05-004184 Julie Lambrou vs. State Board Of Administration Status: Closed Recommended Order on Thursday, September 28, 2006.

Summary: Petitioner established that Respondent failed to follow its generally applicable policy, at that time, that an employee be on salary or on approved leave status in the effective month of transfer. Petitioner was in that status and eligible to transfer.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JULIE LAMBROU , )

)

Petitioner, )

)

vs. ) Case No. 0 5 - 41 84

)

STATE BOARD OF ADMINISTRATION , )

)

Respondent. )

)

RECOMMENDED ORDER

In accordance wit h notice , this cause came on for formal

proceeding and hearing before P. Michael Ruff, duly - designated

Administrative Law Judge of the Division of Administrative

Hearings in Tallahassee, Florida , on April 7, 2006 . The

appearances were as follows:

APPEARAN CES

For Petitioner: James W. Linn, Esquire

Lewis, Longman & Walker, P.A.

Post Office Box 10788

Tallahassee, Florida 32302

For Respondent: Ruth L. Gokel, Esquire

Office of the General Counsel

State Board of Administration

1801 Hermitage Boulevard

Tallahassee, Florida 32308

Brian A. Newman, Esquire

Pennington, Moore, Wilkinson,

Bell & Dunbar, P.A.

Post Office Box 10095

Tallahassee, Florida 32302 - 2095

STATEMENT OF THE ISSUE

The issues to be resolved in this proceeding concern

whether the Petitioner's Decedent, Joann e Eddy, validly effected

a transfer from the pension plan to the Investment Plan of the

Florida Retirement System (FRS), and whether the Respondent

agency is estopped from i nvalidating that transfer. It must

also be determined whether the Petitioner is entit l ed to an

award of reasonable attorney's fees and costs.

PRELIMINARY STATEMENT

This cause arose upon the issuance of a final decision by

the State Board of Administrati on (SBA) . The Petitioner had

requested intervention by the SBA by filing a Request for

Intervention on November 4, 2004. The SBA investigated the

issues raised by the Petitioner concerning the reversal of the

election by Ms. Eddy to change f rom the FRS D efine d B enefit

P rogram (pension plan) to the P ublic Employee Optional

Retirement (Investment Plan). The SBA considered the issues

raised by the Petitioner and finally determined , by letter dated

September 30, 2005, that the Petitioner's contention that Jo anne

Eddy had made a valid election to change from the pension plan

to the Investment Plan was not supported by the fact s . That

decision was communicated to the Petitioner by the SBA's letter

of September 30, 2005, which also advised her of a right to

hea ring to contest the SBA's reversal of her sister , Ms. Eddy's

election to transfer from the pension plan to the Investment

Plan . The Petitioner timely filed a Petition for Hearing which

was received on November 1, 2005, (an extension of time had been

grant ed by th e S BA). That request was referred to the Division

of Administrative Hearings on November 16, 2005, and ultimately

to the undersigned Administrative Law Judge for formal hearing

and adjudication .

The hearing was originally set for January 4, 2006.

Thereafter, by joint request by the parties the case was

continued and abated . At the request of the parties, it was

rescheduled for hearing on April 7, 2006.

The cause came on for hearing as noticed. At the hearing

administrative notice was taken o f Chapter 121, Florida Statutes

(2003), and Florida Administrative Code Rule Chapter 19 - 13. The

Petitioner presented the testimony of Joni Taylor (by

telephone), an employee of Hillsborough County and friend of

Ms. Eddy who assisted her during her final i llness. The

Petitioner also presented ( by telephone ) the testimony of Ron

Ziegler, an employee of Hillsborough County in its Department of

Human Resources . T he Petitioner , Julie Lambrou , testified as

well . The Petitioner's Exhibits A through R were admi tted into

evidence and Exhibit B, a recording of a telephone conversation,

was played and transcribed into the record. The Respondent

presented the testimony of Walter Kelleher, an employee of SBA

and Dan Beard, an employee of the Florida Division of Reti rement

(DOR). On concluding the proceeding the parties had the record

transcribed and sought to file proposed recommended orders. An

extension of time for filing proposed recommended orders was

granted due to a medical crisis involving the Respondent's

c ounsel. Ultimately , the Proposed Recommended Orders were

timely filed . Those Proposed Recommended Orders have been

considered in the rendition of this Recommended Order.

FINDINGS OF FACT

1. The following facts have been stipulated by the parties

in the Joint Pre - hearing Statement or Stipulation:

a. Joanne Eddy was employed as a Paramedic by

Hillsborough County, Florida, from 1989 until 2004.

b. Hillsborough County is now and for all periods

relevant to this case has been a participating employer in the

Florida Retirement System (FRS).

c. As a Hillsborough County employee, Ms. Eddy

participated in the FRS pension plan from her date of hire in

September of 1989 until April of 2004. Ms. Eddy was fully

vested in the FRS pension plan.

d. Ms. Edd y was diagnosed with cancer ( metastatic

melanoma) in August 2003.

e. In that month Ms. Eddy was placed on approved

medical leave.

f. Ms. Eddy remained on approved medical leave of

absence until her resignation in April 2004 (April 8, 2004).

g. I n March 2004, Ms. Eddy submitted a "Second

Election Retirement Plan Enrollment Form" to the FRS Plan Choice

Administrator (Cit i - Street). Ms. Eddy indicated on this form

that she wished to change from the FRS pension plan to the FRS

Investment Plan . The s econd election retirement plan enrollment

form was signed by Ms. Eddy on March 1, 2004, and received by

the FRS Plan Choice Administrator , Cit i - Street on March 8, 2004.

