11-001901 Mary H. King vs. Department Of Management Services, Division Of State Group Insurance Status: Closed Recommended Order on Tuesday, October 4, 2011.

Summary: Petitioner did not meet her burden that her claim for additional life insurance benefits was justified.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARY H. KING, )

)

Petitioner, )

)

vs. ) Case No. 11 - 1901

)

DEPARTMENT OF MANAGEMENT )

SERVICES, DIVISION OF )

STATE GROUP INSURANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this

case on June 17 , and August 15 and 30 , 20 11 , via video

teleconference with sites in Jacksonville and Tallahassee ,

Florida, before Barbara J. Staros, Administrative Law Judge ,

wi th the Division of Administrative Hearings.

APPEARANCES

For Petitioner: James C . Cumbie, Esquire

Cumbie Law Firm

Post Office Box 40066

Jacksonville , Florida 32 203

For Respondent: Sonia P. Mathews, Esquire

Department of Man agement Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399 - 0950

STATEMENT OF THE ISSUE

The issue presented for decision in this case is whether

PetitionerÓs claim of additional life insurance benefits should

be paid or denied.

PRELIMINARY STATEMENT

By letter dated March 7 , 20 11 , the Department of Management

Services, Div ision of State Group Insurance notified Petitioner,

Mary H . King , that h er claim for $ 6, 1 84.38 in additional life

insurance benefits for W illiam King was denied. The letter

stated in part, " [s]pecifical ly, you requested that his life

insurance benefit be changed from $2,500 to $10,000, based upon

the claim that neither you nor Mr. King were informed of his

options ."

Petitioner requeste d a formal administrative hearing to

contest the denial of benefits. On A pril 1 8, 20 11 , the

Department forwarded the case to the Division of Administrative

Hearings for assignment of an Administrative Law Judge. The

case was scheduled for hearing on June 17 , 20 11 , and was

commenced on that date. However, due to video teleconference

technical difficulties, the remainder of the hearing was

rescheduled , continued on August 15 , and concluded on August 30,

2011 .

At hearing, Mary King testified on behalf of h er husband's

estate. Petitioner 's Exhibits numbered 1 through 8 were

admitted into evidence, with the exception of handwriting

contained on Exhibit numbered 4 . Respondent presented the

testimony of Sand ie Wade, Mike Waller , Laura Cutchen , James

West, Rob in Collins, Verla Lawson, and Janice Lowe.

RespondentÓs Exhibits numbered 1 through 46 and 48 were ad mitted

into evidence. Respondent's E xhibit numbered 47 was proffered.

The hearing was not transcribed. Respondent filed a Motion

to Extend Time for Fil ing Proposed Recommended Orders, which was

granted. The parties timely filed P roposed Recommended Orders,

which have been considered in the preparation of this

Recommended Order. References to statutes are to Florida

Statutes (2010) unless otherwise note d.

FINDINGS OF FACT

1. The State of Florida Group Insurance Program (the

Program) is a benefit available to State of Florida officers,

employees, and retirees. The Division of State Group Insurance

(DSGI) is an administrative unit located within the Dep artment

of Management Services. The life insurance policy at issue in

these proceedings is part of the Program which is administered

by DSGI.

2 . At the time of his retirement, March 1, 1998, William

King and his wife resided at 4159 Stratford Way, J acksonville,

Florida 32225 (the Stratford address.) Mr. and Mrs. King moved

from the Stratford address in May 1999 to 12830 Muirfield

Boule vard N., Jacksonville, Florida 32225 ( the Muirfield

address.)

3 . Mr. King died on September 25, 2010. At the time of

his death, Mr. King was a retired state employee with life

insurance coverage through the Program. At the time of his

death, Mr. King resided at the Muirfield address .

4 . Mary H . King is the widow of William King, and the

named beneficiary to Mr. Ki ng's life insurance policy provided

through the Program .

5 . DMS has contracted with Northgate Arinso (Northgate),

formerly Convergys , Inc., to provide human resources management

services, including assisting in the administration of employee

benefits. Northgate primarily performs these tasks through an

on - line system known as "People First." People First became the

system of record for DSGI benefits data, including addresses, on

January 1, 2005. Prior to that, the system of record for DSGI

was the CO PES system. However, People First does not administer

the State of Florida retirement pension program.

6 . Prior to January 1, 2000, life insurance coverage for

retirees was $1,500, with a premium of $4.20 per month.

Effective January 1, 2000, the cover age for retirees was

increased to $10,000, and the premium continued to be $4.20 per

month.

