98-003886 Clara Holland vs. Division Of Retirement Status: Closed Recommended Order on Tuesday, June 29, 1999.

Summary: Evidence did not establish that stroke victim was unable to understand the consequence of signing his retirement papers.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CLARA F. HOLLAND, )

)

Petitioner, )

)

vs. ) Case No. 98-3886

)

DIVISION OF RETIREMENT, )

)

Respondent. )

______________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case

on March 19, 1999, in Quincy, Florida, before Donald R.

Alexander, the assigned Administrative Law Judge of the Division

of Administrative Hearings.

APPEARANCES

For Petitioner: Stanley M. Danek, Esquire

2114 Great Oak Drive, Suite 200

Tallahassee, Florida 32303

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 ISSUE

The issue is whether to grant Petitioner's request that her

deceased husband's selection under the Florida Retirement System

be changed from Option 1 to Option 3.

PRELIMINARY STATEMENT

This matter began on June 17, 1998, when Respondent,

Division of Retirement, issued a letter advising Petitioner,

Clara F. Holland, that it was denying her request that her

deceased husband's selection under the Florida Retirement System

be changed from Option 1 to Option 3. Petitioner then requested

a formal hearing under Section 120.569, Florida Statutes, to

contest the proposed action.

The matter was referred by Respondent to the Division of

Administrative Hearings on September 1, 1998, with a request that

an Administrative Law Judge be assigned to conduct a formal

hearing. By Notice of Hearing dated September 22, 1998, a final

hearing was scheduled on January 20, 1999, in Sneads, Florida.

At the parties' request, the case was continued to March 19,

1999, in Quincy, Florida.

At the final hearing, Petitioner testified on her own behalf

and presented the testimony of J. C. McDaniel, a family friend;

Judith Pinkston, a neighbor; Savannah Comerford, a former co-

worker of her deceased husband; and Karen J. Wood, her daughter.

Also, she offered Petitioner's Exhibits 1-6. All exhibits were

received in evidence. Exhibit 6 is the deposition of Linda Blake

Boynton, a retired speech language pathologist, who was accepted

as an expert in speech pathology. Respondent presented the

testimony of William Nelson, Jr., chief of police of Sneads,

Florida; Clara F. Holland; Paula M. Kazmirski, an agency benefit

programs supervisor analyst; and Margaret H. White, the

decedent's sister. Also, it offered Respondent's Exhibits 1-5.

All exhibits were received in evidence.

The Transcript of the hearing was filed on April 7, 1999.

By agreement of the parties, the time for filing proposed

findings of fact and conclusions of law was extended to May 28,

1999. The same were timely filed by the parties, and they have

been considered by the undersigned in the preparation of this

Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of

fact are determined:

1. In this retirement dispute, Petitioner, Clara F.

Holland, seeks to change her late husband's selection under the

Florida Retirement System from Option 1 to Option 3 on the ground

he was mentally incompetent to make a rational decision when the

selection was made. Respondent, Division of Retirement

(Division), has denied the request on the grounds that the late

husband, William T. Holland (Holland), cashed or deposited his

Option 1 retirement benefits from February 1993 until his death

in December 1997, and that the law prohibits a change of options

under these circumstances.

2. Counting his state and military service, Holland accrued

almost thirty years of creditable service with the Florida

Retirement System between 1959 and early 1993, when he retired,

due to a disability. In the spring of 1990, while employed at

Florida State Hospital as a vocational instructor II, he first

began contemplating retirement and contacted the Division

requesting an estimate of benefits.

3. In April or May 1990, Holland was sent an estimate of

benefits, a pamphlet entitled "Preparing to Retire," and an "OPT

FRS form," which explained in detail the various retirement

options available. Among these were Options 1 and 3. In general

terms, the first option paid the largest monthly benefits but

terminated upon the death of the retiree. The third option paid

smaller benefits, but if the retiree predeceased his spouse, the

spouse would continue receiving benefits for her lifetime. This

was fully explained in the form.

4. On October 8, 1992, Holland was admitted to Tallahassee

Community Hospital (TCC) suffering from recurrent transient

ischemic attacks. After various tests were run, Holland

underwent an emergency carotid endarterectomy to alleviate a

blockage in his left carotid artery. During that surgery, he

suffered a stroke, which, among other things, paralyzed his left

side and temporarily confined him to a wheelchair. Immediately

after the stroke, he could not speak or recognize family members,

and he was totally dependent on others.

5. Holland was eventually discharged from TCC on

October 22, 1992, and referred to Capital Rehabilitation Hospital

(CRH) for additional physical and speech therapy. At the time of

discharge from TCC, his treating neurologist, who did not testify

at final hearing, noted in the patient records, and without

further explanation, that he had "returned to essentially his

normal mental status." As a medical record, and an exception to

the hearsay rule, this notation constitutes the only competent

evidence of record from a medical doctor concerning Holland's

mental status at that time.