Cit i - Street is a private entity which is an agent of the FRS,

Division of Retirement ( DOR) and the SBA.

h. On April 1, 2004, Joanne Eddy participated in a

grievance hearing involving another Hillsborough County

employee.

i. Hillsborough County paid Ms. Eddy for the time

that she attended the grievance hearing on April 1, 2004.

j. Ms. Eddy resigned from her FRS employment with

Hillsborough County on April 8, 2004.

k. Ms. Eddy called the FRS financial guidance line on

April 29, 2004, to inquire about the status of her transfer to

the FRS Investment Plan .

l. In May 2004, Ms. Ed dy received a written statement

from FRS confirming an opening balance of her FRS Investment

Plan account, in the amount of $60,345.86. The transaction date

on the statement is April 29, 2004.

m. Ms. Eddy died of cancer on June 20, 2004.

n. Prior to her death, Ms. Eddy designated her two

sisters, Petitioner Julie Lambrou and Lynda Wood, as

beneficiaries on her FRS Investment Plan account. Ms. Eddy's

beneficiary designation form allocates 60 percent to Ms. Lambrou

and 40 percent to Ms. Wood. As bene ficiaries, Ms. Lambrou and

Ms. Wood are entitled to the value of Ms. Eddy's FRS Investment

Plan assets, if a transfer to the FRS Investment Plan is

determined to be val i d.

o. On September 3, 2004, an employee of the Division

of Retirement within the Dep artment of Management Services wrote

a letter to Joanne Eddy's mother, Kathleen Dickey. In part , the

September 3, 2004, letter states:

Ms. Eddy elected to transfer to the

Investment Plan effective April 1, 2004.

However, since she did not work in the mon th

of April and therefore did not receive a

salary payment under the Investment Plan,

her election is null and void.

p. Ms. Lambrou followed all legally required

procedures to contest the denial of her sister ' s election to

transfer to the FRS Investmen t Plan.

q. On September 30, 2005, SBA Director of Policy,

Risk Management and Compliance wrote a "Final Action" letter to

Ms. Lambrou advising her that SBA had concluded that Ms. Eddy's

election to transfer to the FRS Investment Plan was invalid.

r. Petitioner, Julie Lambrou, filed a Petition for

Hearing in this matter on November 1, 2005, after receiving an

extension from the SBA.

s. Ms. Lambrou's attorney sent SBA a letter on

February 22, 2006, enclosing a copy of the Hillsborough County

payroll check for the work performed by Ms. Eddy on April 1,

2004.

t. As of the date of the Joint Pre - hearing Statement,

th[e] Division of Retirement ha[d] made no determination as to

whether the information contained in the February 22, 2006,

letter constitute s creditable service.

2. Ms. Eddy was very positive and very active regarding

her chances for recovery from the effects of melanoma and

embarked on an active treatment , surgery and therapy program to

try to effect a cure. This included chemical therapy as well as

brain surgery, which was apparently successful. She even

participated in the trial of a new therapy, interleukin therapy

and a new and aggressive type of chemical the r apy . She was

initially optimistic about her chances for recovery. In early

2004, however, she begin to decline in health. She thus beg a n

to focus very strongly o n setting her personal affairs ,

including her financial affairs , in order. She then learned

that , because she was not married and had no children , under the

FRS pension plan (define d contribution) there would be no

beneficiary eligible to receive her retirement benefits upon her

death. She learned at the same time , however, that if she

transferred to the Investment Plan, that she could designate

beneficiaries to receive the full value of her Investment Plan

account upon her death.

3. Consequently, she decided to do so and submitted the

necessary forms to make an election (her "second election") to

transfe r from the pension plan to the I nvestment P lan with the

FRS, in March 2004. She named her two sisters as beneficiaries

in a 60 percent , 40 percent proportion because she really wished

the money to be for the use of her nephews and nieces. One

sister had three children, the other two children.

Eligibility to Transfer to Investment Plan

4. Members of the pension plan who did not elect to

transfer to the FRS Investment Plan when the plan was

established in 2002, as of March of 2004 , were permitted to make

a one - time election known as the "second election" to transfer

to the I nvestment P lan in accordance with Section

121.4501(4)(e), Florida Statutes (2003). This is distinguished

from the first election period which ended in August of 2003.

§ 121.4501(4)(a), Fla. Stat. (2003).

5. No rules ha d been enacted in March 2004 governing the

second election to transfer to the I nvestment P lan. In the

absence of rules , the official policy statement concerning

transfer eligibility to the Investment P lan is the official

"Summary Plan Description" of the FRS Investment Plan,

pr omulgated by the DOR, which was in effect in March and April

of 2004. It is to this document to which employees , intent on

transferring to the I nvestment P lan , are referred by a notation

or instruction on the face of the enrollment form those

employees mu st use to enrol l in the Investment P lan. The

S ummary P lan D escription contains the following guidance for

employees considering a second election:

If you wish to use your Second Election,

note that the plan change is effective the

first day of the month f ollowing the receipt

and processing of your second Election

Retirement Plan Enrollment Form by the FRS

Plan Choice Administrator. To finalize the

plan change you must work or be covered by

approv ed leave for at least one day in the

month of your effective date . If you submit

your Second Election Retirement Plan

Enrollment Form in December and it is

received and processed by the Plan Choice

Administrator on December 15, your plan

change will be effective on January 1. To

finalize the change you must work or be

covered by approved leave for at least one

day in the month of January. If you do not

work or are not on approved leave in

January, your plan change will be reversed

and you will remain in your original plan.

(emphasis supplied) ( See Exhibit O in

evidence. )

6 . Applying the foregoing provision in the Summary Plan

Description, Ms. Eddy's election thus became effective on

April 1, 2004. She was on approved leave in April through the

date of her resignation which was April 8, 2004. Moreover, she

wa s paid for work performed on April 1, 2004, for attending a

grievance hearing as a union representative. This was a

regular , compensable part of her employment duties because she

was a designated union representative and her duties required

her to attend such grievance hearings and related meetings.

Indeed, she attended a formal meeting on March 11, 2004,

concerning the same grievance claim proceeding, in which the

grievance claim of Linda Wood was discussed with Ms. Joni

Taylor. This was done through he r official duties as an

employee union representative designated by her employer to

attend such meetings by her employer's adherence to the

collective bargaining agreement with the union. If Ms. Eddy was

entitled to payment for the April 1, 2004, attendan ce at the

grievance hearing, as indeed she was, then she also should have

been paid for the meeting on March 11, 2004, on the same basis

or theory as she was paid for the April 1, 2004, grievance

hearing by her employer, Hillsborough County.

7 . Ms. Eddy was aware in March 2004 that changing

retirement plans was the only effective means of passing her

vest ed retirement benefits on to other members of her family.

