11-003269 Alexander Halperin vs. Department Of Management Services Status: Closed Recommended Order on Thursday, April 19, 2012.

Summary: Respondent demonstrated that Petitioner's state disability benefits should have been reduced by Social Security disability benefits and was, therefore, entitled to recovery of overpayment.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALEXANDER HALPERIN , )

)

Petitioner , )

)

vs. ) Case No. 11 - 3269

)

DEPARTMENT OF MANAGEMENT )

SERVICES, DIVISION OF STATE )

GROUP INSURANCE , )

)

Respondent . )

)

RECOMMENDED ORDER

A formal hearing was conducted in this case on April 2,

2012 , in Tallahassee, Flo rida, before E. Gary Early, a

designated Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Karen Halperin Cyphers

Qualified Representative

1537 Woodgate Way

Tallahassee, F lorida 32 308

For Respondent: Sonja P. Mathews, Esquire

Department of Management Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399 - 0950

STATEMENT OF THE ISSUE

The issue is w hether Respondent is entitled to recovery of

overpayments of disability benefits resulting from the alleged

failure to re duce such payments by offsetting social security

benefits.

PRELIMINARY STATEMENT

On or about February 21, 2011, Respondent , Department of

Management Services, Division of State Group Insurance

(Respondent or DSGI ) , notified Petitioner , Alexander Halperin

(Petitioner) , that it had overpaid him $13,925.82 , in state

Group Disability Income benefits. The basis for the overpayment

was the failure to offset Social Security Disability Income

payments received by Petitioner.

On or about April 19, 2011, Petitioner received a second

notice of Respondent Ós intent to recover the overpayment of

S tate Group Disability Income benefits. Petitioner responded to

the notice with an e - mail questioning the notice, which

Respondent treated as a Level II Appeal.

By letter dated May 3, 2011 , Respondent advised Petitioner

that it intended to deny the Level II Appeal, and seek recovery

of alleged overpayments .

On May 19, 2011 , Petitioner signed a Petition for Formal

Hearing. The record is silent as to when the Petit ion was filed

with Respondent, but there has been no suggestion that it was

not timely filed. On Ju ne 27, 2011 , Respondent referred the

petition to the Division of Administrative Hearings.

The proceeding was, at the request of the parties, almost

immed iately placed in abeyance. Efforts to resolve the matter

having proven unproductive, and at the request of the parties, a

Notice of Hearing was entered on November 28, 2011 , that

scheduled the final hearing for February 21, 2012 . On

January 13, 2012 , a M otion for Continuance was filed. The

Motion was granted, and the final hearing was rescheduled for

April 2, 2012.

Leading up to hearing, a number of motions were file d and

disposed of by separately - issued orders. Those motions, and

their disposition, ma y be determined by reference to the docket

of this case.

On March 26, 2012, t he parties filed a Stipulation of Facts

which they stipulated to facts numbered 1 through 14. Those

facts have been accepted in the preparation of this Recommended

Order.

On M arch 27, 2012, Respondent filed a Motion to Take

Official Recognition requesting that the undersigned officially

recognize a number of federal rules, and Florida Administrative

Code C hapter 60P - 9 . The motion was granted at the hearing.

The hearing was h eld as scheduled on April 2, 2012. At the

final hearing, Petitioner testified on his own behalf, and

presented the testimony of Gail Halperin, his wife. PetitionerÓs

Exhibits 2, 3, 5(b), 6 , and 7 were received into evidence.

Respondent presented the testimony of Sandie Wade, DSG IÓs

Benefits Administrator for I nsurance and E ligibility; Celeste

Pullen, Bureau Chief for DSGIÓs Bureau of Financial and Fiscal

Management; James West, Operations Manager - Benefits for NorthGate

Arinso, DSGIÓs con tracted administrator for st ate employee

benefits; Tabitha Williams, Senior Human Resources representative

for NorthGate Arinso; and Valeria Jefferson, Human Resources and

Benefits Manager for the Florida Department of Health.

RespondentÓs Exhibits 1 - 2, 4 , and 6 - 14 were received into

evidence.

The final hearing was not transcribed. The parties timely

filed their Proposed Recommended Orders, which have been

considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. From March 1, 2007 , until February 26, 2010, Petitioner

was employed by the Department of Health as a Dental Consultant

for the Prosecution Services Unit . During the period of his

employment, Petitioner was a Select Exempt Service employee .

2. Respondent is responsi ble for the administration of the

state group insurance program. As authorized by law, Respondent

has contracted with NorthGate Arinso to provide human resources

management services, including the administration of employee

health insurance benefits. The electronic portal for state

employees to access personnel information is the ÐPeople FirstÑ

system.

