09-002967 Gavin Naylor vs. Department Of Management Services, Division Of State Group Insurance Status: Closed Recommended Order on Wednesday, September 16, 2009.

Summary: Petitioner is not entitled to reimbursement for wife's medical expenses prior to their marriage and denial of attempt to retroactively reduce amount in his medical reimbursement account due to alleged but not proven agency error.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GAVIN NAYLOR, )

)

Petitioner, )

)

vs. ) Case No. 09-2967

)

DEPARTMENT OF MANAGEMENT )

SERVICES, DIVISION OF STATE )

GROUP INSURANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause was heard by Linda M. Rigot,

the assigned Administrative Law Judge of the Division of

Administrative Hearings, on August 24, 2009, in Tallahassee,

Florida.

APPEARANCES

For Petitioner: Gavin Naylor, pro se

1531 Tallavana Trail

Havana, Florida 32333

For Respondent: Sonja Matthews, Esquire

Department Management Services

Office of the General Counsel

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue presented is whether Petitioner is entitled to a

refund of monies paid into his medical reimbursement account.

PRELIMINARY STATEMENT

By correspondence dated March 23, 2009, Respondent

Department of Management Services, Division of State Group

Insurance, advised Petitioner Gavin Naylor that his request to

retroactively change the amount of his contribution to his

medical reimbursement account was denied. Petitioner timely

requested an administrative hearing regarding that

determination, and this cause was transferred to the Division of

Administrative Hearings to conduct the evidentiary hearing.

Petitioner testified on his own behalf and presented the

testimony of Mandy Manning, Linda Lieblong, and Jackie Williams.

The Department presented the testimony of Petitioner, Sandi

Wade, and James West. Additionally, Petitioner's Exhibits

numbered 2 and 3 and the Department's Exhibits numbered 1, 2, 7,

8, 13, 14, and 16 were admitted in evidence. Further, the

Department's request for official recognition was granted as to

Sections 110.123 and 110.161, Florida Statutes; 26 C.F.R. §

1.125-4; Chapter 60P, Florida Administrative Code, and 26 U.S.C.

§ 125.

No transcript of the final hearing was filed. The parties

have submitted post-hearing proposed recommended orders which

have been considered in the entry of this Recommended Order.

FINDINGS OF FACT

1. Petitioner has a Ph.D and has been a professor at

Florida State University (FSU) since November 2003.

2. Petitioner met his now-wife Veronika in England in

September 2004. In the summer of 2005 she quit her job in

London and came to Tallahassee. She enrolled in FSU's graduate

program to fulfill the conditions of her visa.

3. Petitioner attempted to add her to his health insurance

coverage claiming that she was a dependent or a "partner,"

reasoning that since she was living with him she was

"effectively" his wife. When required to produce a marriage

license, Petitioner was unable to do so. Accordingly, since she

was not legally his spouse and, therefore, was not eligible to

be covered under Petitioner's benefits, his attempt to include

her in his health insurance coverage was unsuccessful.

4. From the beginning of his employment up through the

time of the final hearing in this cause, Petitioner has received

every year the Department's Benefits Guide for active State

employees. He has also received additional information yearly

regarding the State's benefits program and options during the

annual open enrollment period.

5. In 2005 Petitioner began participating in the State of

Florida's pre-tax flexible spending account program by setting

up a medical reimbursement account (MRA). Each year he had

approximately $600 deducted from his gross salary (pre-tax) to

cover medical expenses not covered under his health insurance

plan.

6. In 2008 he and Veronika began fertility treatments,

incurring approximately $14,000 in bills for these treatments.

In April 2008 Veronika became pregnant. Petitioner and Veronika

were married on May 7, 2008. Because his marriage was a

qualifying status change, he was allowed to add her to his

health insurance coverage because she became eligible as his

spouse.

7. On approximately May 20, 2008, he took his check to the

Human Resources office at FSU to pay the additional charge

resulting from converting his health insurance from individual

coverage to family coverage. He gave his check to Jackie

Williams, who worked in that office and who had contacted him

about the need to pay the additional money.

8. On that date he also made arrangements to increase his

MRA from $600 to $5,000, with the increased payroll deductions

to begin July 1 since he was on a nine-month contract.

9. In December 2008 he submitted a claim for reimbursement

from his MRA for the fertility treatments that Veronika

underwent prior to their marriage. That claim was denied

because the treatments occurred prior to the time that Veronika

became an eligible dependent.