She thus filled out the Second Election Retirement Plan

Enrollment Form supplied by the F RS in March 2004. That form

indicates that enrollment is effective on the first day of the

month following the month in which the election form is received

by FRS. It is undisputed that her election form was received by

the FRS administrator on March 8, 2004.

8 . The information provided Ms. Eddy in the Summary Plan

Description indicated that she was eligible to elect the FRS

Investment Plan if she worked or was on approved leave in the

month of April 2004. As a union representative Ms. Eddy knew

that her pr esence at the grievance hearing on April 1, 2004, was

compensable under the terms of the Collective Bargaining

Agreement between the county, her employer, and her union. The

March 11, 2004, meeting should have been compensable as well on

the same basis , a nd Ms. Eddy , no doubt , could have called that

to her employer's attention and to the attention of the DOR , if

she had known of any requirement , intent or position by the DOR

or the SBA that she had to have been paid for employment during

the month of March , in order for her March 2004 election to be

valid. Ms. Eddy also was aware that she was on approved leave

during all of 2004 until her resignation on April 8, 2004.

9 . Ms. Eddy re ceived an initial written confirmation from

the DOR of her election to transfer to the Investment Plan in

March 2004, in the form of a "Second Election Plan Choice

Confirmation." The confirmation, which bears a transaction date

of March 8, 2004, states in relevant part:

This statement confirms your recent FRS Plan

Choice uti lizing your one time, second

election. You have elected to change to the

FRS Investment Plan effective 04/01/2004 and

transfer the present value of your FRS

Pension Plan benefit.

1 0 . Ms. Eddy called the FRS Financial Guidance Line on

April 29, 2004, an d in a lengthy conversation with persons

responsible for fielding inquiries and giv ing financial planning

information (Ernst and Young and Citi - Street ) , she discussed her

account and various options that might be available to

beneficiaries, including tax r amifications. During this phone

conversation, a Citisreet representative confirmed that her

transfer to the Investment Plan became effective in April 2004,

and her investment account balance would be transferred to the

FRS Investment Plan by the end of Ap ril 2004.

1 1 . Before her death, Ms. Eddy received a second written

confirmation from FRS that her transfer to the FRS Investment

Plan was effective, in the form of an "Investment Plan Opening

Balance Confirmation Statement." This confirmation, which bea rs

a transaction date of April 29, 2004, the date of her phone

conversation, states:

This statement confirms the opening balance

of your FRS Investment Plan account. On

04/29/2004, the amount of $60,345.86, which

represents the present value of your FRS

Pension Plan benefit will be allocated to

the investment options listed below.

Ms. Eddy died on June 20, 2004. At the time of her death she

had 2.44 hours of unused sick leave and 6.52 hours of unused

annual leave or vacation leave, for which payment wa s made

following her death.

1 2 . On June 9, 2004, Dan Beard, a Benefits Administrator

with the DOR, in an e - mail with the subject "Election

Reversals," noted the following with respect to Ms. Eddy's

election: "Per agency, member was on some type of leave and

finally resigned. Second election to IP is not valid since

member did not work in IP effective month."

1 3 . Ms. Lambrou first learned that the DOR had determined

Ms. Eddy's election to be "null and void" from a letter sent to

Kathleen Dickey, her mo ther, dated September 3, 2005, which was

in response to an inquiry made by Ms. Dickey. She learned also

of this position by the DOR in conversations with Paul Dane, an

employee of the DOR. The September 3, 2005, letter states that

Ms. Eddy's election was void because "she did not work in the

month of April and therefore did not receive a salary payment

under the Investment Plan . . . ." ( See Exhibit H in evidence.)

1 4 . Ms. Lambrou thereafter made many inquiries into the

reasons for the reversal, chroni cled in Attachment 1 of the SBA

final decision letter. (Exhibit J in evidence.)

1 5 . The SBA conducted a review in response to Ms.

Lambrou's Request for Intervention, which was submitted on

November 4, 2004.

1 6 . In every written communication from and between SBA

and the DOR, from June 2004 through April 2005, the asserted

reason for reversing Ms. Eddy's election was that she did not

work or earn salary in the month following the month of her

election which was therefore her effective month of April 200 4.

1 7 . In its final decision letter of September 30, 2005,

the SBA repeated the position that Ms. Eddy's election was

invalid because she was not actively employed and did not earn a

salary during April 2004.

1 8 . In response to the final decision let ter, Ms. Lambrou

filed a request for formal hearing and hired counsel to

represent her.

19 . A later examination of Ms. Eddy's work record revealed

that Ms. Eddy had in fact worked on April 1, 2004, for which her

employer, Hillsborough County, issued a de layed salary paycheck.

This information was revealed in a letter of February 22, 2006,

from Ms. Lambrou's attorney to the SBA, to the effect that

Hillsborough County had issue d a paycheck for Ms. Eddy's work on

April 1, 2004.

2 0 . Despite the policy posi tion communicated to members of

the retirement system in the official S ummary P lan D escription,

that an effective election required working or being on approved

leave in the month the election became effective, following

receipt of the information concerni ng Ms. Eddy's work on

April 1, 2004, the SBA took the additional position that not

only must the employee seeking to transfer from the pension plan

to the Investment Plan receive a salary payment in the effective

month (April 2004) , but must also have been working and getting

paid on the day the election form was submitted. Moreover, at

the hearing, Dan Beard, the Benefits Administrato r for the DOR,

testified that in order to be eligible to transfer to the

Investment Plan , a member must be on paid status o n the day the

FRS administrator receives the member's election form. When

ask ed how a member would be able to know that they had to be on

paid status on the day the election form is received in order to

be eligible to transfer to the FRS Investment Plan, Mr. Beard

could only respond that member education was "not part of his

job."

2 1 . If Ms. Eddy's election to transfer to the Investment

Plan were determined to be valid her beneficiaries would be

entitled to receive her full investment account balance. I f her

election is determined to be invalid then no benefits will be

paid to any beneficiary , relative or to her estate , and the

funds accrued in her retirement account or accounts through her

working life will be forfeited to the state. The SBA was aware

in June 2004 that Ms. Eddy was on approved leave when she

submitted her election to transfer to the FRS Investment Plan,

and was on approved leave through the date of her resignation on

April 8, 2004.

