95-000059 Gladys L. Whaley vs. Division Of Retirement Status: Closed Recommended Order on Tuesday, August 1, 1995.

Summary: Retirement option of decedent can't be modified by surviving wife. No evidence to support finding that decedent couldn't understand his choice.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GLADYS L. WHALEY, )

)

Petitioner, )

)

vs. ) CASE NO. 95-0059

)

DIVISION OF RETIREMENT, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

On May 8, 1995, a formal administrative hearing was held before Carolyn S.

Holifield, Hearing Officer, Division of Administrative Hearings. The hearing

was held by videoconference between Tampa and Tallahassee, Florida.

APPEARANCES

For Petitioner: Gladys L. Whaley

3807 East Norfolk Street

Tampa, Florida 33604

For Respondent: Robert B. Button, Esquire

Division of Retirement

Cedars Executive Center, Building C

2639 North Monroe Street

Tallahassee, Florida 32399-1560

STATEMENT OF THE ISSUES

The central issue is whether the Petitioner is entitled to modify her

deceased husband's retirement benefit option.

PRELIMINARY STATEMENT

By letter dated September 15, 1994, the Respondent, Division of Retirement,

notified the Petitioner, Gladys Whaley, that it intended to deny her request to

change the retirement option of her deceased husband, Lamar W. Whaley, Jr. The

Petitioner requested a formal hearing and subsequently filed an Amended Petition

for Formal Hearing with the Division of Retirement challenging the intended

action. The matter was forwarded to the Division of Administrative Hearings for

appointment of a Hearing Officer.

By Order dated January 12, 1995, the case was assigned to Hearing Officer

James E. Bradwell, who set the matter for final hearing May 8, 1995, in Tampa,

Florida. However, prior to the final hearing, the matter was transferred to the

undersigned.

At the final hearing, the Division of Retirement's Motion for Official

Recognition of Rule 22B-4.010, Florida Administrative Code, (1990) was granted.

The Petitioner testified on her on behalf and presented the testimony of Thomas

Scott, pastor of the church which Petitioner is a member, and Sabrina Christie,

daughter of Petitioner. One exhibit was offered into evidence by Petitioner.

Respondent presented the testimony of Stanley Colvin, an administrator for the

Division of Retirement, and offered two exhibits into evidence. The Petitioner

and Respondent stipulated to the admission of all the exhibits.

Explicit rulings on the proposed findings of fact contained in the parties'

proposed recommended orders may be found in the attached Appendix to Recommended

Order, Case No. 95-0059.

FINDINGS OF FACT

Based upon my observation of the witnesses and their demeanor while

testifying, the documentary evidence received and the entire record compiled

herein, I make the following findings of fact.

1. Petitioner is the surviving spouse of Lamar W. Whaley, Jr., deceased.

From 1972 to 1990, Mr. Whaley was employed by the Hillsborough County Board of

County Commissioners (Board) and as such was a member of the Florida Retirement

System. Mr. Whaley retired from his position as a minibus driver with the Board

on June 29, 1990.

2. In anticipation of his retirement, Mr. Whaley filed an FR-9 Form with

the Division of Retirement (Division). The FR-9 Form, entitled "Request for

Audit," was signed by Mr. Whaley and dated November 6, 1989. The FR-9 Form is

used by members of the Florida Retirement System who want estimates of the

monthly payments which they will receive after they retire.

3. The FR-9 Form provided a space where Mr. Whaley could list the name and

birthdate of a joint annuitant. On the FR-9 Form, Mr. Whaley named the

Petitioner and the Petitioner's birthdate in these spaces. On the line

immediately after the spaces provided for name and birthdate of the joint

annuitant, the FR-9 expressly states that "This is not an official beneficiary

designation." By listing a joint annuitant and that individual's birthday on

the FR-9 Form, the Division is able to calculate the monthly benefits that

would be payable to a member under each of the four retirement options

available.

