93-005859 Robin A. C. And Mary E. Fearn vs. Division Of State Employees Insurance Status: Closed Recommended Order on Friday, April 1, 1994.

Summary: Spouse Preferred Patient Care insurance plan permitted to add as dependent over-age child who became handicapped after parents initial enrollment in state insurance program.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ROBIN A.C. AND MARY E. FEARN, )

)

Petitioner, )

)

vs. ) CASE NO. 93-5859

)

STATE OF FLORIDA, DEPARTMENT OF )

MANAGEMENT SERVICES, )

)

Respondent. )

__________________________________)

RECOMMENDED ORDER

Upon due notice, this cause came on for formal hearing on January 7, 1994

in Gainesville, Florida, before Ella Jane P. Davis, a duly assigned hearing

officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioners: Robin A. C. Fearn

3241 Northwest 41st Avenue

Gainesville, Florida 32605

For Respondent: Augustus D. Aikens, Jr., Chief

Benefit Programs and Legal Services

Division of State Employees' Insurance

2002 Old St. Augustine Road, B-12

Tallahassee, Florida 32301-4876

STATEMENT OF THE ISSUE

Whether or not Petitioners are entitled to add an above-the-age-limits

child, who became handicapped after their initial enrollment in the state

insurance program, as an eligible dependent.

PRELIMINARY STATEMENT

Petitioners, husband and wife, were represented at formal hearing by the

husband, Robin A.C. Fearn, who was accepted, upon examination, as qualified

representative for Mary E. Fearn, who did not appear.

Petitioners had nine exhibits admitted in evidence and Robin A.C. Fearn

testified in their behalf.

Respondent presented the oral testimony of Verla Lawson, State Enrollment

Administrator, and had three exhibits admitted.

The parties' Joint Prehearing Stipulation was received in evidence as

Hearing Officer Exhibit A.

Appropriate provisions for official recognition of applicable rules and

statutes were made on the record.

No transcript was filed, but all timely filed proposed findings of fact

have been ruled upon in the appendix to this recommended order, pursuant to

Section 120.59(2) F.S.

FINDINGS OF FACT

1. Petitioners are Robin A.C. Fearn, SSN 269-36-8341, an employee at the

Marion County Correctional Institution since May 23, 1986, and his wife, Mary

Fearn, SSN 273-36-8629, an employee of the University of Florida since September

5, 1978.

2. Effective June 1, 1986, Petitioners were enrolled in the Spouse Program

under the State of Florida's Employees' Group Health Self Insurance Plan.

Participants in the Spouse Program are entitled to family coverage for

themselves and any eligible dependents.

3. Petitioners are the parents of a son, Lee A. Fearn, SSN 264-39-0713 who

was born on February 27, 1961. At the time of Petitioners' initial enrollment

in the health plan on June 1, 1986, Lee was 25 years of age and had exceeded the

maximum dependent age limit of 23 years of age provided under the plan. Lee has

not, at any time, been covered as a dependent under the State of Florida

Employees' Group Health Insurance Plan.

4. Shortly after his 29th birthday, Lee Fearn was rendered disabled from

injuries received in an automobile accident in March 1990. Since that accident,

Lee has been dependent on Petitioners for support. The Federal Social Security

Administration has accepted him as dependent on his parents, and Respondent does

not dispute that Lee is "incapable of self-sustaining employment by reason of

such mental or physical handicap and chiefly dependent upon the employee" as

that term is used in Rules 60P-1.003(4)(c) and (d) F.A.C. [formerly Rule 22K-

1.103(4)(c) and (d) F.A.C.]

5. Petitioners attempted to secure health insurance coverage for Lee

during the open enrollment periods in 1991 and 1992 by listing Lee as an

eligible dependent in the space provided for adding dependents on the bottom

half of their annual open enrollment form.

6. As a part of its insurance program, the Respondent permits State

employees to enroll in the State of Florida Employees' Group Health Self

Insurance Plan (Plan) within 31 days of employment or during an annual open

enrollment period as described in its Rules 60P-2.002 and 60P-2.003 F.A.C.