2 2 . Notwithstanding the clear language in the Summary Plan

Description, the SBA took the position after Ms. Eddy's death

that her election was invalid because she had not worked and had

not received a salary in April 2004. This was the position the

SBA communicated on a number of occasions in writing therea fter ,

until a formal proceeding was initiated by Ms. Lambrou o n

November 1, 2005.

2 3 . After the formal proceeding was initiated and after

counsel for the Petitioner informed the SBA in February 2006

that Ms. Eddy had in fact worked and been paid by Hills borough

County for work performed in April 2004, the SBA altered its

position s o that it also contended that the transfer to the

Investment Plan was invalid because Ms. Eddy had allegedly not

worked and not received a salary on the day the election to

enro ll in the Investment Plan and the enrollment form was filed

(March 1, 2004) or, alternatively , that she had not worked or

been paid on the date the Investment Plan election enrollment

form was received by the FRS plan administrator.

CONCLUSIONS OF LAW

2 4 . The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parties to this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (200 5 ).

2 5 . The parties have stipulated that the relevant

provisions of Chapter 121, F lorida Statutes (2003), govern the

disputed issues in this case. The pertinent facts in this case

occurred in the years 2003 and 2004. The election to transfer

from the FRS Pension Plan to the FRS Investment Plan as of March

2004 was governed by Section 121.4501(4)(e), Florida Statutes

(2003), which provides pertinently as follows:

After the period during which an eligible

employee had the choice to elect the defined

benefit program [Pension Plan] or the Public

Employee Optional Retirement Program

[Invest ment Plan], the employee shall have

one opportunity, at the employee ' s

discretion, to choose to move from the

defined benefit program to the Public

Employee Optional Retirement Program or from

the Public Employee Optional Retirement

Program to the defined benefit program.

Overview

2 6 . Ms. Eddy elected to transfer to the Investment Plan in

March 2004. There were no rules in effect governing such

transfers in Ms. Eddy's situation at that time , and no ne were

enacted until October 2004. Under the Agency's s tatutory

interpretation or its policy stateme nt in effect at times

pertinent , the official Summary Plan Description, an FRS member

was eligible to transfer from the pension plan to the Investment

Plan if one of two requirements w as met: either the member must

"work" during the month the transfer became effective, or the

member "must be covered by approved leave at least one day" in

the effective month. The effective month of Ms. Eddy's transfer

to the Investment Plan is the month following the month in wh ich

the election form was received by FRS. The election form was

received on March 8, 2004, and therefore the effective month of

the transfer to the Investment Plan is April 2004.

2 7 . Ms. Eddy met both requirements because she received

pay for work perf ormed on April 1, 2004, and was on approved

leave in April 2004. She was therefore eligible to elect to

transfer to the Investment Plan , and the election to transfer

was valid under the Agency's policy interpretation extant at

that time . The S ummary P lan D escription was available to Ms.

Eddy and depicted on the FRS - related web site to which she had

access and of which she was aware .

2 8 . Ms. Eddy performed each step required by the FRS to

effect her transfer to the Investment Plan . She received two

writ ten confirmations from the FRS indicating to her that her

transfer was effective and that she was enrolled in the

Investment Plan . On her own volition she sought information

concerning the Investment Plan from the official sources

identified on the FRS we bsite, including making a lengthy

telephone call to the FRS Financial Guidance Line. She thus

made contact with E rnst Young, the Financial Planning Agents of

the Agency and Citi - Street, the Agency charged with

administering accounts and effecting transfer s. Both of these

companies, agents of the DOR and/or the SBA , were reached by the

D O R toll - free phone number. In this phone conversation she

received assurance that her transfer to the Investment Plan was

being effected . She received advice about naming her

beneficiaries and otherwise received confirmation that she had

enrolled in the Investment Plan correctly and as required. She

was thus given to believe that she had taken all necessary

actions to complete the transfer . S he received advice as to tax

ramifications of her election and concerning her beneficiaries '

opportunities for withdrawal of her funds at some later point.

This was the last information she received before she died.

29 . Had she been informed before her death that the SBA

deemed he r ineligible to transfer because she had not "worked"

and received pay during the month of and the month following her

transfer election, she could have taken paid leave which she had

in her leave account in each of those months and satisfied the

pay statu s requirement , if she had known of any need to do so .

This is wholly aside from the f act that , as represented to her

and all other a ffected employees by the Summary Plan

Description , and the enrollment form itself , which referenced

it, that she could qual ify to transfer to the Investment Plan if

she was simply on approved leave status . S he clearly knew she

was on approved leave status.

3 0 . Moreover, if she had known that there was any question

concerning her eligibility to transfer, she could have obtain ed

proof from her employer that she was on pay status and had

worked the one day in April . She could also have obtain ed proof

of and payment for performing essentially the same sort of

duties when she attended the formal meeting on March 11, 2004,

with Ms . Taylor concerning the same grievance procedure (if

indeed she was not paid for it, the record is silent on that

question) . She could have provided this proof to the Agency at

the time , but she was not informed of any defect in her

entitlement to transfe r to the Investment Plan . If she had been

so informed she would have no doubt acted quickly to remedy such

a flaw because she was very focused on concluding her affairs

and particularly her financial affairs, to ensure that her

retirement funds were depos ited and approved in the Investment

Plan so that she would have something to leave to her sisters .

3 1 . She was very aware from March 2004 forward that her

death w as imminent and that therefore there was a critical need

to make sure that all these arrangem ents had been performed

correctly. The confirmations she received , referenced above ,

led her to believe that they were. Even if Ms. Eddy were not

actually eligible to elect a transfer to the Investment Plan ,

which she was, for the reasons delineated here in, the SBA is

estopped to deny that election based upon the peculiar facts and

circumstances of this case delineated h erein.