6. Holland remained at CRH until November 25, 1992, or the

day before Thanksgiving. During his month-long stay at CRH, he

was given a course of rehabilitation treatment which included

physical therapy, occupational therapy, speech therapy,

psychology, and recreation. In addition, his brain function was

evaluated by a certified speech language pathologist, Linda

Boynton, who presented expert testimony as a speech pathologist

in this cause.

7. Boynton had no independent recollection of Holland;

instead, she based her deposition testimony on the evaluation and

testing data she compiled in October and November 1992 while

treating him. According to Boynton, because of a deficit in the

right side of his brain, Holland was disoriented in terms of time

and date; his brain could not interpret all of the images that it

was picking up; he had difficulty with remembering, retaining, or

recalling facts; and he had problems with the higher levels of

mental activity. In addition, while he could read "chunks" of

words, he could not read whole sentences. She also opined that

at the time she was evaluating him, Holland would have been

unable to remember the information contained in the four

retirement options even if it was explained to him.

8. Boynton conceded, however, that Holland's stroke was

"mild," his comprehension was "adequate," and he scored

"moderate" in the cognitive areas. She also confirmed that

stroke victims could improve in a matter of days, and that

everyone's recovery is different. She had no firsthand knowledge

of Holland's mental status on November 7, 1992, the critical date

in this dispute. Finally, Boynton was not a medical doctor, and

her expertise was limited to speech pathology. For these

reasons, her testimony has not been accorded the weight given to

the notation in Holland's medical records during his stay at TCH.

9. Shortly after being transferred to CRH, that facility

began allowing Holland to go to his home in Sneads, Florida, on

"weekend passes." While at home on November 7, 1992, a Saturday,

Holland decided to make application for disability retirement

with the State. The record does not reflect the person who

actually obtained the retirement papers from the Division, but

Holland's daughter carried them to his treating physicians so

that they could verify in writing the nature of his disability.

10. With the assistance of his wife, Holland completed

Division Form FR-13 and selected Option 1, which extended

retirement benefits for his lifetime only. In his wife's words,

Option 1 was selected because "I don't think we knew we had a

choice." At that time, Petitioner says her husband was still

strapped in a wheelchair, he was mentally confused, and he could

only briefly converse with others. Petitioner also signed the

form since there is a requirement that if Option 1 is selected by

a married retiree, the spouse must sign the form.

11. Petitioner telephoned William "Bubba" Nelson, Jr., a

second cousin who was chief of police in Sneads, and asked that

he stop by the house that morning, witness Holland sign the form,

and notarize the application. Nelson agreed and notarized the

document as requested. The entire visit took no more than five

minutes.

12. At hearing, Nelson recalled that Holland used a walker

to come into the den to sign the document; he did not appear to

be "confused" when he signed the application; he did not ever

lose his train of thought; he did not struggle to think of a word

while speaking; his "mental capacity seemed to be not affected,"

and the two were able to engage in small talk for a minute or so.

13. Petitioner then carried the papers to the Division's

offices in Tallahassee on November 9, 1992, but was told that her

husband needed to sign the form in one other place. Accordingly,

she carried the form to CRH and obtained her husband's signature.

A stamp on the document reflects that the fully executed document

was later filed with the Division on November 13, 1992. When she

filed the forms, Petitioner did not ask for any additional

information regarding the various options; had she done so,

counseling was available at the Division during normal business

hours.

14. When the application was filed, Holland had 1.84 years

of military service; he also had refunded service from October

1959 to October 1961 and September 1963 to February 1966.

Accordingly, on January 12, 1993, the Division advised Holland

that $3,334.68 was due if he intended to claim that service. If

he did so, his Option 1 benefits would increase almost $200.00

per month. The form requested that Holland notify the Division

in writing only if he wished to retire with paid-on service, and

not claim his military and refunded service. Finally, the form

advised him in bold print as follows:

YOU HAVE CHOSEN OPTION 1. YOUR OPTION

SELECTION CANNOT BE CHANGED AFTER YOU CASH OR

DEPOSIT ANY BENEFIT PAYMENT.

15. The record does not specifically show if Holland opted

to purchase his military and refunded service. However, it can

be reasonably inferred that he did since the first benefit check

described in Respondent's Exhibit 4 roughly equated to what his

estimated benefits would have been under Option 1 if such service

had been purchased, and there is no record of any written notice

to the Division by Holland that he did not wish to purchase this

service.

16. Holland's first benefit check was issued on February 5,

1993, and mailed to him on February 9, 1993. That check, and all

subsequent monthly checks until his death in December 1997, were

cashed or deposited by Holland. They totaled $55,830.72, or more

than his total deposits to the retirement system. Therefore,

when he died, Petitioner was not due any refunded contributions

or future monthly benefits. If Petitioner prevails in this

action, however, she would be required to offset any future

benefits by approximately $22,000.00, which represents the

difference between the benefits payable under Options 1 and 3

during the lifetime of her husband.