7 . The Open Enrollment Guide for Plan Year 2000 notified

all current life insurance plan participants that they must re -

enroll for the life insurance program , an d that failure to do so

would result in those retirees no longer receiving life

insurance benefits.

8. Because the retirees' response to the 1999 Open

Enrollment was poor, DSGI developed a letter dated November 10,

1999, to provide the retirees another c hance to enroll, as

opposed to their losing life insurance coverage as of January 1,

2000, due to lack of response.

9 . By letter dated November 10, 1999, DSGI sent a letter

to Mr. King notifying him of the above - referenced increase in

retiree life insu rance coverage from $1,500 to $10,000 effective

January 1, 2000. The November 10, 1999 letter informed retirees

that they had to complete a new enrollment form in order to

continue retiree group life insurance coverage. This

November 10, 1999 letter was addressed to the Muirfield address.

10. In this effort to get a better response to the

reenrollment requirement, DSGI created a file with names and

social security numbers and provided that to the Division of

Retirement (D OR ) . DOR then provided DSGI wi th a disk containing

the addresses for those persons from the DOR database. The

November 10, 1999 letter , including the one sent to M r . King,

used the addresses furnished by DOR.

11. Although the DOR address data base was used to mail the

letter dated N ovember 10, 1999, no c hange was made to the DSGI

data base ( which, at that time, was COPES ), for those retirees

whose address es w ere different in the DOR database . Later

mailings by DSGI were to the addresses of record in the

DSGI/COPES system.

12 . A cha nge of address notification card dated August 10,

1999 , regarding Mr. King's change of address from the Stratford

address to the Muirfield address is in evidence. I t is not

clear from the face of the change of address form as to whether

this was sent to D SGI or to DOR .

13 . Two months later, DSGI sent another letter to retirees

informing them that they were enrolled in the life insurance

plan but required them to submit an enclosed form to indicate a

decision either to decline the coverage or to provide

beneficiary coverage. This letter was dated January 12, 2000 ,

and was mailed to the Stratford address , Mr. King's former

address .

14 . Several of Mr. King's State of Florida Statements of

Retirement Benefit Payments are in evidence and reflect that the

payment of $4.20 was regularly deducted from Mr. King's monthly

retirement benefit for State life insurance, including the

monthly statement dated January 31, 2000. The monthly

retirement benefits statements were mailed to the Muirfield

address by DOR.

15 . Sandi Wade is a benefits administrator for DSGI.

According to Ms. Wade, the cost of retiree life insurance was

supplemented in the past with funds from a trust account ,

thereby reducing the premium charged to retirees.

16 . I n 2006, DSGI deter mined that the funds used to augment

the retirees' benefits from years 2000 through 2007 would be

depleted after 2007. DSGI then determined that the current life

insurance premium of $4.20 would support a benefit of $2,500,

and that the premium to continu e $10,000 of life insurance

coverage would be $35.79 per month. This resulted in a change

in the life insurance options available to retired employees.

17 . By letter dated July 31, 2006, DSGI informed retired

state employees of this change in a letter w hich read in

pertinent part:

Dear Retiree:

RE: State of Florida Life Insurance

* * *

The upcoming annual open enrollment period

will provide you with three (3) options

regarding your life insurance coverage. You

should caref ully examine all options and the

information provided in your Open Enrollment

packet, which will be mailed prior to Open

Enrollment, to decide which choice best

suits your unique circumstances.

Effective January 1, 2007, the three (3)

life insurance opt ions available will be:

- A $2,500 benefit for a monthly premium of

$4.20

- A $10,000 benefit for a monthly premium

of $35.79

- Terminate life insurance coverage

(precludes participants from re - enrolling

for the product in the future.)

Consistent wi th our practice in previous

years, should you not participate in the

Open Enrollment process, or make no change

to your life insurance election, you will

continue to be enrolled with retiree life

insurance coverage. Your default election

will be the $2,50 0 benefit, with its

associated premium.

If there is a desire to modify your open

enrollment life insurance election, requests

for changes to your life insurance coverage

enrollment will be accepted through Friday,

January 19, 2007.

* * *

This notice in advance of open enrollment is

being provided in order that you will have

additional time to consider all options

available to you. Life insurance choices

are important decisions.

18 . Mike Waller, an employee of DSGI, maintains benefits

data for People First/DSGI. In July 2006, Mr. Waller was asked

to prepare a file containing the names and mailing addresses of

all retirees who were covered by life insurance. He created a

file used in a mail merge to send all retirees a copy of the

July 31, 2006 letter.

