09-002842 Deborah Bohler vs. Department Of Management Services, Division Of Retirement Status: Closed Recommended Order on Tuesday, November 10, 2009.

Summary: Petitioner established her husband chose Option 1 (no survivorship benefits) through the use of forged spousal notification and acknowledgement of that selection. Therefore, the election is nullity and she takes survivor's benefits as "Joint Annuitant."

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEBORAH BOHLER, )

)

Petitioner, )

)

vs. ) Case Nos. 09-2842

) 09-3350RX

DEPARTMENT OF MANAGEMENT )

SERVICES, DIVISION OF )

RETIREMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to proper notice, this matter came on for formal

proceeding and hearing before P. Michael Ruff, a duly-designated

Administrative Law Judge of the Division of Administrative

Hearings. The hearing was conducted in Jacksonville, Florida,

on August 11, 2009. The appearances were as follows:

APPEARANCES

For Petitioner: T. A. Delegal, Esquire

Delegal Law Offices, P.A.

424 East Monroe Street

Jacksonville, Florida 32202

For Respondent: Elizabeth Regina Stevens, Esquire

Department of Management Services

Office of the General Counsel

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32327

STATEMENT OF THE ISSUES

The issues to be resolved in this proceeding concern

whether the Petitioner, as a surviving spouse, is entitled to a

continuing benefit from the Florida Retirement System (FRS)

based on the retirement account of her deceased husband,

George S. Bohler. More specifically, it must be determined

whether the forgery of the spousal acknowledgement form renders

the member's election of the "Option 1" retirement benefit

payment, which precludes a survivor's benefit for his spouse,

invalid and void.

PRELIMINARY STATEMENT

This dispute arose upon the death of FRS member George S.

Bohler, on October 18, 2007. Immediately after his death, the

Petitioner, his surviving spouse, requested that her late

husband's retirement benefits be paid to her as a survivor's

benefit. Because of its view that the member, Mr. Bohler, had

validly elected "Option 1" for receipt of FRS benefits upon his

retirement (and entry into the DROP arrangement) the Agency took

the position that there was no survivor's benefit to be paid to

his surviving spouse, the Petitioner. Consequently, by letter

of March 19, 2009, the Division of Retirement (Division) advised

the Petitioner of its denial of her request.

The Petitioner availed herself of a right to a formal

administrative proceeding to contest that initial Agency action.

She seeks to resolve the issue of whether her spouse's option

selection was valid, could be changed or, in any event, whether

she was entitled to a survivor retirement benefit. The matter

was transferred to the Division of Administrative Hearings and,

in due course, to the undersigned Administrative Law Judge for

conduct of a formal proceeding, pursuant to Sections 120.569 and

120.57(1), Florida Statutes (2009).

The Petitioner has also filed a rule challenge petition

pursuant to Section 120.56, Florida Statutes, challenging

Florida Administrative Code Rule 60S-9.001(2)(s) as an invalid

exercise of delegated legislative authority. This is the Rule

which provides for the form for spousal acknowledgement of a

retirement system member's election of Option 1. It indicates

that the spouse is aware of the election of the retirement

benefit option which precludes any survivor benefit being

available to a surviving spouse. This Rule was enacted pursuant

to Section 121.091(6)(a), Florida Statutes, which states that

the spouse of a member shall be notified and shall acknowledge

any such election of one of the two options which result in

divesting a spouse of a survivor's benefit.

The Rule Challenge Petition was assigned Case No. 09-3350RX

and was consolidated for hearing purposes with the instant case.

It, however, will be the subject of a separate final order being

entered adjudicating the Rule Challenge Petition and

adjudication of that proceeding is not addressed in this

recommended order.

This cause came on for hearing, as noticed. The Petitioner

presented her own testimony and offered two exhibits which were

admitted into evidence. The Respondent presented the testimony

of one witness, Sharlene Fansler, and offered one exhibit which

was admitted into evidence. A joint exhibit was also submitted

and admitted by the parties. Upon concluding the proceeding,

the parties elected to file proposed recommended orders which

were timely-filed after conclusion of the final hearing. Those

Recommended Orders have been considered in the rendition of this

Recommended Order. The parties elected to obtain no transcript

of the final hearing.

FINDINGS OF FACT

1. George Bohler, the FRS member at issue, was employed,

at times pertinent, as a Professor of Economics at Florida

Community College in Jacksonville. The College is an FRS

employer and Mr. Bohler was a member of the FRS retirement

system. The Division of Retirement is an administrative agency

charged with regulation and operation of the Florida retirement

system, including calculation of and determination of

entitlement to retirement benefits, under various options and

member circumstances.