4. In response to Mr. Whaley's audit request, the Division calculated the

amount of the monthly payments he and/or his survivor would receive under the

four retirement options available. On or about November 22, 1989, the Division

sent Mr. Whaley information which reflected an estimate of the monthly benefits

he and/or his survivor would receive under each of the four retirement options

from which he was eligible to select.

5. Included with the estimate of retirement benefits sent to Mr. Whaley,

was a document entitled, "What Retirement Option Should I Choose?". This

information sheet listed sent to Mr. Whaley listed and described the four

different options.

6. In 1990, members of the Retirement System contemplating retirement

were provided a Division Form FR-11, Florida Retirement System Application for

Service Retirement (Application). The application listed the four different

options and provided a brief description of each. Next to Option 1 was the

following: "Benefit for the Member Only." A further notation on the application

read, "SEE THE REVERSE SIDE FOR AN EXPLANATION OF THESE OPTIONS." The

Application adequately described the consequences of the election of each

option. The explanation read as follows:

Option 1: A monthly benefit payable to you for

your lifetime. This option does not provide

continuing benefit to a beneficiary. Upon your

death, the monthly benefit will stop and you

beneficiary will receive only a refund of any

contributions you paid which are in excess of

the amount you received in benefits. If you

wish to provide a beneficiary with a continued

monthly benefit after your death, you should

consider selecting one of the other three

options. The option 1 benefit is the maximum

form of lifetime payment and all other optional

payments are derived by applying actuarial factors

to the option 1 benefit.

Option 2: A reduced monthly benefit payable to

you for your lifetime. If you die before receiving

120 monthly benefit payments, your designated

beneficiary will receive a monthly benefit

payment in the same amount as you were receiving

until the total monthly benefit payments to both

you and your beneficiary equal 120 monthly

payments. No further benefits are then payable.

Option 3: A reduced monthly benefit payable to

you for your lifetime. Upon your death, your

joint annuitant (spouse or financial dependent),

if living, will receive a lifetime monthly benefit

payment in the same amount as you were receiving.

No further benefits are payable after both you

and your joint annuitant are deceased.

Option 4: An adjusted monthly benefit payable to

you while both you and your joint annuitant (spouse

or financial dependent) are living. Upon the death

of either you or your joint annuitant, the monthly

benefit payable to the survivor is reduced to two-

thirds of the monthly benefit you were receiving

when both were living. No further benefits are

payable after both you and your joint annuitant

are deceased. (Emphasis in original text.)

7. On January 12, 1990, Mr. Whaley executed an Application. The

Application listed the Petitioner as beneficiary and indicated that the

retirement option selected was Option 1.

8. In selecting Option 1, Mr. Whaley rejected all other options. The fact

that Petitioner was listed on the application as a beneficiary is of no

consequence given that Mr. Whaley chose Option 1. An explanation on the back of

the retirement application expressly states, "This option does not provide

continuing benefit to a beneficiary." Because Mr. Whaley chose Option 1,

Petitioner, as his beneficiary, would have been entitled only to a refund of Mr.

Whaley's contributions in the event that Mr. Whaley's contribution exceeded the

amount of monthly benefits paid to him before prior to his death. Petitioner

did not assert, nor did the evidence establish that the refund provision in

Option 1 applies in the instant case.

9. Petitioner stated that Mr. Whaley could read and was not mentally

impaired at the time he completed the retirement application, yet Petitioner

testified that the agency did not explain to Mr. Whaley the benefits of the plan

which he selected. According to the testimony of Stanley Colvin, administrator

and supervisor of the Division's Survivor Benefits Section, staff members are

available to provide counseling to members who come in or call with questions

relative to their retirement. There is no record that Mr. Whaley ever contacted

the Division with questions regarding the various options.

10. The pastor of the church which Petitioner is a member testified that

Mr. Whaley may have needed help to understand the ramifications of legal

documents. Mr. Whaley's daughter also testified that her father may not have

understood the retirement option he chose. Both the pastor and Mr. Whaley's

daughter testified further that in conversations with Mr. Whaley, he had

indicated to them that he had taken care of the legal work necessary to ensure

that his was family was taken care of in the event of his death.