19 . In preparing the file containing the mailing addresses

of retirees covered by life insurance in July 2006, Mr. Waller

used the addresses of record from the benefits data he

maintained.

20 . In July 2006, the address of record in t he DSGI

data base for Mr. King was the Stratford address, and was

included in the mailing addresses file.

2 1 . Mr. Waller prepared the file and on July 3, 2006,

delivered it to Dick Barnum and Thomas Lockridge.

2 2 . Thomas Lockridge delivered the file to Laura Cutchen,

another employee of DSGI.

2 3 . DSGI contracted with Pitney Bowes t o mail the July 31,

2006 letter to 29,392 retired state employees.

2 4 . After obtaining copies of the letter from the print

shop of DSGI, Ms. Cutchen delivered the lett ers and the file

containing names and addresses of retirees to Pitney Bowes to

assemble. Pitney Bowes provided the envelopes, assembled the

letters (inserting them in each of the 29,392 envelopes), and

addressed the letters by ink jet.

2 5 . The letters w ere delivered to the U.S. Post Office,

accompanied by Ms. Cutchen. The State of Florida first class

mailing permit had been applied to each envelope.

2 6 . The July 31, 2006 letter was mailed to Mr. King at the

Stratford address .

2 7 . The return addres s on the envelope containing the

July 31, 2006 letter was DSGI, 4050 Esplanade Way, Suite 215,

Tallahassee, Florida 32399 - 0949.

2 8 . Janice Lowe is employed by DSGI and has been for over

32 years. Her duties include assisting retirees with insurance

issu es. According to Ms. Lowe, DSGI received numerous returned

letters as undeliverable . These undeliverable letters were

processed by Ms. Lowe. If the returned envelope showed a

different address on a yellow sticker applied by the U.S. Postal

Service, the letter was re - mailed to that address.

29 . However, if the returned envelope did not provide a

different address, DSGI accessed the DOR data base to determine

whether there was another address for the retiree to whom the

returned letter was addressed. E ach time a name was accessed on

the DOR system, DSGI printed that Retirement Benefit Information

s creen showing the address in the DOR database. If the address

in the DOR database was different from the address in the DSGI

database, the original envelope and letter were placed in

another envelope and mailed to the retiree at the address from

the DOR database.

30 . A copy of each retirement print screen that was

accessed by Ms. Lowe was printed and in serted alphabetically

into binder s .

31 . The presen ce of a DOR print screen indicates that the

initial letter was returned as undeliverable and processed as

described above.

3 2 . From each retirement screen that was accessed,

Ms. Lowe typed the name of the retiree and DOR address in a

format used for a ddress labels. Once she had typed a full page

of names and addresses, she printed those onto mailing labels

and put the new labels on envelopes . She then placed the

July 31, 2006 letter and original envelope that had been

returned into the new envelope b earing the newly created address

label.

3 3 . There is a DOR print screen for Mr. King, thereby

indicating that the letter to him dated July 31, 2006, and

mailed to the Stratford address, had been returned to DSGI, and

was processed as described above.

3 4 . Ms. Lowe re - mailed the July 31, 2006 letter to

Mr. King at the Muirfield address on or about October 13, 2006.

A copy of the address label used to mail this to Mr. King is in

evidence. This label reflects the Muirfield address.

3 5 . The letters mail ed by Ms. Lowe were mailed first

class. The return address printed on the envelopes was the

State of Florida, Division of State Group Insurance, P.O. Box

5450, Tallahassee, Florida 32314 - 54 5 0.

3 6 . When one of the letters as prepared and mailed by

Ms. Lowe was returned to DSGI, Ms. Lowe stapled the letter to

the DOR print screen for that retiree.

3 7 . The retirement print screen that Ms . Lowe printed for

Ms . King does not contain a letter that was returned, indicating

that the envelope with the Muirf ield address , mailed in October

2006, was not returned to DSGI as undeliverable .

3 8 . Although Ms. Lowe re - mailed the letter using the

Muirfield address, she did not change Mr. King's address in the

DSGI database, and does not have access that would allo w her to

do so.

39 . Prior to Convergys assuming responsibility for the

administration of benefits, DSGI maintained benefits information

in the COPES system . When Convergys assumed responsibility for

the management of benefits on January 1, 2005, the ben efits

information from COPES was imported into the Convergys/People

First system.