17. In August 1994, Holland received a new driver's license

with the only restriction being that he had to drive a vehicle

with an automatic transmission. He used his license to drive to

Marianna for physical rehabilitation treatement.

18. At no time was Holland ever adjudicated incompetent or

incapacitated by a court. It is fair to state that he

experienced gradual but continued improvement from the time of

his release from the hospital until his death in December 1997.

CONCLUSIONS OF LAW

19. The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties hereto

pursuant to Sections 120.57 and 120.569, Florida Statutes

(Supp. 1998).

20. Respondent suggests that under the case of In re Bryan ,

550 So. 2d 447, 448 (Fla. 1989), Petitioner is obligated to prove

her husband's incapacity by clear and convincing evidence. That

case, however, is inapposite since it involved a proceeding to

determine the appropriate standard for adjudicating a person

incompetent to manage his property, a matter not in issue here.

Moreover, in a long string of administrative decisions, the

Division has always observed the rule that in order for a

claimant to prevail in this type of action, it need only prove

incapacity by a preponderance of the evidence. See , e.g. , Maso

v. Dep't of Mgmt. Svcs, Div. Of Ret. , Case No. 98-0357 (Div. Of

Ret., Dec. 31, 1998); Paehler v. Div. Of Ret. , Case No. 95-4841

(Div. Of Ret., May 20, 1996); Portee v. Dep't of Admin., Div. Of

Ret. , Case No. 91-2306 (Div. Of Ret., Nov. 14, 1991).

Accordingly, that standard will be used.

21. Section 121.091(6)(k), Florida Statutes (1997), reads

as follows:

(h) The option selected or determined for

payment of benefits as provided in this

section shall be final and irrevocable at the

time a benefit payment is cashed or

deposited.

A similar provision is found in Rule 60S-4.002(4), Florida

Administrative Code, which implements the foregoing statute.

22. Under Petitioner's theory, she acknowledges that her

late husband was not adjudicated incompetent by a court. She

requests, however, that an administrative determination be made

that he was incapable of understanding the character of his acts

on November 7, 1992, and that the transaction is voidable,

notwithstanding the foregoing statute and rule.

23. In the absence of an adjudication of incompetence, the

standard in Florida to determine incompetence is whether the

party is unable to understand in a reasonable manner the nature

and consequences of the transaction. Judge Robert W. Lee, Mental

Illness and the Right to Contract , 72 Fla. Bar J., December 1998

at 48. To make this determination, it is necessary to consider,

where relevant: (a) the party's medical and psychiatric history;

(b) the party's medical and psychiatric diagnoses and opinions;

(c) the party's behavior and conduct at the time of the

transaction; and (d) the circumstances surrounding the

transaction. Id. at 49.

24. The more persuasive evidence supports a conclusion that

Holland was sufficiently competent when he executed his

retirement papers on November 7, 1992, to understand the nature

and consequences of the transaction. This conclusion is based on

the notation in his medical records by his treating neurologist

at TCH that he "had returned to essentially his normal mental

status"; the testimony of an impartial witness who notarized his

retirement papers and described his behavior and conduct as being

relatively normal under the circumstances; the fact that

explanatory pamphlets had been sent to Holland some two years

earlier explaining in detail the various retirement options; the

assistance rendered by his wife throughout this process in

completing the paperwork; and Holland's comprehension of the fact

that if he purchased refunded and military service, his benefits

would substantially increase. As to this latter consideration,

this occurred in January 1993, or two months after he had

selected Option 1, but one month before he received his first

retirement check. Finally, while Holland may not have clearly

understood the differences between Options 1 and 3 on November 7,

1992, a difficulty in understanding retirement options does not

equate to a determination that one does not understand the nature

and consequences of a transaction. This being so, Petitioner's

request should regrettably be denied.

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 Petitioner's request that her late husband's

election of retirement benefits be changed.

DONE AND ENTERED this 29th day of June, 1999, in

Tallahassee, Leon County, Florida.

___________________________________

DONALD R. ALEXANDER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 29th day of June, 1999.

COPIES FURNISHED:

A. J. McMullian, III, Director

Division of Retirement

Cedars Executive Center, Building C

2639 North Monroe Street

Tallahassee, Florida 32399-1560

Emily Moore, Chief Legal Counsel

Division of Retirement

Cedars Executive Center, Building C

2639 North Monroe Street

Tallahassee, Florida 32399-1560

Robert B. Button, Esquire

Division of Retirement

Cedars Executive Center, Building C

2639 North Monroe Street

Tallahassee, Florida 32399-1560

Stanley M. Danek, Esquire

2114 Great Oak Drive, Suite 200

Tallahassee, Florida 32303

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this

Recommended Order within fifteen days. Any exceptions to this

Recommended Order should be filed with the Division of Retirement.