02-000986 Richard W. Holland vs. Department Of Management Services, Division Of Retirement Status: Closed Recommended Order on Monday, June 24, 2002.

Summary: Evidence showed Petitioner was overpaid $961.87 in 1975, but neither statutes nor rules authorize agency to condition payment of retirement benefits related to current service upon refund of overpayment related to prior service.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RICHARD W. HOLLAND, )

)

Petitioner, )

)

vs. ) Case No. 02 - 0986

)

DEPARTMENT OF MANAGEMENT )

SERVICES, DIVISION OF )

RETIREMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

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

on May 21, 2002, in Orlando, Florida, before T. Kent

Wetherell, II, the designated Administrative Law Judge of the

Division of Administrative Hearings.

APPEARANCES

For Petiti oner: Richard W. Holland, pro se

17964 Lookout Hill Road

Winter Garden, Florida 34787

For Respondent: Thomas E. Wright, Esquire

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399 - 0950

STATEMENT OF THE ISSUE

Whether Petitioner was overpaid $961.87 in 1975 when he

received a refund of his retirement contributions, and, if so,

whether Petitioner is required to refund that amount to the

Division of Retirement before receiving any retirement benefit s.

PRELIMINARY STATEMENT

By letter dated October 2, 2001, the Division of Retirement

(Division or Respondent) informed Petitioner that he was

overpaid $961.87 in 1975 when he received a refund of the

contributions that he had made to his State retirement account.

The letter further informed Petitioner that he was required to

repay the amount of the overpayment, plus interest -- a total of

$4,643.62 -- before he could receive any retirement benefits.

On or about October 16, 2001, Petitioner filed a petit ion

in which he requested a formal administrative hearing to contest

the Division's determination regarding the overpayment. On

March 12, 2002, the petition was referred to the Division of

Administrative Hearings for the assignment of an administrative

la w judge to conduct the hearing requested by Petitioner.

The hearing was held on May 21, 2002. At the outset of the

hearing, counsel for Respondent stipulated that the Division was

no longer seeking interest from Petitioner. Thus, the only

amount still a t issue in this proceeding is the alleged

overpayment of $961.87.

At the hearing, Petitioner testified in his own behalf and

also presented the testimony of his wife, Jean Holland.

Petitioner's Exhibits P1 - P9 were received into evidence. At the

hearing, Respondent presented the testimony of Ira Gaines, an

administrator with the Division's Bureau of Retirement

Calculations, and Willie Gavin, a records administrator with the

Department of Banking and Finance. Respondent's Exhibits R1 - R3

were received into evidence. At Respondent's request, official

recognition was taken of Chapter 121, Florida Statutes, and Rule

60S - 3.002, Florida Administrative Code.

No transcript of the hearing was filed. At the conclusion

of the hearing, the parties requested and were granted until

June 10, 2002, to file their proposed recommended orders. The

parties' Proposed Recommended Orders were timely filed and were

considered by the undersigned in preparing this Recommended

Order.

FINDINGS OF FACT

Based upon the testimony and evidence received at the

hearing, the following findings are made:

1. Petitioner is a law enforcement officer employed by the

Florida Highway Patrol (FHP).

2. Petitioner was first hired by FHP in August 1968. He

left FHP on October 15, 1975, to pursu e a private venture.

3. Petitioner rejoined FHP in July 1981, and he is

currently a member of the troop that patrols the Florida

Turnpike.

4. Between September 1968 and December 1974, Petitioner

made monthly contributions to the FHP pension fund which , at the

time, was administered by FHP.

5. In 1970, when the Florida Retirement System (FRS) was

created, Respondent took over the administration of the FHP

pension fund, and Petitioner elected to participate in the FRS.

The FRS was, and still is, admin istered by Respondent pursuant

to Chapter 121, Florida Statutes.

6. Prior to January 1, 1975, the FHP pension fund and the

FRS were "contributory," meaning that the employee was required

to contribute a percentage of his or her salary to the fund, and

con tributions were also made by the employer. Starting on

January 1, 1975, the FRS became "non - contributory," meaning that

the employer made all of the contributions.

7. Petitioner's contributions to his FHP pension fund

account were recorded on a four - colu mn ledger sheet which showed

the old balance, date of contribution, amount of the

contribution, and the total balance. The ledger sheet was not

computerized. The entries were manually typed onto the ledger

sheet.

8. Petitioner's account showed a total b alance of

$4,656.71 on December 31, 1974, and because the FRS was "non -

contributory" after that date, the account had the same balance

on October 15, 1975, when Petitioner left FHP.

9. The total balance shown for Petitioner's account was

incorrect as a re sult of a calculation error made when

Petitioner's December 1968 contribution was entered onto the

ledger sheet.

10. Prior to that contribution, the old balance reflected

on the ledger sheet was $108.89. Petitioner's December 1968

contribution was $37.45 , so the total balance should have been

$146.34. However, a calculation error was made and the total

balance entered on the ledger sheet was $1,108.21.

11. The effect of this error was that the balance shown in

Petitioner's account was $961.87 ( i.e. , $1, 108.21 minus $146.34)

more than Petitioner had actually contributed.