2. On March 22, 1999, Mr. Bohler filed a completed Florida

Retirement System Application for service retirement and the

Deferred Retirement Option Program (DROP). This was

accomplished through his filing of "Form DP-11." The Form

provides a retiree with information pertaining to four options

by which his retirement benefits may be paid. One full page of

that form provides an explanation of each option. Mr. Bohler

selected Option 1, a retirement benefit pay-out plan which

provides the highest monthly benefit. The Option 1 selection

provides that this highest monthly benefit is payable for the

lifetime of the retiree only. Upon his death, the benefit would

stop and his beneficiary, here his spouse, the Petitioner, would

receive only a refund of any contributions the member might have

paid into the FRS which exceeds the amount he had received in

benefits. Option 1 provides no continuing or survivor benefit

to a beneficiary or surviving spouse.

3. The DP-11 Form filed with the retirement application

contained an apparent spousal acknowledgement purportedly signed

by Deborah T. Bohler, the spouse of member George Bohler. It

appears to acknowledge that the member had elected either Option

1 or Option 2, which provide no survivor/spouse benefit.

4. The DP-11 Form indicated to the Division that the

member was married. The parties have stipulated, however, that

the Petitioner's signature on the FRS application for service

retirement and the DROP program was actually forged.

5. George Bohler, the member, was an FRS member from

August 19, 1968, to March 31, 2005. He received FRS retirement

benefits based upon the above-referenced application from the

Division from April 1, 2000, to October 31, 2007.

6. The Form DP-11 contained a statement to the effect that

the retiree member understood that he could not add additional

service, change options, or change his type of retirement once

his retirement became final.

7. Mr. Bohler began participation in the DROP program on

April 1, 2000. Thereafter, his last date of employment was

March 31, 2005, and he passed away on October 18, 2007. He

received FRS benefits from April 1, 2000, until October 31,

2007. For 28 years, until his death on that date, Mr. Bohler

was legally married to the Petitioner, Deborah Bohler, during

which time they were never separated or divorced. On March 10,

1999, Mr. Bohler executed the FRS Application for Service

Retirement and the DROP program. He had his signature notarized

as required for that form. Joint Exhibit 1, in evidence.

8. Mr. Bohler designated the Petitioner as his primary

beneficiary on the DROP Application. He elected to begin

participation in the DROP program as of April 1, 2000, and to

retire from state employment effective March 31, 2005, which he

did.

9. There are four options which an FRS member may select

for his or her retirement benefits to be paid to the member or

to the survivors/beneficiaries. Mr. Bohler selected "Option 1"

on his DROP Application form. This results in a significantly

higher retirement monthly benefit than does Options 3 or 4,

which have survivorship rights.

10. The acknowledgement section on the DROP Application

form requires that a member's spouse be notified and must

acknowledge a member's selection of Option 1 or Option 2 by

signing that DROP Application form, so that the FRS is thus

informed that the spouse made a knowing, intelligent waiver of

survivorship rights to benefits. The spousal acknowledgement

provision or section does not require that the member's spouse's

signature be notarized. The form also does not require a member

to swear under oath that the spouse was notified.

11. The parties have stipulated that the Petitioner's

apparent signature shown on Mr. Bohler's retirement application

form was forged. The Petitioner had no knowledge that her name

had been placed on the form by some other person, nor did she

have any knowledge that Mr. Bohler had selected Option 1 prior

to his death. The Petitioner first learned that her husband had

selected Option 1 when she contacted the Respondent, after his

death, to request that his retirement benefits now be paid to

her. She believed that she was entitled to survivorship

benefits. Her husband never informed her that he had selected a

retirement option which would not pay her survivorship benefits,

nor had they discussed the matter before or since his

retirement. In their marital and family relationship, the

Bohlers had divided certain duties in such a way that

Mr. Bohler, the FRS member at issue, handled all financial

matters himself. The Petitioner, Mrs. Bohler, dealt with any

tax issues or filings the couple was required to make during the

years of their marriage. The Petitioner is a certified public

accountant. The Petitioner was simply aware that her husband

received retirement benefits, and knew the amount of them, but

did not know that they represented benefits for Option 1 rather

than Option 3 or 4.

12. The Petitioner's signature on the spousal

acknowledgment section of the DROP Application form is

stipulated to have been forged. The fact of the forgery, and

the Petitioner's un-refuted testimony, establishes that she was

never notified, nor did she ever acknowledge that her husband

had selected Option 1. She was not aware that an attempt to

waive or extinguish her survivor's benefits had been made. She

believed, during his lifetime, that she was to be accorded

survivor benefits.