7. The annual open enrollment form is titled, "Annual Benefit Selection

Form." All state employees are asked to complete and return this form during

each annual open enrollment period. It provides, in pertinent parts, as

follows: "You must make a decision on each benefit. . . . Add only those

dependents not currently covered by your health insurance. Eligible dependents

are those outlined in Rule 22K-1 F.A.C." (Emphasis supplied)

8. Employees wishing to make changes in their current health insurance are

permitted to do so during the open enrollment period by indicating those changes

on the Annual Benefit Selection Form. No health examination or declarations,

even of a preexisting condition, are required during this annual open enrollment

period.

9. Employees are given five options regarding their health insurance on

the Annual Benefits Election Form:

a. Make no changes;

b. Cancel

c. Enroll

d. Change from HMO Plan to State Self-Insured

Plan or vice versa; and

e. Change from individual coverage to family

coverage or vice versa.

10. Petitioners separately completed their Annual Benefits Selection Forms

during the 1992 open enrollment period by indicating they did not wish to make

any changes in their health insurance coverage, that is, family PPC coverage.

11. At the bottom of the Annual Benefits Selection Form, Petitioners added

Lee as a dependent and authorized payroll deductions and stated "I understand my

enrollment or coverage changes will be effective January 1, 1993 . . ."

(Emphasis supplied)

12. Petitioners claim they submitted a similar form in 1991 and never

received notice from Respondent of the acceptance or denial of their 1991 open

enrollment request to add Lee as their dependent.

13. Petitioners did receive back a denial in the form of two memos via the

University of Florida personnel department, which employs Mrs. Fearn, for their

1992 open enrollment request.

14. Verla Lawson, Department of Management Services, [formerly Department

of General Services] Division of State Employees Insurance, State Enrollment

Administrator, testified as to how the open enrollment plan and applicable rules

have been administered. She has been employed with the agency since 1986, but

her involvement with the pertinent issues appears to have begun only with her

assuming her present position in 1991.

15. Ms. Lawson testified that to accomplish Petitioners' goal of adding

Lee to their coverage as a dependent they "should have" checked the box for "I

wish to change" at the top of the form, filled out the dependent information at

the bottom of the form and then made out another form for PPC coverage. From

this portion of Ms. Lawson's testimony, it is inferred that the annual open

enrollment form a/k/a the Annual Benefits Selection Form also constitutes the

"Health Care Option Selection Form" referenced in Rule 60P-2.002 F.A.C.

16. Ms. Lawson also testified that even if Petitioners had made out both

forms required, the agency would have denied coverage of Lee.

17. According to Ms. Lawson, employee participation in the Plan is

considered continuous unless an employee elects to discontinue participation or

to change to an HMO. She stated that although employees are asked to return

open enrollment Annual Benefit Selection Forms each year for administrative

purposes, they are not required to re-enroll in the Plan during each open

enrollment period. If an employee indicates no changes on an Annual Benefit

Selection Form, that form is not transmitted by an employee's local personnel

office to the Department of Management Services in Tallahassee. Ms. Lawson

conjectured that is what happened to Petitioners' 1991 attempts to add Lee to

their coverage. However, Ms. Lawson consistently referred to the Annual Benefit

Selection Form as "the enrollment form" for the Plan, and Mr. Fearn testified

credibly that he was advised by his supervisor that his coverage would be

terminated if he did not turn in his form timely. The language on the form

reflects the same compulsory instruction. (See FOF 7). It is accepted,

pursuant to Mr. Fearn's testimony and within the parameters of Section

120.58(1)(a) F.S.. that Mrs. Fearn was told that submission of the annual open

enrollment form was necessary to prevent termination of her coverage.