11. Notwithstanding the testimony of Petitioner and others, there is no

evidence that at the time Mr. Whaley selected Option 1 he did not fully

understand the nature and effect of his selection. Neither does the evidence

support the claim that the selection of Option 1 by Mr. Whaley was inconsistent

with his desire or intention at the time the choice was made.

12. At the time of Mr. Whaley's retirement, he was in good health. Given

this fact it is not unusual that he selected the option that would provide him

with the maximum monthly benefit. Statements by Mr. Whaley that he had taken

care of matters and that "things were in order" do not provide substantial

evidence that the selection of Option 1 by Mr. Whaley was made only because he

did not fully understand the consequences of his choice.

13. The testimony revealed that upon Mr. Whaley's death, the Petitioner

was the beneficiary of his life insurance policy and also the recipient of

benefits under his social security. Under these circumstances, Mr. Whaley's

selection of Option 1 was not necessarily inconsistent with his statement that

things "were in order" or his listing Petitioner as beneficiary on the

Application.

14. On several documents provided to and/or completed by Mr. Whaley, it

was clearly stated that once a member begins to receive his benefit, the option

selection cannot be changed. The information sheet, "What Retirement Option

Should You Choose?," mailed to Mr. Whaley on or about November 22, 1989,

contained the following provision:

Option Choice Cannot Be Changed

Once you begin to receive your benefit your

option selection cannot be changed. Therefore,

it is important to carefully study your personal

circumstances before making your decision . . . .

The Application submitted to the Division by Mr. Whaley on or about January 25,

1990, contained a statement that "[o]nce you retire, you cannot add additional

service nor change options." Finally, the Acknowledgment of Retirement

Application sent to Mr. Whaley by the Division on or about February 8, 1990,

provided in relevant part the following:

ONCE YOU RETIRE, YOU CANNOT ADD ADDITIONAL SERVICE

OR CHANGE OPTIONS. RETIREMENT BECOMES FINAL WHEN

ANY BENEFIT CHECK IS CASHED OR DEPOSITED!

15. Mr. Whaley received his first retirement check on or about the last

working day in July 1990. Petitioner testified that Mr. Whaley cashed this

check in July or August of that same year. By cashing that check, Mr. Whaley

was precluded from thereafter changing his retirement option.

16. By selecting Option 1, Mr. Whaley received the maximum benefits

payable to him during his lifetime. However, under the provisions of retirement

Option 1, upon Mr. Whaley's death, his beneficiary, the Petitioner is not

entitled to receive any benefits.

CONCLUSIONS OF LAW

17. The Division of Administrative Hearings has jurisdiction over the

subject matter of and the parties to this proceeding. Section 120.57(1),

Florida Statutes (1993).

18. Chapter 121, Florida Statutes (1993), also known as the Florida

Retirement System Act, established the Florida Retirement System. Current

statutory provisions which are relevant in this case are identical to those in

effect in 1990 when Mr. Whaley selected Option 1 in 1990.

19. The Petitioner has the burden of proof in this case. See Balino v.

Department of Health, etc., 348 So.2d 349 (Fla. 1st DCA 1977). To meet the

burden of proof, the Petitioner must prove by a preponderance of evidence that

she is entitled to the action agency she is entitled to the action agency she

proposes.

20. Section 121.091(6), Florida Statutes (1989), provides that a member

shall elect, prior to the receipt of his first monthly retirement payment, one

of four different options. Section 121.091(6)(a), Florida Statutes (1989),

provides in relevant part the following description of those options:

1. The maximum retirement benefit payable

to the member during his lifetime.

2. A decreased retirement benefit payable

to the member during his lifetime and, in the

event of his death within 10 years after his

retirement, the same monthly amount payable

for the balance of such 10-year period to his

beneficiary....

3. A decreased retirement benefit payable

during the joint lifetime of both the member

and his joint annuitant and which, after the

death of either, shall continue during the

lifetime of the survivor.