13. Testimony presented by the Respondent shows that the

Respondent Division will not accept a retirement application

form, or process it, if a member fails to complete the spousal

acknowledgement section or, alternatively, to submit a signed

statement explaining why that section is left blank, or the

signature of the spouse has not been obtained. The fact that

the Division will not accept a retirement or DROP Application

form or process the related benefits if the acknowledgement

section is unsigned or blank establishes the mandatory nature of

the requirement that a spouse acknowledge a member's election to

receive benefits under an option which would preclude a spouse's

survivorship benefits. The acknowledgement is thus not an

optional requirement. In fact, the legislature clearly placed

that requirement in the statute, Section 121.091(6)(a), Florida

Statutes, as a mandatory requirement so a spouse would know of

any such attempt to waive the spouse's survivorship rights and

benefits. It is an acknowledgement that the spouse has a vested

or property right in such benefits, which must be knowingly and

intelligently waived. The Statute says, in fact, that the

spouse of any member "shall be notified of and shall acknowledge

any such election." Therefore, obtaining a spouse's signature

is not the only desired result set forth by the legislature (and

under the rule adopted pursuant thereto) because it requires

actual notification of the spouse, not merely the obtaining of a

spouse's signature, whether genuine or forged. Actual

notification is what must be accomplished. The required

notification and indeed the obtaining of the Petitioner's

signature was not accomplished in the facts of this case.

14. In light of these facts, the act of declaring and

accomplishing retired status, and selection of the related

benefit option, was never completed. The Option selection was

obviously a nullity and void ab initio because the mandatory

condition precedent never was accomplished by the member.

CONCLUSIONS OF LAW

15. The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parties to this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2009).

16. The Petitioner in this matter has the burden of

proving by a preponderance of evidence that she is entitled to

the relief and retirement benefits sought. See Florida

Department of Transportation v. J.W.C., Co. , 396 So. 2d 778, 789

(Fla. 1st DCA 1981).

17. When an FRS member retires, there are four benefit

payment options available. The first is Option 1, which pays

the maximum retirement benefit payable to the member during his

lifetime, but by which retirement benefits are extinguished upon

the member's death. Option 2 provides a retirement benefit

payable during the member's lifetime and, in the event of his

death within a period of 10 years after retirement, the same

monthly benefit amount will be payable to the beneficiary for

the balance of the 10-year period only.

18. Option 3 provides a retirement benefit to be payable

during the joint lifetimes of both the member and his joint

annuitant and which shall continue after the death of either

during the lifetime of the survivor in the same amount (except

as provided in Florida Administrative Code Rule 60S-4.0101

(1)(e).) Option 4 provides for a retirement benefit payable

during the joint lifetimes of the member and his joint

annuitant, and which shall continue after the death of either

during the lifetime of the survivor, in an amount equal to 66

and 2/3 percent of the amount which was payable during the joint

lifetime of the member and his joint annuitant (here again,

except as provided in Rule 60S-4.010(1)(e), concerning joint

annuitants who are under the age of 25 or disabled, who receive

a different amount of benefit).

19. Section 121.091(6)(a), Florida Statutes (2008), states

that the spouse of any member "shall be notified of and shall

acknowledge any such election " which would divest a spouse of a

survivor's benefit. This provision applies to the retiree's

selection of "Option 1" in this case. Therefore, a spouse must

mandatorily be actually notified and must actually acknowledge

the option selection of the member, before the survivor's

benefit can be divested. This requirement is carried forward in

Florida Administrative Code Rule 60S-4.010. This statute and

related rule do not require that a signature on the

acknowledgement form be obtained. Rather, actual notification

of the spouse and actual acknowledgement by the spouse must be

accomplished. The unrefuted evidence of record in this de novo

proceeding reveals that the Petitioner, the surviving spouse,

was never notified of the retiree husband's option election

which would have served to extinguish her survivor's benefits.

20. A spouse's survivorship benefit has been recognized in

the Department's rules and in the statute, as well as case law.

Florida Administrative Code Rule 60S-4010(9); Eaves v. Division

of Retirement , 704 So. 2d 140 (Fla. 1st DCA 1997); Russell v.

Russell , 922 So. 2d 1097, 1099 (Fla. 4th DCA 2006); Ganzel v.

Ganzel , 770 So. 2d 304 (Fla. 4th DCA 2000). It is a vested

property right.

21. A mandatory notification and acknowledgement of a

member's spouse is required in order to divest the spouse's

survivorship rights, as a "joint annuitant." The Petitioner

herein has that status because she is a continuous spouse and

surviving spouse. Such notification and acknowledgment is a

condition precedent to making the option selection effective and

to processing the retirement application or payment of benefits.

Because the purported spousal acknowledgement was, admittedly, a

forgery, the benefit option selection made by Mr. Bohler was

void ab initio .