18. Also, according to Ms. Lawson, the agency interprets its rules to

permit employees to add additional eligible dependents within 31 days of the

acquisition of that dependent or during the open enrollment period, and the Plan

has been administered to permit above-the-age-limit handicapped children to be

added only during the employee's or retiree's initial enrollment in the Plan.

The agency interprets Rules 60P-2.001 and 60P-2.002 F.A.C. and Section

110.123(2)(b) F.S. to mean that only employees, retirees or spouses of deceased

employees may apply for "enrollment" in the Plan, that eligible dependents

merely "participate" in the Plan under an existing family coverage when added as

dependents, and that consequently, dependents do not independently "enroll" in

the Plan. The agency therefore decided that Petitioners' 1992 attempts to add

Lee Fearn to his parents' existing family coverage as a dependent did not

constitute an "enrollment" which by its own terms created the opportunity to

enroll an above-the-age-limits handicapped child. Because under this

interpretation Lee Fearn was not an eligible dependent, the agency felt he could

not have been added to Petitioners' coverage.

19. Ms. Lawson was not familiar with any case with facts similar to this

one.

20. According to Ms. Lawson, if Petitioners had been first employed in

1992 and enrolled in the Plan within 31 days of that first employment, their

handicapped over-age son could have been covered, and if they had been employed

in 1986 but waited until 1992 to enroll for the first time in the Plan, their

handicapped over-age son could have been enrolled at that time. Ms. Lawson

specifically stated she could not say how the agency would proceed if the

Petitioners herein dropped their coverage for one year and then tried to enroll

both parent employees and the over-age handicapped child during a new employee

31 day grace period or an annual open enrollment. Ms. Lawson was not clear on

what the agency might do if one or both of Lee's parents accepted employment

elsewhere and later returned to government service and applied for the Plan,

except that state retirement rules possibly would govern the length of a

permissible break in service. Ms. Lawson was not asked, and therefore the

record is barren of any explanation of how, the agency would interpret its rules

if one parent were employed without covering Lee and the other were later

employed and wished to cover him as an over-age dependent handicapped child

within the second parent's first 31 days of initial employment. However, the

agency maintained that there is no provision in the Plan allowing an employee

who is already enrolled in the Plan to add a handicapped over-age child and that

its rules have never been interpreted to permit the adding of such a dependent

at annual open enrollment.

21. Rule 60P-1.003(4)(c) F.A.C., as interpreted by the agency, applies to

a handicapped dependent child already in the Plan who then turns nineteen.

22. Rule 60P-1.003(4)(d) F.A.C., as interpreted by the agency, applies

only to a handicapped dependent child not in the Plan at the time of the parent-

employee(s) initial enrollment.

23. The word "enroll" as used in Rule 60P-1.003(13) F.A.C. is interpreted

by the agency to mean "change or transfer plans" under the program, if an

employee is already enrolled in any state insurance program at all (PPC Plan or

HMO). The agency interprets the same word to mean "enroll" if the employee has

never before been enrolled in any state insurance program.

24. Under the provisions of Section 110.123(5), F.S. the Secretary of the

Department of Management Services is given the responsibility for administering

the state group insurance program. Inherent in that responsibility, but subject

to prior legislative approval, is the authority to determine benefits and the

contributions required therefor. Such determinations, whether for a contracted

plan or a self-insurance plan, do not constitute "rules" within the meaning of

Section 120.52(16) or "orders" within the meaning of Sections 120.52(11) F.S.

The purpose of this exception to the Administrative Procedure Act is to afford

the Department flexibility to make benefit changes or clarifications consistent

with legislative approval. Respondent modified its January 1, 1993 edition of

the Benefit Document to reinforce its interpretation that above-age-limits

handicapped children could only be added during an initial enrollment, but this

information was not provided to employee consumers until after the instant case

was already in progress.

25. There was no actuarial or expert insurance evidence to show that the

legislature by its statutes or the agency by its rules had made a conscious and

reasonable decision to treat the over-age handicapped children of longtime

employees differently than the over-age handicapped children of brand-new

employees or employees who have had a significant interruption in government

service or that there is any reason or purpose for such a distinction.