Eligibility to Transfer

3 2 . The facts found herein based upon preponderant

credible evidence indeed reflect that Ms. Eddy was el igible to

transfer to the Investment Plan in accordance with the official

Summary Plan Description. This is because she was on approved

medical leave during the month that her election became

effective - - April 2004 and for that matter during March 2004

w hen she filed her enrollment form and election to transfer to

the Investment Plan . The Summary Plan Description reflects the

SBA's contemporaneous statutory interpretation or policy

concerning the meaning and applicability of the statutes

governing the In vestment Plan and transfers thereto. The

Summary Plan Description states that to make a transfer, a

member "must work or be covered by approved leave for at least

one day in the month" the transfer becomes effective. There is

no question that the transfe r became effective in April 2004, on

April 1 to be specific. Only after Ms. Eddy died did the

Division of Retirement notify her mother that her election was

invalid because she did not work and earn a salary during the

effective month. Based on a later e xamination of her work

records, Hillsborough County , her employer , determined that she

had , in fact , worked in a bona fide way on April 1, 2004, when

she participated in the grievance hearing which was part of the

duties of her employment. The county acco rdingly issued a

belated paycheck for the work she had thus performed. Despite

the fact that she worked and received a salary payment during

the April 2004, effective month, and despite the fact that she

was on approved leave through the date of her resig nation on

April 8, 2004, the SBA still maintains that her transfer was

invalid. It was informed no later than February 2006, by letter

of the Petitioner's counsel, of the fact of the salary payment

for the work performed on April 1, 2004, paid to Ms. Eddy or to

her estate by Hillsborough County.

3 3 . Section 121.4501, Florida Statutes (2002) was designed

to provide participants in the FRS Pension Plan, the opportunity

to transfer from that plan in which retirement benefits are paid

based on a formula of t he average salary times years of service ,

to a defined contribution plan or Investment Plan , in which the

value of the participant ' s retirement benefit is expressed in

actual dollars earned by funds invested in the financial

markets. The statute provide d an initial transfer period for

existing employees during calendar years 2002 and 2003 , the so -

called " first election period. " Thereafter, in accordance with

Subsection (4)(e) of that statute, there is provided a "second

election" after the first election period has elapsed, giv ing

FRS members a second chance to elect a transfer from one plan to

the other , at their discretion. In March 2004, when Ms. Eddy

made her election, Section 121.4501(1)(e) provide d as follows:

After the period during which an eligib le

employee had the choice to elect the defined

benefit program [pension plan] or the public

employee optional retirement program

[investment plan], the employee shall have

one opportunity, at the employee's

discretion to choose to move from the

defined be nefit program to the public

employee optional retirement program or from

the public employee optional retirement

program to the defined benefit program.

This paragraph shall be contingent upon

approval from the Internal Revenue Service

for including the c hoice described herein

within the programs offered by the Florida

Retirement System.

1. If the employee chooses to move to the

public employee optional retirement program,

the applicable provisions of this section

shall govern the transfer.

3 4 . The Respondent Agency 's reason for reversing Ms.

Eddy's election was described as being that she had not worked

or received pay during the month of April 2004 , the month when

her election became effective. Later, apparently after it had

been in formed by couns el's letter in February 2006 that, with

proof supplied, she had indeed worked and had been paid for the

day in question in April 2004, the SBA then maintained that in

order to be eligible to make the transfer Ms. Eddy would have

had to work in March 2004 , the month when she submitted her

election and election document or Investment Plan enrollment

form. This position by the Agency was altered again at the

hearing when the SBA witness , Mr. Kelleher, testified that in

his view Ms. Eddy would have had to work on the day that she

submitted her election or enrollment form in March 2004.

Moreover, the Division of Retirement's witness, Dan Beard, in

his testimony espoused the view that Ms. Eddy would have had to

work on the day the election form was received by t he retirement

plan administrator. How an applicant for transfer like Ms. Eddy

would have known what that day was is unexplained in the

evidence.

3 5 . While the rationale for such a position is difficult

to discern, perhaps it is predicated on the belie f that Ms. Eddy

did not meet the definition of " eligible employee " at the time

of her election. "Eligible employee" was defined in the 2003

statute and continues to be defined as "an officer or employee,

as defined in s. 121.021(11)." Section 121.021(11) , Florida

Statutes, defined then , and continues to define "officer or

employee" as "any person receiving salary payments for work

performed in a regularly established position and, if employed

by a city or special district, employed in a covered group."

3 6 . The SBA and the DOR apparently place a great deal of

weight on a literal interpretation of "salary payments" as

meaning that an eligible employee , to have that status must

actually be receiving monetary compensation for work performed ;

as opposed to ot her forms of pay or benefits as for instance

annual leave accruals or medical disability payments, which

Ms. Eddy was receiving and had accrued in her account.

Throughout the chronological course of th is controversy ,

culminating in this formal proceeding and hearing, the

Respondent has applied this literal interpretation of salary

payments and "eligible employee" to any date that could be

relevant to the transfer election. Indeed , the SBA has relied

on three different dates for determining eligibility bas ed on

the members pay status in the course of this proceeding prior to

and during hearing: (1) one day during the effective month

(April 2004); (2) the day the election form was submitted

(March 2, 2004); and (3) the date the election form was received

by the R etirement P lan A dministrator (March 8, 2004).

3 7 . Significantly, however, there were no rules in place

concerning transfer from the pension plan to the Investment Plan

at the time Ms. Eddy made her transfer and indeed for months

thereafter and after her death, not until October 2004. The one

official document addressing this issue in evidence is the

Summary Plan Description, (to which applicants are referred on

their Investment Plan enrollment form) . It was available to all

FRS employers and member s , including Ms. Eddy, in March 2004 .

It best illustrates the SBA's contemporaneous interpretation of

the applicable statutes and is the most credible , preponderant

and persuasive proof of its policy with regard to eligibility to

make the transfer. Thus, at the time of her election, Ms. Eddy

met the requirements for transfer to the Investment Plan as they

are plainly set forth in this Summary Plan Description , as

follows:

If you wish to use your second election,

note that the plan changes effective the

fi rst day of the month following the receipt

and processing of your second election

retirement plan enrollment form by the FRS

Plan Choice Administrator. To finalize the

plan change you must work or be covered by

approved leave for at least one day in the

m onth of your effective date. If you submit

your Second Election Retirement Plan

Enrollment Form in December and it is

received and processed by the Plan Choice

Administrator on December 15, your plan

change will be effective on January 1. To

finalize the change you must work or be

covered by approved leave for at least one

day in the month of January. If you do not

work or are not on approved leave in

January, your plan change will be reversed

and you will remain in your original plan.