22. Florida Administrative Code Rule 60S-4.002(4)(b)

provides that once a retirement benefit payment has been cashed

or deposited, the option selection cannot be changed. In the

instant situation, however, the option selection was not

effectively made, because of the lack of a spousal

acknowledgement. The Respondent has conceded that, in the event

of fraud, over-payment or the miscalculation of benefit

payments, that the Respondent Agency has the authority to recoup

incorrect benefit payments and re-calculate amounts due to

beneficiaries. Here, through no fault of its own, the Agency,

the Division, relied on the option selection made by Mr. Bohler.

However, in the de novo context of the evidence in this case,

and even prior to hearing, the Agency learned of and stipulated

that the option selection was based on the above forgery.

Therefore, the mistaken payment of benefits and divestiture of

the spouse's rights as a joint annuitant, because they are based

upon fraud, must be corrected.

23. If the acknowledgement section of the relevant

retirement application form, adopted in July 2006, along with

the above-referenced rule, requiring that a benefit once cashed

or deposited cannot be altered, were applied to extinguish the

Petitioner/joint annuitant's survivor benefits, the effect would

be to nullify the mandatory spousal notification and

acknowledgement requirements of Section 121.091(6)(a), Florida

Statutes, a prior-enacted statute. This would violate generally

accepted principles of statutory construction and would, based

on the effect of unrefuted evidence, in the de novo context of

this proceeding, allow a fraudulent act to nullify the surviving

spouse's vested rights.

24. An ineffectual designation of beneficiary (analogous

to designation of an option plan through the use of forgery in

the instant case) cannot serve to defeat a surviving spouse's

and joint annuitant's rights to certain death benefits. See

Eaves , supra . Certainly, designation of Option 1 benefits by

the retiree, for his benefit, cannot be supported by the use of

a forged document. Generally speaking, in the field of

retirement law, including persuasive cases arising under the

Employees Retirement Income Security Act (ERISA), designations

of beneficiaries, or other retirement benefit designations by

retirees or future retirees cannot be upheld if based upon

forged documents. See , for example, Rice v. The Rochester

Laborers Annuity Fund, Robert Brown and Shirley J. Jenkins

defendants 888 F. Supp. 494 (W.D.N.Y. 1995); Lombardo v. United

Technologies Corp. , 1997 U.S. Dist. LEXIS 7651 (Dist. Conn.

1997). The Eaves Court also stated that, for a beneficiary who

qualifies as a joint annuitant under Florida Administrative Code

Rule 60S-6.001(34), as the Petitioner herein does, the optional

form of payment of death benefits, embodied in Section

joint annuitant's lifetime.

25. In summary, because selection of Option 1 was a

nullity, because it was based on a forged acknowledgment, then

that designation never actually occurred. The Petitioner is a

joint annuitant and is entitled to be paid benefits which are

based on Option 3.

26. Although benefits have been paid and cashed or

deposited, such was based on the forgery. The Division

understandably did so because it had no basis for knowing, until

this proceeding commenced, that the subject acknowledgement

document was a forgery. It, by its own concession, has the

authority to correct that mistake, so that benefits can still be

paid to the survivor based on Option 3. See Fla. Admin. Code R.

60S-4.008. This should be accomplished but it is also true that

the Petitioner has no entitlement to a windfall based upon the

fact that Option 1 benefit payments were paid for approximately

seven years or during the retiree's DROP period, plus the period

of retirement benefits after employment ceased and before death.

Consequently, payments to the Petitioner, as a joint annuitant

and surviving spouse, should be adjusted so that the Division

and the state of Florida recoups what would amount to the excess

amount of benefits paid under the Option 1 regime. The

Petitioner should thus be accorded Option 3 level benefits,

adjusted for recoupment of the referenced excess amounts

previously paid.

RECOMMENDATION

Having considered the foregoing findings of fact,

conclusions of law, the evidence of record, the candor and

demeanor of the witnesses and the pleadings and arguments of the

parties, it is

RECOMMENDED that a final order be entered by the State of

Florida, Department of Management Services, Division of

Retirement, awarding the Petitioner retirement benefits based

upon her status as a surviving spouse and joint annuitant, in

the manner described above, adjusted to reflect re-calculation

and recoupment of overpayment based upon the amount of benefits

already paid from the subject retirement account pursuant to

Option 1.

DONE AND ENTERED this 10th day of November, 2009, in

Tallahassee, Leon County, Florida.

S

P. MICHAEL RUFF

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 10th day of November, 2009.

COPIES FURNISHED :

Elizabeth Regina Stevens, Esquire

Department of Management Services

Office of the General Counsel

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32327

T. A. Delegal, Esquire

Delegal Law Offices, P.A.

424 East Monroe Street

Jacksonville, Florida 32202

Sarabeth Snuggs, Director

Division of Retirement

Department of Management Services

Post Office Box 9000

Tallahassee, Florida 32315-9000

John Brenneis, General Counsel

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.