12. The error was carried forward to the following month

when $1,108.21 was entered as the old balance, and all

subsequent entries to Petitioner's account reflected the error.

As a resu lt, Petitioner's actual contributions as of

December 31, 1974 (and, hence October 15, 1975, when he left

FHP) were $3,694.84, not $4,656.71.

13. The error was not discovered in October 1975 when

Petitioner left FHP and requested a refund of his contributi ons.

Apparently, the account was not audited prior to payment of the

refund to Petitioner.

14. In October 1975, Petitioner signed a card requesting a

refund of his contributions. The address listed on the card

corresponded to Petitioner's address at t hat time.

15. The pertinent information from the card ( i.e. , the

payee and the amount) was provided to the Comptroller by

Respondent when a warrant was requested.

16. The Comptroller prepared a warrant in the requested

amount and returned it to Responden t along with a computer -

printed label that contained Petitioner's name and social

security number, the refunded amount ($4,656.71), warrant number

(173213), and the date of the warrant (November 4, 1975). The

label was affixed to the refund request card, and the warrant

was mailed to Petitioner.

17. The Comptroller's records show that warrant number

173213 was paid on November 21, 1975. The records do not show

the payee of the warrant. Nor do the records show whether the

warrant was deposited into a ban k account or cashed. The

cancelled warrant no longer exists.

18. Petitioner did not recall receiving a warrant in the

amount of $4,656.71. Petitioner and his wife both testified

that they recalled receiving only $2,500.00. Petitioner

produced a deposit slip dated November 15, 1975, showing a

$2,500.00 deposit as well as bank records which showed that

deposit as the only large deposit into Petitioner's account

between November 1975 and February 1976.

19. The source of the $2,500.00 check is not shown on the

deposit slip. The Comptroller's records show no FRS warrants in

that amount during the period of November 15, 1975, through

November 21, 1975, when such a warrant would likely have been

paid. Moreover, Petitioner conceded that he may have had

anot her bank account at the time, although he could not locate

any records for such an account.

20. Petitioner received a statement of account from

Respondent in June 1974 showing the balance of his account to be

$4,220.47 at that time. Despite having that i nformation and

despite his financial circumstances being "tight" at the time,

Petitioner did not make any inquiry to Respondent as to why he

received only $2,500.00. This suggests that the $2,500.00 check

was not the FRS warrant.

21. The overpayment was first discovered in 2000 when

Respondent conducted an audit of Petitioner's FRS account as

part of its preparation of the member annual statement required

by Section 121.136, Florida Statutes.

22. Petitioner was first informed of the error and the

1975 ov erpayment in August 2001 when he received an unsolicited

telephone call from Brenda Shiver, an employee of the

Respondent, regarding his retirement plans and the cost of

"buying back" his prior service with the FHP between 1968 and

1975.

23. Petitioner ha s no current plans to retire. Nor does

Petitioner have a current desire to "buy back" his prior service

which would cost over $21,000, not including the amount at issue

in this proceeding. The cost of the prior service is not at

issue in this proceeding.

CONCLUSIONS OF LAW

24. The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding pursuant to Sections 120.569 and 120.57(1), Florida

Statutes. (All references to Sections are to the Florida

Stat utes. All references to Rules are to the Florida

Administrative Code.)

25. The audit of Petitioner's FRS account that resulted in

the agency action triggering Petitioner's request for an

administrative hearing was initiated by Respondent, not

Petitioner . Thus, unlike Wilson v. Dept. of Administration , 538

So. 2d 139 (Fla. 4th DCA 1989) (involving petitioner's assertion

of right to receive credit for prior service), and Helms v.

Dept. of Management Servs. , DOAH Case No. 02 - 0354 (Recommended

Order dated A pril 17, 2002) (involving request by petitioner for

a refund of his contributions), where it was determined that the

petitioner had the burden of proof, Respondent is the party

seeking affirmative relief and a change in the status quo, i.e. ,

a refund of th e overpayment made to Petitioner in 1975.

Therefore, it has the burden of proof in this proceeding. See

Amico v. Division of Retirement , 352 So. 2d 556 (Fla. 1st DCA

1977)(agency has the burden of proof in case involving change in

person's retirement sta tus); Balino v. Dept. of Health and

Rehabilitative Servs. , 348 So. 2d 349 (Fla. 1st DCA 1977)

(agency has the burden to establish that person receiving

Medicaid benefits were no longer eligible).

26. The standard of proof is a preponderance of the

evid ence, see Section 120.57(1)(j), which means that Respondent

must prove that it is "more probable than not" that an

overpayment was made to Petitioner. See Black's Law Dictionary ,

at 1182 (6th ed. 1990) (defining "preponderance of the

evidence").

27. The evidence clearly establishes that a calculation

error was made in December 1968 which resulted in the balance of

Petitioner's retirement account reflecting $961.87 more than

Petitioner had actually contributed.