3 . During his employment with the Department of Health,

Petitioner participated in the Florida state group insurance

program, and was enrolled as a membe r of the State Employees PPO

Plan.

4 . At the time of his enrollment in the state group

insurance program, Respondent was provided with the Senior

Management and Select Exempt Service Employees' State Group

Disability Insurance Program benefits booklet. The booklet

provides, under the heading "Benefit Reduction Provisions,"

that:

Benefits payable under this insurance will

be reduced by the amount of:

Any disability or retirement Social Security

Benefits for which the employee is eligible,

and benefits fo r which the employee's spouse

or children are eligible as a result of the

employee's eligibility for Social Security

benefits . DSGI reserves the right to

estimate the amounts of any Social Security

benefits until the employee has applied for

such benefits and the Social Security

Administration has made a final

determination, and to reduce the plan

benefits as if these Social Security

benefits were paid. Benefit payments made

by DSGI will be adjusted when a

determination is made by the Social Security

Admi nistration. If such a determination

reveals an overpayment by the Plan, DSGI has

the right to recover any such overpayment.

5 . Petitioner has a supplemental disability life insurance

policy with the Cigna insurance company. The supplemental

policy is not administered by Respondent, and did not affect the

state disability insurance benefits.

6 . While employed at the Department of Health , Petitioner

began to experience debilitating health problems . By October,

2009, his condition had advanced to the degree that he could no

longer work.

7 . Petitioner began to contemplate going on disability.

He was uncertain as to whether he would be allowed to resign

from state employment and still qualify for disability benefits.

PetitionerÓs daughter , Karen Halp erin Cyphers, researched the

issue and discovered that it had been resolved by judicial

decision in a manner that would allow Petitioner to retire from

state employment, but maintain his disability benefits for the

full term allowed by law . Ms. Cyphers so ught confirmation from

Respondent th at Petitioner would qualify for disability benefits

if he resigned his position . On January 2 9 , 2010, Respondent

e - mailed a letter to Ms. Cyphers confirming that Ðbenefits will

not terminate solely because an insured t erminates employment

with the state. To be eligible for these benefits, all other

requirements must be satisfied.Ñ

8 . On February 17, 2010, Petitioner filed his claim for

benefits under the state disability plan , and the required

Attending PhysicianÓs Statement . The Attending PhysicianÓs

Statement confirmed that Petitioner was not able to work.

Petitioner thereafter went on leave - without - pay status on

February 18, 2010. His last day of employment with the

Department of Health was February 27, 201 0. Petitioner was

eligible for state disability benefits for 364 days, or into

February, 2011.

9 . At all times pertinent to this proceeding, PetitionerÓs

wife , Dr. Gail Halperin, 1/ was responsible for handling the

familyÓs finances. Petitioner consulted wi th Mrs. Halperin when

he was able. However, the severity of PetitionerÓs medical

condition, which necessitated a stay of almost five weeks at the

Mayo Clinic, often made communications regarding finances

impractical.

10 . Mrs. Halperin used electronic ba nking services, and

frequently checked the family account to ensure that the bi -

weekly state disability benefit payments had been deposited.

11 . On March 12, 2010, Mrs. Halperin wrote to Respondent

to object to an underpayment in one of the first disability

benefit payments to Petitioner . The under payment amount

resulted from an issue regarding four days of available leave,

which would have made Petitioner ineligible for benefits for the

period of March 1 through March 4, 2010 . In her e - ma il,

Mrs. Halperin acknowledged having read the "Benefit Reduction

Provisions" of the benefits booklet regarding reduction of state

benefits by Social Security benefits, but as to any such

reductions of PetitionerÓs state benefits , noted that Petitioner

Ð di d apply of [sic ] social security, but he does not expect to

hear from them for quite some time.Ñ The underpayment issue was

resolved, and Petitioner was ultimately paid for the disputed

four days.

12 . By a Notice of Award from the Social Security

Admini stration dated September 3, 2010, Petitioner was notified

that he had been determined to be e ntitled to Social Security

D isability benefits in the amount of $1,818.00 per month. He

received his regular monthly payment for September, 2010, and a

lump - sum p ayment of $ 5, 454.00 , for the months of June - August,

2010.

13 . As was her practice regarding state disability

payments, Mrs. Halperin regularly checked her bank accounts to

ensure that the payments were deposited , and knew that Social

Security Disability Income benefits were being paid to

Petitioner .

14 . Petitioner did not infor m Respondent when he became

eligible for Social Security Disability Income benefits, or when

he began receiving those payments .