CONCLUSIONS OF LAW

26. The Division of Administrative Hearings has jurisdiction over the

parties and subject matter of this cause, pursuant to Section 120.57(1), F.S.

27. The pertinent statutes and rules provide as follows:

627.6615 F.S. Handicapped children; continuation

of coverage under group policy.

A group health insurance policy or health care

services plan contract, delivered or issued for

delivery in this state, which provides that coverage

of a dependent child of an employee or other member

of the covered group will terminate upon attainment

of the limiting age for dependent children specified

in the policy or contract shall also provide in

substance that attainment of such limiting age will

not operate to terminate the coverage of such child

while the child is and continues to be both:

(1) Incapable of self-sustaining employment by

reason of mental retardation or physical handicap; and

(2) Chiefly dependent upon the employee or member

for support and maintenance.

If a claim is denied under a policy or contract

for the stated reason that the child has attained

the limiting age for dependent children specified

in the policy or contract, the burden is on the

policyholder to establish that the child is and

has continued to be handicapped as defined by

subsections (1) and (2).

110.123(2) F.S.

(b) "Enrollee" means all state officers and

employees, retired state officers and employees,

and surviving spouses of deceased state officers

and employees enrolled in an insurance plan offered

by the state group insurance program.

(h) "State group health insurance plan" means

the state self-insured health insurance plan

offered to state officers and employees, retired

state officers and employees, and surviving spouses

of deceased state officers and employees pursuant

to this section.

(i) "State group insurance program" or "programs"

means the package of insurance plans offered to state

officers and employees, retired state officers and

employees, and surviving spouses of deceased state

officers and employees pursuant to this section,

including the state group health insurance plan,

health maintenance organization plans, and other

plans required or authorized by this section.

. . .

110.123(5) F.S. DEPARTMENT OF ADMINISTRATION; POWERS

AND DUTIES. The Secretary of Administration shall be

responsible for the administration of the state group

insurance program. The Department of Administration

shall initiate and supervise the program as established

by this section and shall promulgate such rules as are

necessary to perform its responsibilities. To

implement this program, the department shall, with

prior legislative approval:

(a) Determine the benefits to be provided and the

contributions to be required for the state group

insurance program. Such determinations, whether for

a contracted plan or a self-insurance plan pursuant

to paragraph (c), do not constitute rules within the

meaning of s. 120.52(16) or orders within the meaning

of s. 120.52(11).

. . .

Rule 60P-2.001 Eligibility

(1) Employees and retirees are eligible to

participate in the Health Plan with individual

coverage or with family coverage if there are

eligible dependents to be covered, in accordance

with the provisions of this Chapter.

(2) Eligible dependents may only participate

under a family coverage.

Rule 60P-2.002 Enrollment

(1) An employee may apply for enrollment in

the Health Plan with or without chiropractic

coverage by completing and submitting the Health

Care Option Selection form and a New Enrollee form

to his or her personnel office during the first

thirty-one (31) calendar days of State employment

or, if a state officer, the first thirty-one (31)

calendar days after such officer begins a new term

of office.

(2) An employee may only apply for enrollment in

the Health Plan with or without chiropractic coverage

after the first thirty-one (31) calendar days of

employment by completing and submitting the Health

Care Option Selection form and a New Enrollee form

to his or her personnel office during the open

enrollment period.

Rule 60P-2.003 Changes in Coverage

(3) An employee or retiree may begin family

coverage prior to acquiring any eligible

dependents. Since such coverage is effective

the first day of any given month, employees who

will acquire eligible dependents during the month

and are desirous of having immediate coverage of

such dependents must make application in time for

a complete month's premium to be deducted prior to

the first day of the month during which the dependent

will be acquired. Otherwise, coverage cannot be

effective on the actual date the dependent is acquired.