4. A decreased retirement benefit payable

during the joint lifetime of the member and

his joint annuitant and which, after the death

of either, shall continue during the lifetime

of the survivor in an amount equal to 66 2/3

percent of the amount which was payable during

the joint lifetime of the member and his joint

annuitant.

21. Each retirement option has its advantages and disadvantages. The

advantage of Option 1 is that it provides the largest monthly payment for which

a retiree is eligible. The disadvantage is that it provides no continuing

monthly benefit to a spouse or other dependents upon the retiree's death.

22. Section 121.031(1), Florida Statutes (1989), grants the Division

authority to promulgate rules for the efficient and effective operation of the

system. Pursuant to that grant of authority, the Division promulgated Rule

22B-4.002(3), Florida Administrative Code, which was in effect at all times

pertinent hereto. (This rule was subsequently transferred to Rule 60S-4.002,

Florida Administrative Code.) According to that provision, after a retirement

payment has been cashed or deposited, the selection of an option may not be

changed.

23. A similar provision is found in Rule 22B-4.010, Florida Administrative

Code, the rule which was effective in 1990. The rule, subsequently transferred

to Rule 60S-4.010, Florida Administrative Code, provides the following:

A member shall select an option for receiving

benefits and may select a different option prior

to the time the first benefit check has been

cashed or deposited. Thereafter, the member

shall not be permitted to change the option he

selected.

Unless the applicable rules are challenged in accordance with Section 120.56,

Florida Statutes, which has not been done in the instant case, they are presumed

to be valid in any 120.57 proceeding to which the apply.

24. As established by the testimony of Stanley Colvin, a Division

administrator, Mr. Whaley selected Option 1 on January 12, 1990 and was added to

the payroll in July 1990. Petitioner testified that the first retirement check

was negotiated by Mr. Whaley in July or August of 1990. In view of these facts,

the relevant law would have prevented the member, Mr. Whaley, from changing his

retirement option.

25. The Petitioner contends that Mr. Whaley did not possess the level of

reading comprehension skills to make a knowing and intelligent selection of his

options. As evidence of this, Petitioner presented testimony that Mr. Whaley

indicated prior to his death that he had taken care of the legal work to ensure

that his family was taken care of and that "things were in order." The implicit

assertion is that, given these statements made by Mr. Whaley, his intention was

to select a retirement option that would have provided benefits to Petitioner

should she survive her husband. The evidence failed to establish that at the

time Mr. Whaley selected Option 1, he did not possess the reading skills and

mental capacity to make an informed selection. Neither was it demonstrated by

substantial evidence that at the time Mr. Whaley selected Option 1, he did not

understand the nature and consequence of that decision. Thus, Petitioner failed

to meet her burden of proof.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

recommended that the Division of Retirement enter a final order denying the

request of Petitioner to modify the retirement benefits elected by Mr. Whaley,

the deceased husband of Petitioner.

RECOMMENDED this 1st day of August, 1995, in Tallahassee, Florida.

___________________________________

CAROLYN S. HOLIFIELD

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 August, 1995.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-0059

To comply with the requirements of Section 120.59(2), Fla. Stat. (1993),

the following rulings are made on the parties' proposed findings of fact:

Petitioner's Proposed Findings of Fact.

1a-1c. Rejected as not being supported by competent and substantial

evidence.

Respondent's Proposed Findings of Fact.

1-6. Accepted and incorporated herein.

7-8. Accepted.

9-11. Accepted and incorporated herein.

COPIES FURNISHED:

Gladys Whaley

3807 East Norfolk Street

Tampa, Florida 33604

Robert B.Button, Esquire

Division of Retirement

Legal Office

Cedars Executive Center-Building C

2639 North Monroe Street

Tallahassee Florida 32399-1560

A. J. McMullian, III, Director

Division of Retirement

Cedars Executive Center, Building C

2639 North Monroe Street

Tallahassee, Florida 32399-1560

Paul A. Rowell, Esquire

General Counsel

Department of Management Services

4050 Esplanade Way, Suite 265

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the 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 consult with the agency that will issue the

Final Order in this case concerning their 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.