15 . During his period of disability, Petition er had a

dispute with Cigna regarding its denial of a waiver of his

supplemental disability policy premium . On November 14, 2010,

Mrs. Halperin sent an appeal of the denial to Rhonda Whethers,

an emplo yee of Cigna . The appeal , sent by e - mail, consisted of

roughly nine pages of printed text and eight exhibits .

Mrs. Halperin d escribed Petitioner's medical condition in

detail, and requested that Cigna waive the premium to keep the

policy in effect. Mrs. Halperin sent copies of the appeal to

Cig na's manager of Specialty Lines Administration , to the

Director of Cabinet Affairs for the Florida Attorney General , to

the Insurance Consumer Advocate for the Department of Financial

Services , and to Michele Robletto, the DSGI Division Director.

16 . In the d escription of Petitioner's medical condition,

Mrs. Halperin stated that "[i]ndeed, Minnesota Life, the State

of Florida through the State Group Health Plan, and the U.S.

Social Security Disability Insurance (SSDI) program have fully

approved [Petition er's] claim of total disability from ANY and

ALL work." That statement is the only time in which mention of

Petitioner's Social Security benefits w as made to Respondent.

The reference, which was not d irected to Respondent, is too

indirect to constitute n otice to Respondent of Petitioner's

Social Security benefits.

17 . On February 1, 2011, Respondent sent Petitioner a

notice that his Attending PhysicianÓs Statement had not been

updated.

18 . On February 6, 2011, in response to the previous

notice, Mrs . Halperin sent a copy of the September 3, 2010 ,

Notice of Award from the Social Security Administration to

Respondent. That letter was the first disclosure to Respondent

of Petitioner's eligibility for , and receipt of , payments of

Social Security disabil ity benefits.

19 . Based on the September 3, 2010 letter, Respondent

determined that Petitioner had been receiving state disability

benefits without the reduction of Social Security benefits as

provided for by rule. Thereafter, Respondent calculated that

Petitioner was overpaid in the amount of $13,925.82. On

February 21, 2011, Respondent notified Petitioner that it had

overpaid him $13,925.82 , in S tate Group Disability Income

benefits. That figure is found to accurately reflect the amount

of state benefits that were not reduced by corresponding

payments of Social Security benefits.

20 . Peti tioner argues that neither r ule 60P - 9.005 nor the

the Senior Management and Select Exempt Servi ce Employees' State

Group Disability Insurance Program benefits booklet contain s a

requirement that a recipient of state disability benefits notify

Respondent of eligibility for or receipt of Social Security

disability benefits, and that as a result, Respo ndent should be

estopped from recovering any overpayments.

21 . Rule 60P - 9.005 and the Senior Management and Select

Exempt Service Employees' State Group Disability Insurance

Program benefits booklet are both clear and unequivocal that

state disability benefits are to be reduced by Social Security

disability benefits. Respondent receives no information

directly from the federal government regarding disability

benefits. Thus, it is the responsibility of recipients of state

disability income to understan d and comply with the law.

22 . Petitioner testified that neither he nor his family

had any intent to mislead the state. The undersigned accepts

that as true. Nonetheless, Petitioner received state disability

benefits after he became eligible for and be gan receiving Social

Security benefits, without the reduction required by law. Thus,

Respondent is entitled to recovery of the overpayments.

CONCLUSIONS OF LAW

23 . The Division of Administrative Hearings has

jurisdiction over the parties and the sub ject matter of this

proceeding pursuant to s ections 120.569 and 120.57(1), Florida

Statutes (2011) .

24 . Respondent is the agency charged by the legislature

with the duty to oversee the administration of the State Group

Insurance Program, including the gr oup disability insurance

program.

25 . Respondent, as the party asserting the right to

recovery of paid disability benefits, has the burden of proving

by a preponderance of the evidence that it is entitled to

recovery of overpayments resulting from the failure to reduce

state disability benefits by offsetting social security

benefits. See DepÓt of Transp. v. J.W.C. Co., Inc. , 396 So. 2d

778 (Fla. 1st DCA 1981) ; cf , Southpointe Pharmacy v. DepÓt of

HRS , 596 So. 2d 106,109(Fla. 1st DCA 1992)(the agency seeking to

establish a Medicaid overpayment, and recovery of that

overpayment, has the burden of proving the allegations by a

preponderance of the evidence.) .

26 . Section 110.123 , entitled State Group Insurance Plan,

describes the powers and duties confe rred on Respondent, in

pertinent part, as follows:

(5) DEPARTMENT POWERS AND DUTIES. Ï The

department is responsible for the

administration of the state group insurance

program. The department shall initiate and

supervise the program as established by th is

section and shall adopt such rules as are

necessary to perform its responsibilities.