Rule 60P-1.003 Definitions

 (4) "Eligible Children" shall mean the employee'

or retiree's own children, legally adopted children

or children placed in the employee's or retiree's

home for the purpose of adoption in accordance with

Chapter 63, Florida Statutes, stepchildren for whom

the employee or retiree is financially responsible,

or any other children for whom the employee or retiree

has established legal guardianship in accordance with

Chapter 744, Florida Statutes. Such children are

eligible for coverage as follows:

(a) From their date of birth to the end of the

month in which their nineteenth (19th) birthday occurs;

 (b) From their nineteenth (19th) birthday to th

end of the month in which their twenty-third (23rd)

birthday occurs, if they are enrolled in and regularly

attending on a full-time basis any school, college or

university which provides training or educational

activities, and which is certified or licensed by

a state or foreign country.

(c) Such children who are mentally or physically

handicapped shall be eligible to continue coverage

after attainment of the above age limits and while

the employee's or retiree's family coverage is in

effect provided such children are incapable of self-

sustaining employment by reason of such mental or

physical handicap and chiefly dependent upon the

employee, retiree or surviving spouse for support

and maintenance.

(d) Such children who are over the above age

limits at the time of the employee's or retiree's

enrollment in the Program, and who are mentally or

physically handicapped, shall be eligible for coverage

if they are incapable of self-sustaining employment

by reason of such mental or physical handicap and

chiefly dependent upon the employee or retiree for

support and maintenance.

(13) "Open enrollment period" shall mean a period

designated by the Department of Management Services

each calendar year during which time employees may

enroll in the Health Plan; or, if residing in a

qualified HMO's service area, employees may enroll

in such HMO; or during which time employees, retirees

or surviving spouses may transfer from their present

plan to any other plan available for the area in

which they reside without application of waiting

periods or exclusions based on health status as

conditions of enrollment or transfer.

28. The Respondent agency's position was that Section 627.6615 F.S. and

Rule 60P-1.003(4)(c) F.A.C. [formerly Rule 22K-1.103(4) F.A.C.] provide

"continuation" coverage to handicapped children already in the Plan beyond the

Plan's usual limiting age of nineteen, if the child in question continues to be

both: (1) incapable of self-sustaining employment by reason of mental

retardation or physical handicap; and (2) chiefly dependent upon the employee or

member for support and maintenance. Rule 60P-1.003(4)(d) F.A.C. [formerly Rule

22K-1.103(4)(d) F.A.C.] allows only new employees the opportunity to insure

their handicapped dependents even if those dependents are above the limiting age

at the time of their parent's initial enrollment. Respondent argued that no

other provision for enrolling over-age handicapped children is provided under

the Plan. In Respondent's view, once a dependent child turns nineteen, that

child would not become a covered dependent again simply by subsequently becoming

handicapped. Lee Fearn was a child who was over nineteen and not dependent on

the date of his parents' initial enrollment, so he was never in the Plan. He

became handicapped after he was already ineligible by age. Respondent urged

that because Petitioners' son was neither an "eligible child" who was entitled

to continuing coverage on the date of his disability in March 1990 nor a

handicapped child at the parents' initial enrollment date of June 1, 1986, he

could not be added later and is not now covered.

29. More simply, the Respondent contended that while there is open

enrollment for employees, there is no open enrollment for their over-age

handicapped children except during the 31 day period immediately following an

employee-parent's initial employment enrollment. The agency's interpretation

engrafts the word "initial" into Rule 60P-1.003(4)(d).

30. While conceding that neither the statutes, rules, nor informal benefit

documents put Petitioners on notice of this agency interpretation by specifying

that "initial" enrollments are different than "annual" enrollments, Respondent

contended that the Plan has always been administered as such, that participation

in the Plan is continuous unless the employee elects to discontinue

participation or change to an HMO plan, and that although employees are asked to

return open enrollment Annual Benefit Selection Forms for administrative

purposes, they are not required to "re-enroll" in the Plan during each open

enrollment period. Respondent maintained that Petitioners did not "enroll" on

October 30, 1992 or at any other time because of the definitions of "enrollee"

at Section 110.123(2)(b) F.S. and of "state group insurance plan" and "state

group insurance program" at Sections 110.123(2)(h) and (i), F.S., respectively.