(Emphasis supplie d).

3 8 . This Summary Plan description comports with the

ordinary understanding of "employee" as defined in Section

121.021(11), Florida Statutes, that is, one who holds a regular

position, who may be either actively working in the position or

who is on approved leave from that position an d so has the right

to return to active employment. The dispute concerning

Ms. Eddy's situation seems to have been engendered by an

evolving or uncertain policy concerning what is necessary to be

deemed to be an "eligibl e employee" for the purpose of an

election to transfer between the relevant retirement plans.

39 . At some point after the initial transfer or after

March and April of 2004 the SBA apparently altered its

definition of "eligible employee." This may have been as early

as the e - mail referenced in the above findings of fact sent

shortly before Ms. Eddy's death but which was unknown to her.

The SBA and D O R Staff apparently may have begun to apply a

stricter eligibility requirement as reflected in the e - mails

between agency personnel in June and August 2004 ( see Exhibit

"G" in evidence ) and as indicated by the September 3, 2004,

letter to Ms. Eddy's mother ( Exhibit "H" in evidence ) . In their

review of Ms. Eddy's situation t hey may even have begun

application of the contemplated rule change before that rule was

adopted. In any event, the process was formalized with the

adoption of Florida Administrative Code Rule 19 - 11.007 in

October 2004, which contains the language:

The participant must work at least one day

in the month that the election becomes

effective for the transfer to be effective

(Subsection (3)(d).

4 0 . That rule language represents a change from the

requirement in effect in March 2004, expressed in the Summary

Plan Description. Interestingly, how ever, Ms. Eddy would have

been eligible under this rule because of the proof supplied

later to the SBA, perhaps as late as Petitioner's counsel 's

letter of February 2006, to the effect that indeed Ms. Eddy was

paid for work performed in Ap ril 2004, the mon th that her

election became effective. In any event, the SBA and the DOR

staff were applying a stricter eligibility standard , before the

rule was ever adopted , to Ms Eddy's situation making it

impossible for Ms. Eddy to comply because of her death.

4 1 . This illustrates the problem in this case because the

SBA has applied a changing purported policy on eligibility

retroactively to Ms. Eddy and her situation. At the time of

Ms. Eddy's election, the SBA interpreted the term "eligible

employee" as one who i s working or covered by approved leave , as

shown in the Summary Plan Description. At some point after that

description was published, SBA changed its interpretation of

"eligible employee," as is reflected in Florida Administrative

Code Rule 19 - 11.007, not adopted until October 2004. In

evaluating Ms. Eddy's eligibility to transfer, effectively , the

SBA applied the later - adopted rule or its policy concept , rather

than the published policy statement contained in the Summary

Plan Description that was in effe ct at the time Ms. Eddy made

her election. The October 2004, rule that changed the "eligible

employee" definition or interpretation cannot lawfully be

applied to an election that was made in April 2004 before the

rule was adopted and when the different an d noticed policy

statement embodied in the Summary Plan Description was clearly

in effect . See Cleveland Clinic Florida Hospital v. AHCA , 679

So. 2d 1238, 1241 - 42 (Fla. 1st DCA 1996).

4 2 . Interestingly, another change was effected by the 2005

amendment to Section 121.4501(4)(e), Florida Statutes, which now

reads in pertinent part:

Eligible employees may elect to move between

Florida Retirement Systems programs only if

they are earning service credit in an

employer - employee relationship consistent

with th e requirements under s.

121.021(17)(b), excluding leaves of absence

without pay. Effective July 1, 2005, such

elections shall be effective on the first

day of the month following the receipt of

the election by the third - party

administrator and are not sub ject to the

requirements regarding employer - employee

relationship or receipt of contributions for

the eligible employee in the effective

month, except that the employee must meet

the conditions of the previous sentence when

the election is received by the third - party

administrator.

4 3 . In other wor d s , with this change, what is now the

pivotal consideration is that the employee be working, in an

employee - employer relationship , and must be earning service

credit in the month or at the time that the third party

administrator receives the election from the employee. The

effect of this change is to reverse the requirement that an

employee must be working on the effective date of the transfer,

and to effectively define "eligible employee" in terms of

"credi ta ble service," excluding leaves of absence . Florida

Administrative Code Rule 19 - 11.007 was amended on March 9, 2006,

to reflect this legislative change.

4 4 . The statute clearly changes the requirement for

eligible employees, although the Section 121.450 1(2)(f)

definition of "eligible employee" remains unchanged.

Mr. Beard's testimony , in effect , reflects the present rule ,

amended on March 9, 2006, as well as the above statutory change ,

where he testifies that the status of eligible employee or

employee being paid a salary must be in effect on the date that

the Florida Retirement System receives the election form from

the employee. He was thus in his testimony applying the present

March 9, 2006, rule amendment and the statutory amendment quoted

above to Ms. Eddy's situation which arose back in March of 2004.

4 5 . The SBA has thus attempted to determine Ms. Eddy's

status by applying concepts from later adopted statutes and

rules to the March 2004 election by Ms. Eddy . At various times

in this proceeding i t has appl ied the concept of " eligible

employee " from the October 2004, rule and from the March 2006

rule to Ms. Eddy's April 2004 effective election, with the rules

being inconsistent with each other. Thus, the Respondent,

effectively has espoused three different concepts concerning the

requirements Ms. Eddy had to fulfill in order to be a n "eligible

employee" and to validly effect her transfer , as found above .

4 6 . When considered in relationship to the Agency

statement embodied in the Summary Plan Des cription, which was

noticed and made available to all employees or persons situated

as Ms. Eddy on the relevant website and otherwise, it is clear

that the Summary Plan Description is the most credible and

persuasive espousal of Agency policy governing Ms. Eddy's

Investment Plan transfer election situation. The putative

policy or positions espoused by the Agency are less credible

under the circumstances found and concluded above and are

rejected. A s discussed above they cannot legally be applied

retroacti vely to Ms. Eddy 's situation in any event.