10. Since those expenses were not eligible for

reimbursement, he next sought to reduce his election of $5,000

for his MRA back down to his normal level of $600. He told

other personnel in FSU's Human Resources office that Williams

had told him that he could claim reimbursement from his MRA for

expenses incurred by Veronika before her marriage to him since

the plan year for an MRA was from January through December.

11. Based solely upon Petitioner's assertion that Williams

gave him wrong information, other personnel in that office

directed a memorandum to People First telling that company,

which operates the State of Florida's payroll and employee

benefits services, that due to an "agency error" Petitioner's

MRA should be reduced to its prior level. That request was also

denied because a change in Petitioner's MRA could only be made

during open enrollment or because of a qualifying status change,

and neither condition applied.

12. Jackie Williams remembers her contacts with Petitioner

because Veronika spells her name with a "k," which is an unusual

way to spell it. Williams only discussed with Petitioner his

health insurance coverage and did not discuss with him his MRA.

13. Petitioner asserts that the Benefits Guide, which he

consulted, lends credence to the misinformation he says Williams

gave him because it provides in the section describing MRAs:

"The entire amount in your account is available at the beginning

of the plan year." That sentence, however, speaks only to the

issue of the timing of claims filed against the account. It

does not speak to the eligibility of expenses claimed.

14. The Benefits Guide is very clear as to who is eligible

to receive benefits under the State's employee benefits options.

It uses plain language that has not changed from year to year

although the page number on which the explanation is given may

change. The Benefits Guide for 2008 on page 11, for example,

states clearly that all active full-time or part-time State of

Florida employees qualify for coverage under the benefits plans

described in the Guide plus the employee's spouse and children.

15. Eligibility for reimbursement of expenses is quite

different from the time period during which claims for eligible

expenses can be made. Although the State's MRA plan year runs

from January through December, the expenses of only eligible

persons will be covered. Since Veronika and Petitioner did not

marry until May 7, 2008, her medical expenses before that date

do not qualify for reimbursement from Petitioner's MRA, just as

she did not qualify to be added to Petitioner's health insurance

coverage until they married.

16. To the extent that Petitioner claims he was misled by

Jackie Williams, his argument is not persuasive. First,

Petitioner had his Benefits Guide which gave the correct

information, and his reliance on one sentence in the Guide which

does not refer to eligible persons or eligible expenses is

illogical and misplaced. Second, Williams' testimony that she

did not discuss his MRA with him and that she remembers her

transactions with him because of the unusual spelling of

Veronika is credible and was supported by the way both

Petitioner and Williams referred to that spelling during her

testimony at the final hearing.

17. Veronika's medical expenses incurred before her

marriage to Petitioner do not qualify for reimbursement from

Petitioner's MRA. Further, Petitioner is not entitled to a

reduction in his 2008 MRA contribution due to an "agency error"

or a misrepresentation by FSU's Human Resources office because

no agency error or misrepresentation was made. Quite simply

put, Petitioner herein seeks a benefit of marriage prior to the

time he was entitled to enjoy it under both the law and the

State of Florida's employee benefits plans.

CONCLUSIONS OF LAW

18. The Division of Administrative Hearings has

jurisdiction over the subject matter hereof and the parties

hereto. §§ 120.569 and 120.57(1), Fla. Stat.

19. Petitioner bears the burden of proof in this

proceeding. See Florida Dept. of Transp. v. J.W.C. Co. , 396

So.2d 778 (Fla. 1st DCA 1981); Balino v. Dept. of Health and

Rehab. Serv. , 348 So. 2d 349 (Fla. 1st DCA 1977); and Young v.

Dept. of Community Affairs , 625 So. 2d 831 (Fla. 1993).

Petitioner has failed to meet his burden of proving his

allegation by a preponderance of the evidence.

20. The State of Florida Flexible Spending Accounts (FSA)

were established pursuant to Section 110.161, Florida Statutes,

the State Employees Pretax Benefits Program Act. An FSA

provides a federal income tax benefit by reducing an employee's

reportable gross income. One type of FSA, the medical

reimbursement account (MRA) covers qualified medical expenses

not otherwise covered by health insurance.

21. The rules applicable to the State of Florida's pre-tax

program are primarily found in Chapter 60P-6, Florida

Administrative Code, and, by references therein, Chapter 60P-2

is also applicable. Among the definitions found in Florida

Administrative Code Rule 60P-6.006 is the definition of

"qualifying status change (QSC) event" or "QSC event," which

means "the change in employment status, for subscriber or

spouse, family status or significant change in health coverage

of the employee or spouse attributable to the spouse's

employment." Fla. Admin. Code R. 60P-6.006(13). That Rule also

defines the "plan year" as a 12-month period beginning January 1

and ending December 31. Fla. Admin. Code R. 60P-6.006(11).