28. Although Respondent did not, and withou t a cancelled

warrant bearing Petitioner's endorsement it could not

conclusively prove that Petitioner received a refund in the

amount of $4,656.71, the paper trail shown by Respondent

establishes that it is more probable than not that Petitioner

received the refund in that amount. In this regard, the

evidence shows that Petitioner requested a refund of his

contributions; that as a result of that request, warrant number

173213 was prepared by the Comptroller in the amount of

$4,656.71; that the computer - ge nerated label prepared by the

Comptroller in connection with warrant number 173213 identified

Petitioner as the payee of the warrant; that Respondent had

Petitioner's correct address on file; that the warrant was paid

on November 21, 1975; and that no FRS warrants were paid around

that time in the amount of $2,500.00, which was the amount that

Petitioner recalled receiving from Respondent.

29. At the hearing, Petitioner argued that Respondent's

effort to recover the overpayment should be barred by the

stat ute of limitations. There is some appeal to that argument

because the events giving rise to this case occurred more than

33 years ago (calculation error) and 26 years ago (overpayment),

and as a result of the passage of time, documents (namely, the

cancel led warrant) are no longer available and memories have

faded. However, as Respondent points out in its Proposed

Recommended Order, neither the statute of limitations nor the

related equitable principle of laches apply in administrative

proceedings. See S ection 95.011 (defining "action" to mean a

"civil action or proceeding"). And see Farzad v. Dept. of

Professional Reg. , 443 So. 2d 373 (Fla. 1st DCA 1983) (agency's

disciplinary action not barred by the laches); Dept. of

Community Affairs v. Goodson Pavin g, Inc. , DOAH Case No. 99 - 2725

(Recommended Order dated Dec. 1, 1999)(concluding after

extensive analysis that the statute of limitations and laches

did not bar agency action to collect a late fee).

30. Having determined that Respondent met its burden of

proof and that its effort to recover the overpayment is not

time - barred, the only remaining issue is the remedy. Respondent

contends that Petitioner is required to repay the overpayment

prior to receiving any retirement benefits for his current 20

years o f service.

31. As support for its position, Respondent cites Rule

60S - 3.002(2), which provides:

All employee retirement contributions for

service credit on which benefits are to be

calculated must be paid prior to the date of

issuance of the first retirem ent benefit

payment.

32. That rule is inapplicable in this case. By its terms,

the rule only applies to contributions related to service credit

"on which benefits are to be calculated." In this case, the

contributions at issue relate to Petitioner's s ervice from 1968

to 1975. However, Petitioner is not requesting that his

retirement benefits be calculated based upon that prior service.

33. Only if Petitioner chooses to "buy back" his prior

service would Rule 60S - 3.002(2) be implicated. And see Secti on

121.091(5)(authorizing employee who received refund of member

contributions to reinstate his or her rights to the credit for

that service by repaying the refunded member contributions).

Until then, Petitioner has no rights under the FRS to the

service credit represented by the refunded contributions. See

Section 121.071(6)(c); Rule 60S - 3.002(6). It is as if that

service never occurred.

34. Respondent has not cited any basis other than Rule

60S - 3.002(2) to require Petitioner to refund the overpayment as

a condition of receiving retirement benefits based upon his

service from 1981 to the present. Nor has the undersigned's

research located any. Indeed, there is nothing in Chapter 121

or Rule Chapter 60S which specifically authorizes Respondent to

seek refunds of overpayments under the circumstances of this

case. Cf. Section 17.04 (assigning the Comptroller the

responsibility of initiating actions to collect monies owed to

the State); Section 121.091(9)(b)2. - 6.(requiring retiree to

repay retirement bene fits under specified circumstances); Rules

3A - 21.001 and 3A - 21.004 (Comptroller's rules which establish

procedures for recovery of non - salary sums due to the State).

35. In sum, although the evidence shows that Petitioner

was overpaid $961.87 in 1975 when he received a refund of his

contributions, Respondent is only authorized to require

Petitioner to refund the overpayment as a condition of receiving

benefits for the service to which the contributions are related,

i.e. , Petitioner's service with FHP betwe en 1968 and 1975.

There is no statute or rule that authorizes Respondent to

require Petitioner to refund the overpayment as a condition upon

Petitioner's receipt of benefits for his current 20 years of

service.

RECOMMENDATION

Based upon the foregoing Fi ndings of Fact and Conclusions

of Law, it is

RECOMMENDED that the Division of Retirement issue a final

order that increases the cost for Petitioner to "buy back" his

prior service by $961.87 to reflect the 1975 refund overpayment,

but eliminates the mandat e that Petitioner pay that amount as a

condition of receiving retirement benefits related to his

current service.

DONE AND ENTERED this 24th day of June, 2002, in

Tallahassee, Leon County, Florida.

___________________________________

T. KENT WETHERELL, II

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Divisio n of Administrative Hearings

this 24th day of June, 2002.

COPIES FURNISHED :

Richard W. Holland

17964 Lookout Hill Road

Winter Garden, Florida 34787

Thomas E. Wright, Esquire

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399 - 0950

Erin Sjostrom, Director

Division of Retirement

Department of Management Services

Cedars Executive Center, Building C

2639 North Monroe Street

Tallahassee, Florida 32399 - 1560

Monesia Taylor Brown, Acting General Counsel

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399 - 1560

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 Recommen ded Order should be filed with the

agency that will issue the final order in this case.