Since eligible dependents do not apply for enrollment but participate by being

added to the Plan by an employee, Respondent claimed Lee Fearn cannot be added

to the Plan after the initial 31 days for his parents' enrollment.

31. On the other hand, Petitioners suggested that a clear reading of the

rules shows that two different situations were intended to be covered by Rules

60P-1.003(4)(c) and (d) F.A.C. Petitioners urged that subsection (c) applies to

dependent handicapped children who continue to be covered after age 19 and

subsection (d) applies to over-age handicapped children who are subsequently

enrolled. Petitioners asserted that any other interpretation renders (d)

superfluous and that Respondent's interpretation which inserts the word

"initial" before the word "enrollment" in subsection (d) is contrary to a clear

reading of the duly promulgated rule, as evidenced by the agency's adding the

word "initial" to its benefit document after this series of events.

32. Petitioners' position is straightforward and comports with a fair

reading of the agency's duly promulgated rules. Although the agency's

interpretation of its rules is possible and is entitled to great weight, its

interpretation also is forced and creates disparate treatment of the handicapped

adult children of longtime employee parents. Such disparate treatment is both

unjust and has a chilling effect on the state retaining good employees. It is

therefore contrary to good public policy. If the agency wishes to have a rule

that prohibits the coverage of over-age handicapped children except by naming

them at the initial enrollment of the parent-employee, it can promulgate one.

If it seeks to reach that result purely by a statement of policy, as here, it

must show some clear prior legislative approval pursuant to Section 110.123(5)

F.S.. That prior approval has not been demonstrated in this record. This

record shows not capricious rules, but a capricious application of those rules.

RECOMMENDATION

Upon the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that a final order be entered enrolling Lee Allen Fearn SSN

264-39-0713 as an eligible dependent of Robin A.C. Fearn and Mary E. Fearn in

the State Health Plan effective January 1, 1993 and that all eligible claims for

his medical expenses after January 1, 1993 be paid.

RECOMMENDED this 1st day of April, 1994, at Tallahassee, Florida.

___________________________________

ELLA JANE P. DAVIS

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 1st day of April, 1994.

APPENDIX TO RECOMMENDED ORDER 93-5859

The following constitute specific rulings, pursuant to S120.59(2), F.S.,

upon the parties' respective proposed findings of fact (PFOF).

Petitioners' PFOF:

Petitioners' proposed recommended order does not comply with the rules of

the Division of Administrative Hearings as to designating proposed findings of

fact and conclusions of law separately or numbering same. It appears to present

only conclusions of law or a final recommendation. It is rejected as proposed

findings of fact. As proposed conclusions of law and legal argument it has been

covered but not necessarily adopted in the recommended order's conclusions of

law.

Respondent's PFOF:

1-2 Accepted.

3 Accepted in part and rejected in part as legal argument or mere

recitation of one person's testimony. Covered in FOF 17.

4-5 Accepted.

6-10 Rejected as legal argument or mere recitation of testimony,

covered in FOF 17-25.

COPIES FURNISHED:

Robin A.C. & Mary E. Fearn

3241 NW 41st Avenue

Gainesville, FL 32605

Augustus D. Aikens, Jr., Esquire

DMS/Division of State Employees Insurance

2002 Old St. Augustine Road B-12

Tallahassee, FL 32301-4876

William H. Lindner, Secretary

Department of Management Services

Knight Building Suite 307

Koger Executive Center

2737 Centerview Drive

Tallahassee, FL 32399-0950

Sylvan Strickland

General Counsel

Department of Management Services

Knight Building Suite 309

Koger Executive Center

2737 Centerview Drive

Tallahassee, FL 32399-0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this Recommended Order. Any exceptions to this Recommended Order should be

filed with the agency that will issue the final order in this case.