09-003964 Kevin Frye vs. Department Of Education Status: Closed Recommended Order on Wednesday, November 25, 2009.

Summary: Petitioner's lottery winnings were properly credited by Respondent.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KEVIN FRYE, )

)

Petitioner, )

)

vs. ) Case No. 09-3964

)

DEPARTMENT OF EDUCATION, )

)

Respondent. )

)

RECOMMENDED ORDER

On October 2, 2009, an administrative hearing in this case

was conducted by video teleconference between Tampa and

Tallahassee, Florida, before William F. Quattlebaum,

Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: (No appearance)

For Respondent: Robert C. Large, Esquire

Department of Education

325 West Gaines Street, Suite 1244

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue in this case is whether the Department of

Education (Respondent) acted properly within its authority to

claim lottery winnings of Kevin Frye (Petitioner).

PRELIMINARY STATEMENT

By letter dated May 13, 2009, the Respondent notified the

Petitioner that the Florida Department of Lottery (Lottery) had

transmitted the Petitioner's lottery winnings of $1,000 to the

Respondent's Office of Student Financial Assistance. The

Petitioner challenged the Respondent's action and requested an

administrative hearing. The request was forwarded to the

Division of Administrative Hearings, which scheduled and

conducted the proceeding.

At the hearing, the Petitioner did not appear and was

otherwise unrepresented. The Respondent presented the testimony

of one witness and had Exhibits numbered 1 through 8 admitted

into evidence.

The Transcript of the hearing was filed on October 21,

2009. The Respondent filed a Proposed Recommended Order that

has been considered in the preparation of this Recommended

Order.

FINDINGS OF FACT

1. At all times material to this case, the Petitioner was

a borrower, participating in the federal student loan program.

2. Two of the loans involved funds disbursed in 2002, and

the third involved funds disbursed in 2003. Repayment of the

three loans was to begin in 2005.

3. The Respondent acted as the guarantee agency for the

Petitioner's three loans under the federal student loan program.

4. The program provided that the Respondent was obligated

to repay the loan in the event of default by the borrower. Such

loans were regarded as in default after passage of a 270-day

payment delinquency period.

5. Lenders reported defaulted loans by filing claims with

the Respondent. The Respondent paid the claims and initiated a

collection process to obtain the funds from the borrowers.

6. The Respondent became aware of the Petitioner's

defaulted loans in February 2007, when claims were filed with

the Respondent by the Petitioner's lender. The Respondent paid

the claims and became the owner and holder of three promissory

notes documenting the loans.

7. By letter dated March 24, 2009, the Respondent notified

the Lottery that the Petitioner had outstanding student loans in

the amount of $5,788.08. The amount included accrued interest

as of April 8, 2009. The letter stated that such interest would

continue to accrue according to the terms of the notes.

8. The letter requested that any lottery prize proceeds

won by the Petitioner be transmitted to the Respondent to be

credited towards the debt.

9. On April 9, 2009, the Lottery delivered a check in the

amount of $1,000 to the Respondent with a letter identifying the

amount as lottery winnings of the Petitioner.

10. By letter dated May 13, 2009, the Respondent advised

the Petitioner that the lottery proceeds had been received and

would be credited towards his student loan debt.

11. The Petitioner's request for hearing stated that he

had entered into and completed a "loan rehabilitation" program

and that "there is no reflection in outstanding loan balance

that coincides with the lottery winnings."

12. Although the Respondent has a program designed to

rehabilitate defaulted student loans, there was no evidence

presented at the hearing that the Petitioner has entered into

any rehabilitation agreement with the Respondent applicable to

the debt obligations relevant to this dispute.

CONCLUSIONS OF LAW

13. The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2009).

14. The Respondent has the burden of establishing

entitlement to the funds at issue in this case by a

preponderance of the evidence. Balino v. Department of Health &

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

this case, the burden has been met.

15. Subsection 24.115(4), Florida Statutes (2009), which

sets forth the Lottery's obligation to assist the debt

collections efforts of other state agencies, provides as

follows:

It is the responsibility of the appropriate

state agency and of the judicial branch to

identify to the department, in the form and

format prescribed by the department, persons

owing an outstanding debt to any state

agency or owing child support collected

through a court, including spousal support

or alimony for the spouse or former spouse

of the obligor if the child support

obligation is being enforced by the

Department of Revenue. Prior to the payment

of a prize of $600 or more to any claimant

having such an outstanding obligation, the

department shall transmit the amount of the

debt to the agency claiming the debt and

shall authorize payment of the balance to

the prize winner after deduction of the

debt. If a prize winner owes multiple debts

subject to offset under this subsection and

the prize is insufficient to cover all such

debts, the amount of the prize shall be

transmitted first to the agency claiming

that past due child support is owed. If a

balance of lottery prize remains after

payment of past due child support, the

remaining lottery prize amount shall be

transmitted to other agencies claiming debts

owed to the state, pro rata, based upon the

ratio of the individual debt to the

remaining debt owed to the state.

16. Under the Federal Family Education Loan Program, the

Respondent is authorized to act as a guarantee agency for

student loans, to pay the claims of lenders relative to

defaulted loans for which the Respondent was the guarantor, and

to initiate collection efforts to obtain payment of defaulted

loans. See 20 U.S.C. § 1701, et seq. , and § 1009.85, Fla. Stat.

(2009).

17. The evidence in this case establishes that: the

Petitioner had lottery winnings of $1,000; the Petitioner was in

default of student loan obligations in excess of $1,000, which

were due and owing to the Respondent; the Respondent properly

notified the Lottery of the obligation; and the Lottery properly

forwarded the Petitioner's prize winnings to the Respondent.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Florida Department of Education

enter a final order applying the $1,000 lottery prize winnings

of Kevin Frye to the student loan debt referenced herein.

DONE AND ENTERED this 25th day of November, 2009, in

Tallahassee, Leon County, Florida.

S

WILLIAM F. QUATTLEBAUM

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 25th day of November, 2009.

COPIES FURNISHED :

Robert C. Large, Esquire

Department of Education

325 West Gaines Street, Suite 1244

Tallahassee, Florida 32399

Kevin Frye

7429 Oakvista Circle

Tampa, Florida 33634

Lynn Abbott, Agency Clerk

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399-0400

Dr. Eric J. Smith, Commissioner of Education

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399-0400

Deborah K. Kearney, General Counsel

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399-0400

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.