Further, "health care expenses" are defined as "any unreimbursed

eligible expenses incurred by a participant or by a spouse or

dependent of such participant for medical care." Fla. Admin.

Code R. 60P-6.006(7).

22. Florida Administrative Code Rule 60P-6.0068(2),

provides that during a plan year an election is irrevocable

except when a participant in a pre-tax plan experiences a QSC

event. Petitioner was able to make a change in his 2008 MRA

during the plan year because he experienced a QSC event in 2008

due to his marriage to Veronika, but he experienced no other QSC

event that year which would allow him to make the second change

which he seeks in this proceeding.

23. Section 110.161(5), Florida Statutes, authorizes the

Department of Management Services to develop rules for the pre-

tax program. Subsection (6)(c) requires the Department to take

all actions necessary to preserve the tax-exempt status of the

program. To maintain the pre-tax benefit, employers are

required to administer the program in compliance with the

Internal Revenue Code (26 U.S.C. § 125), the applicable federal

rules and regulations, and the employer’s written plan. The

State of Florida’s administrative rules clearly provide that a

spouse is covered but a girlfriend is not. Accordingly,

approving Petitioner’s request that his girlfriend’s medical

expenses be reimbursed would violate the State of Florida’s

written plan and would jeopardize the tax-exempt status of the

State’s MRA FSA.

24. Though not requested as such by Petitioner, he is

requesting retroactive reduction of his MRA based upon the

theory of estoppel. He argues that the Department should not

deny the retroactive reduction because of a misrepresentation by

an FSU personnel employee. This tribunal does not have

jurisdiction to grant equitable remedies. § 26.012, Fla. Stat.

25. Even if there were jurisdiction to award equitable

relief in this proceeding, Petitioner would have the burden of

proving the following elements: (1) a representation by a party

as to some material fact, (2) reliance on that representation by

the party claiming estoppel, and (3) a change in the party's

position caused by his or her reliance on the representation to

his detriment. See , e.g. , Shaffer v. School Bd. of Martin

County , 543 So. 2d 335 (Fla. 4th DCA 1989).

26. Further, as a general rule, estoppel may be applied

against the state only in rare instances or under exceptional

circumstances. Dolphin Outdoor Advertising v. Dept. of Transp. ,

582 So. 2d 709 (Fla. 1st DCA 1991).

27. Petitioner has not proven a factual basis for applying

equitable estoppel in this proceeding. It has been found that

Jackie Williams did not discuss Petitioner’s MRA with him and,

therefore, did not misrepresent a material fact. Accordingly,

Petitioner has also failed to prove that he relied on that

misrepresentation and that he changed his position to his

detriment due to his reliance on that misrepresentation.

28. Even if Petitioner were provided misinformation as

alleged by him, his reliance was not reasonable in that the

information was readily available in the administrative rules

and in the Benefits Guides which Petitioner received each year.

Further, based upon his previous experience Petitioner knew or

should have known that benefits are available only to “legal

spouses.” Council Bros., Inc. v. City of Tallahassee , 634 So.

2d 264 (Fla. 1st DCA 1994).

29. As a general rule, estoppel will not apply to mistaken

statements of the law. Dept. of Rev. v. Anderson , 403 So. 2d

397 (Fla. 1981). The question of eligibility of medical

expenses that can be reimbursed from an MRA is a question of law

in that the requirements are established by the Department’s

substantive statutes and administrative rules.

30. Even if the alleged misrepresentation had been made,

FSU is a separate entity from the Department, and

representations made by FSU cannot be attributed to the

Department. Bright v. Dept. of Management Serv., Div. of

Retirement , DOAH Case No. 03-2142 (F.O. 4/8/04). Further,

Section 110.123(5), Florida Statutes, provides that final

decisions regarding the State’s group insurance program cannot

be delegated by the Department.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that a final order be entered denying

Petitioner’s request for a retroactive reduction in his MRA.

DONE AND ENTERED this 16th day of September, 2009, in

Tallahassee, Leon County, Florida.

S

LINDA M. RIGOT

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 16th day of September, 2009.

COPIES FURNISHED :

Sonja P. Mathews, Esquire

Department of Management Services

Office of the General Counsel

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399

Gavin Naylor

1531 Tallavana Trail

Havana, Florida 32333

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.