4 7 . Moreover, even if the Agency's second or third

position or some variant of it were true , so that Ms. Eddy had

to have worked for salary sometime in March 2004, the month in

which she filed her election, the testimony of Ms. Taylor was

unrefutted and establishes that she had a formal meeting with

Ms. Taylor on March 11, 2004 . That formal meeting was about the

same grievance procedure ( involving county employee Linda Wood ) ,

with which her clearly legitimate , p aid employment duty on

April 1, 2004, was involved. It was a regular part of her

employment duties , according to the persuasive evidence in this

record, to be in attendance at such meetings or hearings as the

employee union representative. Her employer o bviously deemed

that to be the case because it paid her for the grievance

hearing it knew about in April 2004.

48 . The record does not reflect that she was paid for the

March 11, 2004, formal meeting with Ms. Taylor (the management

representative) conce rning the grievance procedure process and

claim , but the duties being substantially the same on both

occasions , it is likely that had Ms. Eddy sought it she could

have been paid for that meeting and quite likely her estate, if

it so requested, would be ent itled to payment for the March 11,

2004, duties. That being the case , it would seem that she

qualifies as an " eligible employee ," under even the Agency's

definition espoused at hearing , because of these facts

concerning the March 11, 2004, formal meeting.

49 . In any event, the policy statement put forth by the

Agency in the Summary Plan Description is the one preponderantly

and persuasively proven to apply to Ms. Eddy's situation. It

was in effect at that time , in the absence of a rule. Thus, for

the reason that Ms. Eddy was paid during the month her election

became effective , April 2004 , and because she was on approved

leave status during both March and April 2004, she is clearly an

eligible employee and as such validly effected her election to

transf er her retirement credits or benefits to the Investment

Plan .

Estoppel

50 . It is well - settled that estoppel against a state

agency is only applied in exceptional circumstances. Salz v

Department of Administration, Division of Retirement , 432 So. 2d

1376 , 1378 (Fla. 3rd DCA 1983); Kuge v. Department of

Administration, Division of Retirement , 449 So. 2d 389 (Fla. 3rd

DCA 1984). It is well - settled that "exceptional circumstances"

do occur from time to time. The Salz and Kuge cases both

demonstrate the typ e of estoppel applicable to the instant

situation.

5 1 . In the Salz case, a teacher was erroneously informed

that she could purchase eight years of credible service for

years working at a school which was not a public school but

erroneously believed to be . She relied upon the information and

purchased the credits. Based on the purchase credit she

determined that she could reasonabl y retire. After the fact,

the DOR sought to disallow the eight years of credit purchased.

The court noted in that opinion t hat estoppel against an agency

may be established by showing "(1) a representation as to a

material fact that is contrary to a later - asserted position; (2)

reliance on that representation; and (3) a change in position

detrimental to the party claiming esto ppel caused by the

representation and relian ce thereon." Id. at 1379. That case

squarely met these estoppel requirements: the DOR

representative represented that the teacher could purchase the

service; she relied reasonably upon the representation, comi ng

as it did from an official charged with making such

determinations; she changed position by quitting her position

believing that she had sufficient retirement to meet her needs.

Id. (citing DOR v. Anderson , 403 So. 2d 397, 400 (Fla. 1981).

5 2 . The Ku ge case is a similar case. In the Kuge case a

teacher had been informed that if she worked until a certain

date, she would be credited with 10 years of credible service

and thus be vested in the retirement system. She worked to the

indicated date and res igned. The Agency then took the position

that she was several month s short from 10 years and therefore

was not vested. A court determined in that opinion that she had

properly relied upon the mistaken factual information concerning

her credible service a nd clearly changed her position when she

resigned her position to her detriment. Consequently, the

Agency was estopped to deny her vesting in the retirement

system. 449 So. 2d at 389.

5 3 . This is a parallel case , because Ms. Eddy relied upon

the inform ation given to members of the State Retirement System

by the Summary Plan Description. She followed up on that

information to make sure everything was in order because she was

very concerned that her financial plans be carried ou t. She was

focused on lea ving her retirement benefits to her two sisters

because she knew that she was terminally ill , would not likely

survive and that she had limited time in order to effect her

financial plans in this regard and otherwise. I n this effort

she called the state's designated financial planning and

information source and agents, conferred with them at length and

received no information to the contrary. Rather , the factual

information she received clearly represented that her transfer

was effected.

5 4 . She receiv ed two written confirmations from FRS that

her transfer to the FRS Investment Plan had been processed and

her investment account had been accordingly funded. She

received no information or representation to the effect that

there might be a chance that the transfer to the Investment Plan

might be reversed , even after the funds had been transferred to

the Investment Plan account. She was very focused upon making

sure her sisters received the benefits so that her nieces and

nephews would benefit by it deriva tively, the benefits of her

years of retirement credit. She knew that she could only

achieve this result by becoming a participant in the FRS

Investment Plan. She was so focused particularly because , by

March 2004, she already knew that her death was imm inent. The

evidence clearly shows that she was capable during March and

April of 2004 of doing whatever was necessary or needed to

comply with the transfer requirements, if different ones had

been communicated to her , which they were not. She relied to

h er detriment and that of her designated beneficiaries on the

factual representations that she had the status and had done

what was necessary to accomplish the transfer. It is concluded

that , based upon the findings and conclusions herein the SBA is

estopp ed to reverse Ms. Eddy's election to transfer to the

Investment Plan .

5 5 . Moreover, clearly, if Ms. Eddy's election to transfer

to the Investment Plan , so that her sisters could receive her

retirement benefits , was deemed to be invalid, those benefits

wo uld be the subject of a forfeiture , because there would be no

beneficiaries to receive her retirement benefits. This brings

to attention an opinion of the First District Court Appeal in

Pamela Eaves v. Division of Retirement , 704 So. 2d 140 (Fla. 1st

DCA 1997) . That case , in an opinion by Judge Robert Benton ,

involved a different fact situation from the instant case in

that it involved a decedent designating beneficiaries to receive

his retirement benefits before he later re - married. His second

wife was never designated as a beneficiary. The decedent then

succumbed to a heart attack before he ever retired and the court

was confronted with the fact that his designated beneficiaries

could not receive his retirement benefits because they no longer

met the s tatutory requirements since they were no longer

eligible dependents. Nevertheless, the D OR took the position

that because they had been named beneficiaries that they had to

execute a disclaimer of benefits ( even though they were due

none ) before the survi ving spouse could claim the decedent ' s

survivor benefits. The court , speaking through Judge Benton

reversed that position taken in the Agency's Final Order on

appeal. The court determined that the purported designation of

other beneficiaries was nugatory because , at law , they were not

dependents and could not be qualified to receive the benefits.