40 . For reasons that are not entirely clear, People First

and DOR do not share databases and each maintains its own

database of names and addresses. This results in two di visions

(DSGI and DOR) of the same state agency (DMS) using different

databases.

41 . Each year, DSGI holds an open en rollment period as

required by s ection 110.123(3)(h) 5. , Florida Statutes. Open

enrollment is that period of time once a year, as ident ified by

DSGI, during which participants in the state group insurance

programs , including retirees, may change, add, or cancel

participation in the insurance plans offered.

4 2 . Prior to open enrollment, DSGI mails to each employee

and retiree participa t i ng in the state group insurance program a

package that explains the benefits and options that are

available for the next year.

4 3 . There is a copy of correspondence from DSGI addressed

to Mr. King regarding open enrollment for 2001. This

correspondence was mailed to Mr. King at the newer Muirfield

address. It states in part, "The Annual Enrollment Period

begins on September 11, 2000 and ends on October 11, 2000."

This correspondence contained a copy of a return postcard

addressed to DSGI and also cont ained the statement "Detach this

postcard and mail to DSGI by 9 - 22 - 00 to obtain the desired

information." It is unclear from the record how the Muirfield

address was used at this p oint in time when the DSGI data base

still reflected the Stratford address f or Mr. King.

4 4 . DSGI maintains that its database reflected that the

DSGI address of record for Mr. King was the Stratford address

until February 8, 2011, after the death of Mr. King.

4 5 . The 2006 Open Enrollment period for the 2007 plan year

ran from September 19, 2006, through October 18, 2006.

4 6 . During Open Enrollment for Plan Year 2007, the People

First Service Center was charged with the responsibility of

sending open enrollment packages to State of Florida employees

and retirees. The Op en Enrollment packages for Plan Year 2007

were mailed by People First using the U.S. Postal Service.

4 7 . People First mailed Mr. King's Open Enrollment 2007

package o n September 3, 2006, to the older Stratford address .

48 . The Open Enrollment package m ailed to Mr. King on

September 3, 2006, contained Mr. King's 2007 Benefits Statement;

a letter f rom John Mathews, former Director of DSGI; Information

of Note; a Privacy Notice; and the 2007 Benefits Guide.

49 . The 2006 Open Enrollment package for year 2007 also

included a document entitled, " State Group Insura nce Program -

Information of Note" which reads in pertinent part:

RETIREE LIFE INSURANCE

For Plan Year 2007, those currently enrolled

with retiree life insurance may elect to

retain the current $4. 20 premium for a

benefit of $2,500, retain the current

benefit of $10,000 for a premium of $35.79,

or cancel coverage. If no change is made

during open enrollment, participation will

continue at the $4.20 premium level.

50 . Prior to the benefits chang e effective January 1,

2007, Mr. King paid a monthly premium of $4.20 for $10,000 in

life insurance coverage. This amount was deducted from his

retirement benefit monthly payment. This amount continued to be

deducted from his retirement benefits followin g the change in

January 20 07 until December 2007 when the amount deducted

increased to $7.41.

51 . In any event, no election to pay the increased premium

of $35.79 was received by DSGI for Mr. King. This is not

surprising since Mr. King did not receiv e the Open Enrol l ment

package informing him of the right to make this election as it

was mailed to the Stratford address.

52 . For those retirees who did not make a timely election

pursuant to the Open Enrollment notice sent in 2006 for Plan

Year 2007, th e death benefit automatically became $2,500,

effective January 1, 2007, for the monthly premium of $4.20.

53 . Throughout the years, the Benefits Guides and

newsletters sent from DSGI have informed program participants of

their responsibility to maintain current addresses with DSGI,

including reminders to notify both DOR and DSGI in writing if

there was an address change.

54 . Neither DGSI nor DOR notifies the other of receipt of

address change. A change of address of one division of DMS does

not automat ically change the address in another as the t wo

divisions have separate data bases.

55 . While it is beyond the scope of this proceeding to

evaluate the fact that these two divisions of the same state

agency do not share data bases, it is noted that DOR ser ves a

larger population of persons. That is, the database of the DOR

consists of all retirees that participate in the Florida

Retirement System, including retirees of various local

government agencies and educational entities .

5 6 . Deductions were made monthly for state life insurance

premiums until Mr. King's death in September 2010. No evidence

demonstrated that Mr. King informed DSGI in any way that he

desired to maintain his $10,000 life insurance benefit.

CONCLUSIONS OF LAW

57 . The Division o f Administrative Hearings has

jurisdiction over the parties and the subject matter of this

proceeding pursuant to s ection 120.57(1), Florida Statutes.

