pursuant to the Act, to operate the Plan. The Plan, the Association, and DAP have never attempted to comply with any provision of the Act, based on the position that ERISA preempts all or part of the Act. The Plan is not fully insured and has no exemption from the Secretary of Labor, as these terms are discussed below.
Recommendation Based on the foregoing, it is recommended that a Final Order be entered finding Respondent guilty of failing to hold a subsisting certificate of authority while operating or maintaining a multiple-employer welfare arrangement, ordering Respondent to cease and desist from writing any new or renewal business and accepting any contributions or premiums from current or prospective enrollees or participants, and imposing an administrative fine against Respondent in the amount of $5000. ENTERED this 1st day of June, 1988, in Tallahassee, Florida. ROBERT E. MEALE 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 1st day of June, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-3046 Treatment Accorded Petitioner's Proposed Findings 1-4. Adopted. Rejected as unsupported by the evidence. The exhibit discloses the names of about 85 employers. Rejected as unsupported by the greater weight of the evidence. The Plan documents limit enrollees to employers. Adopted. Rejected as irrelevant and not a proper finding. The proposed finding goes to the weight of other testimony. Adopted, except that the second to last sentence is rejected as unsupported by the greater weight of the evidence. Adopted. First two lines are rejected as unsupported by the greater weight of the evidence. The remainder is adopted. Adopted. Adopted in substance. 14-18. Adopted. 19. Rejected as irrelevant. 20 and 23. Adopted in substance. 21-22, 24-25. Rejected as irrelevant and, in the case of paragraph 22, legal argument. Treatment Accorded Respondent's Proposed Findings All of Respondent's proposed findings are rejected as legal argument, except that paragraph 1 and the first sentence of paragraph 2 are adopted. COPIES FURNISHED: R. Terry Butler, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32399-8300 Geoffrey B. Dobson, Esquire Meredith & Dobson 77 Bridge Street St. Augustine, Florida 32804-1957 Honorable William Gunter State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300