The court went on to state, espousing the principal that the law

abhors a forfeiture, that:

If the surviving spouse could not receive

benefits in the present ca se, nobody could.

To uphold the Division ' s position w ould have

the effect of working a forfeiture, which we

decline to do. See generally Williams v.

Christian , 335 So. 2d 358, 361 (Fla. 1st DCA

1976) ( ' statutes imposing forfeiture will be

strictly constr ued in a manner such as to

avoid the forfeiture and will be liberally

construed so as to avoid and r elieve from

forfeiture. ' ); Ireland v. Thomas , 324 So. 2d

146, 147 (Fla. 1st DCA 1975) (where

forfeiture of retirement benefits was not

clearly required by s tatute, no forfeiture

should be inferred). . . .

This opinion is instructive in the situation at bar. Ms. Eddy

has been established to have been entitled to make the transfer

election. It was shown to have been valid. Moreover , the

Agency has been sho wn to be estopped to deny it. However, if

the Agency's position were to be adopted a forfeiture would be

imposed, which Judge Benton's opinion instructs should be

avoided through a liberal construction of the relevant statutes

"so as to avoid and relie ve from forfeiture ." Ireland supra .

Attorney's Fees Claim

5 6 . The Petitioner contends that SBA has acted for an

im proper purpose in this case by taking actions that caused

unnecessary delay and needless ly increased the cost of the

litigation in securing her sister's retirement benefit . The

Petitioner has therefore moved for an award of attorney's fees

and costs under authority of Section 120.595(1)(d) and (e),

Florida Statutes (as amended in 2003). The Petitioner contends

that the SBA's decision to reverse Ms. Eddy's election was

contrary to its own contemporaneous interpretation of law or its

policy , as reflected in the Summary Plan Description and ,

moreover, once it became clear that the decision to reverse her

election was in error, when it learned that she had worked and

received pay during April 2004, that the SBA persisted

unreasonably in advocating its position to deny the claim.

57 . However, as the court observed in Burke v. Harbor

Estates Associates, Inc. , 591 So. 2d 1034 (Fla. 1st DCA 1991),

the determination of whether a party participated in an

administrative proceeding for an improper purpose is an issue of

fact. 591 So. 2d at 1037. The facts in this case demonstrate

indeed that the SBA tended to alter or shift its position

concerning its bas is for denying the claim. It first contended

that because the decedent had not been paid a salary as a n

"eligible employee" in the effective month of the election,

April 2004, that the claim should be denied. Upon learning , in

February 2006, that the Pet itioner's decedent had been paid for

the one day in that month, it expanded its interpretation to

refer also to the fact that she had not been paid or worked on

paid status in March 2004, the month the election was submitted.

Later, it apparently adopted a corollary position that the

Petitioner's decedent had to be earning "creditable service" in

the effective month of April 2004. This was while it also did

not recognize the other avenue of eligibility for a transfer

between plans contained in the Summary Plan Description, that

is, if the part y seeking to make the election was on "approved

leave" status, which Ms. Eddy was .

58 . U pon consideration of all the facts and circumstances,

however, it is determined that there has not been substantial ,

persuasiv e evidence that the SBA's apparently varying legal

positions in support of its ultimate denial , during the free -

form and formal stage of this dispute , clearly went beyond the

pale of reasonable advocacy of its positions in continuing to

deny the Petitioner 's claim. Thus, its actions did not clearly

constitute an abuse of agency discretion or arbitrariness. In

that circumstances, an award of attorney's fees under Section

120.595, Florida Statutes , on the basis of "improper purpose , "

has not been persuasive ly established.

59 . In summary, the above findings of fact and conclusions

of law , based upon the preponderant , persuasive evidence , show

that Ms. Eddy indeed met the eligibility requirements to effect

transfer to the relevant Investment Plan at the tim e she elected

such transfer. Moreover, aside from her meeting those

eligibility requirements for the reasons found and concluded

above , the SBA is estopped to deny that her transfer election to

the Investment Plan was valid , for the reasons found and

conc luded above.

RECOMMENDATION

Having considered the foregoing findings of fact,

conclusions of law, the evidence of record, the candor and

demeanor of the witnesses and the pleadings and arguments of the

parties, it is, therefore,

RECOMMENDED: Th at a final order be entered by the State

Board of Administration finding that the election of Ms. Eddy,

the Petitioner's decedent and testatrix, to transfer her

retirement benefits and credits to the FRS Investment Plan was

valid and that the benefits ther eof be paid over , in the

proportions designated by Ms. Eddy, to Ms. Eddy's designated

beneficiaries, the Petitioner , Julie Lambrou , and her sister,

Lynda Wood . The request for attorney's fees and costs is

denied .

DONE AND ENTERED this 28th day of Septembe r, 2006

Tallahassee, Leon County, Florida.

S

P. MICHAEL RUFF

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCO M 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 28th day of September , 200 6 .

COPIES FURNISHED :

James W. Linn, Esquire

Lewis, Longman & Walker, P.A.

Post Office Box 10788

Tal lahassee, Florida 32302

Ruth L. Gokel, Esquire

Office of the General Counsel

State Board of Administration

1801 Hermitage Boulevard

Tallahassee, Florida 32308

Brian A. Newman, Esquire

Pennington, Moore, Wilkinson,

Bell & Dunbar, P.A.

Post Office Box 10095

Tallahassee, Florida 32302 - 2095

Coleman Stipanovich

Executive Director

State Board of Administration

of Florida

Post Office Box 13300

Tallahassee, Florida 32317 - 3300

Bruce Meeks

Inspector General

State Board of Administration

of Florida

Pos t Office Box 13300

Tallahassee, Florida 32317 - 3300

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.