58 . The burden of proof is on the party asserting the

affirmative of an issue before an administra tive tribunal. Fl a .

Dep ' t of Transp . v. J.W.C. Corp . , Inc. , 396 So. 2d 778 (Fla. 1st

DCA 1981); Balino v. Dep 't of H RS , 348 So. 2d 349 (Fla. 1st DCA

1977). Accordingly, Petitioner bears the burden of proof in

this proceeding by a preponderance of the evi dence.

§ 120.57(1)(j), Fla. Stat.

59 . DSGI and DOR are divisions established by statute

within DMS . § 20.22(2), Fla. Stat. DSGI is the entity charged

with administering the st ate group insurance program.

§ 110.123(3) and (5), Fla. S tat. No other agency is given

authority to act regarding state insurance benefits.

60 . DOR, while also a division of DMS, administers the

Florida Retirement System pursuant to the provisions of c hapter

121, Florida Statutes.

61 . There i s nothing in the statutes governing these

entities or the rules implementing them which would require DSGI

and DOR to share databases.

6 2 . As provided in s ection 110.123(4)(f), the state cannot

increase the insurance premium deducted from reti rement warrants

unless requested by the retiree. As provided in s ection

110.123(4)(e), the state cannot contribute to the premium paid

by retirees that participate in the state insurance program.

6 3 . While there is no evidence that Mr. King elected to

reduce his coverage, there is also no evidence that he elected

to maintain the $10,000 by agreeing to pay the increased

premium.

64 . It is presumed that mail properly addressed, stamped

and mailed was received by the addressee. Berwick v. Pruden tial

Prop. and Cas. Ins. Co. , 436 So. 2d 239 (Fla. 3d DCA 1983).

Proof of mailing of a document to the correct address creates a

presumption that the item mailed was received. W.T. Holding,

Inc., v. Ag . for H ealth Care Admin . , 682 So. 2d 1224 (Fla. 4th

D CA 1996). This presumption is a rebuttable one. Id. ; Scutieri

v. Miller , 584 So. 2d 897, 900 (Fla. 3rd DCA 1991). A denial of

receipt does not automatically overcome the presumption of

receipt but creates a question of fact for the trier of fact.

W.T. Holding v. Ag. for Health Care Admin . , supra .

65. The question becomes, did DSGI send the pertinent

information to the correct address? Clearly, Mr. King had moved

from the Stratford address. There is evidence that he notified

someone of this addre ss change, but no competent evidence that

this notification went to DSGI. The November 1999 and October

2006 mailings used the Muirfield address, which DSGI obtained

from DOR in tho se instances. The DSGI database was not updated

with the address furnishe d by DOR, which clearly had the newer

Muirfield address. The DSGI database contained the Stratford

address until Mr. King's death in 2010.

66 . Applying the analysis supplied by case law, the

evidence presented by Petitioner is not sufficient to rebut the

presumption established by Respondent. Respondent's evidence

established that DSGI mailed the pertinent notices to Mr. King's

address of record with DSGI. The evidence also established that

DSGI personnel tracked all July 31, 2006, letters that were

returned to DSGI, and that the letter mailed to Mr. King was

returned. It then obtained the Muirfield address from DOR and

remailed it in October 2006. This mailing to the Muirfield

address, Mr. King's correct address, was not returned. Thus,

based upon the above - referenced case law, this creates a

presumption that it was received prior to the implementation of

the insurance premium change January 1, 2007. W hile the end

result is harsh under the circumstances of this case , the

undersigned is c ompelled to follow the applicable case law and

does not have jurisdiction to grant equitable relief.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED:

That the Department of Management Services enter a Final

Order deny ing Petitioner's request for an increase in life

insurance benefits.

DONE AND ENTERED this 4 th day of Octo ber , 20 11 , in

Tallahassee, Leon County, Florida.

S

___________________________________

BARBARA J. STAROS

Administrativ e 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

Division of Administrat ive Hearings

this 4th day of Octo ber, 2011 .

COPIES FURNISHED :

Sonja P. Mathews, Esquire

Department of Management Services

Office of the General Counsel

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399

James C . Cumbie, Esquire

The Cumbie Law Firm, P.A.

Post Office Box 40066

Jacksonville, Florida 32203

Jason Dimitris , General Counsel

Department of Management Services

4050 Esplanade Way , Suite 160

Tallahassee, Florida 32399 - 0950

NOTICE OF RIGHT TO SUBMI T 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 t he final order in this case.