To implement this program, the department

shall, with prior approval by the

Legislature:

(a) Determine the benefits to be provided

and the contributions to be requi red for the

state group insurance program . . . .

However, in the determination of the design

of the program, the department shall

consider existing and complementary benefits

provided by the Florida Retirement System

and the Social Security System.

27 . Regarding entitlement to benefit payments, Florida

Administrative Code Rule 60P - 9.005 provides, in pertinent part :

60P - 9.005 Benefits.

If an employee, while insured under the Plan

and as a result of sickness or injury,

becomes totally disabled, the Pla n will pay

biweekly benefits to the employee for the

period of such disability. Such benefits

are payable in an amount of sixty - five (65)

percent of the employee's basic daily

earnings at the date of disability.

Benefits are payable from the first benefi t

day of any one continuous period of

disability up to a maximum of one year (364

days) subject to the following:

* * *

( 2 ) B enefits paid under the Plan will be

reduced by any benefits paid or

payable:

* * *

(b) As primary and family benefits

u nde r the Social Security Act; . . . .

28 . The requirement that state disability benefit payments

be offset by Social Security benefits is reiterated in the

Senior Management and Select Exempt Service Employees' State

Group Disability Ins urance Program ben efits booklet which both

Petitioner and Mrs. Halperin read.

29 . The evidence demonstrates that Petitioner received

benefits under the state disability insurance plan, while

simultaneously receiving benefits under the Social Security Act.

The evidence fu rther demonstrates that benefits paid under the

state disability insurance plan were not reduced by benefits

under the Social Security Act received by Petitioner.

Estoppel

30 . Petitioner has asserted that, despite rules to the

contrary, he is entitled to the application of estoppel against

Respondent to preclude it from recovering the state disability

benefits that were not reduced by Social Security disability

benefits. Pet itioner, as t he party asserting the issue of

estoppel as a defense , has the burden of proving by a

preponderance of the evidence that the elements of estoppel

apply in this case . See DepÓt of Transp. v. J.W.C. Co., Inc. ,

supra ; Mercede v. Mercede Park Ita lian Rest. , 392 So. 2d 997,

998 (Fla. 4 th DCA 1981) .

31 . It is well established that Ð[e] quitable estoppel will

apply against a governmental entity Òonly in rare instances and

under exceptional circumstances.ÓÑ Council Bro s . , Inc. v. City

of Tallahassee , 634 So. 2d 264, 266 (Fla. 1st DCA 1994), citing

North American Co. v. Green , 120 So. 2d 603, 610 (Fla. 1959) ,

and DepÓt of Rev. v. Anderson , 403 So. 2d 397, 400 (Fla. 1981) .

The First District Court of Appeal in Council Brothers

established t he elements that must be established for the

doctrine of equitable estoppel to apply against a governmental

agency as follows:

The elements which must be present for

application of estoppel are: Ð (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 estoppel, caused by the

representation and reliance thereon. Ñ State

Department of Revenue v. Anderson , 403 So.

2d 397, 400 (F la. 1981). See also Dolphin

Outdoor Advertising v. Department of

Transportation , 582 So. 2d 709, 710 (Fla.

1st DCA 1991); Harris v. State, Department

of Administration, Division of Employees'

Insurance , 577 So. 2d 1363, 1366 (Fla. 1 st

DCA 1991); Warren v. Department of

Administration , 554 So. 2d 568 (Fla. 5th DCA

1990). As a general rule, estoppel will not

apply to mistaken statements of the law, see

Anderson , 403 So. 2d at 400, but may be

applied to erroneous representations of

fact. Dolphin Outdoor Adv ertising , 582 So.

2d at 711; Harris , 577 So. 2d at 1366;

Warren , 554 So. 2d at 571; City of Coral

Springs v. Broward County , 387 So. 2d 389,

390 (Fla. 4th DCA 1980).

* * *

One seeking to invoke the doctrine of

estoppel against the government first must

establish the usual elements of estoppel,

and then must demonstrate the existence of

affirmative conduct by the government which

goes beyond mere negligence, must show that

the governmental conduct will cause serious

injustice, and must show that the

appli cation of estoppel will not unduly harm

the public interest. Alachua County v.

Cheshire , 603 So. 2d 1334, 1337 (Fla. 1 st

DCA 1992).

32 . Petitioner has demonstrated no exceptional

circumstances that would estop Respondent from recovering the

overpayment s of state disability benefits that should have been

reduced by Social Security disability benefits received by

Petitioner . Respondent never suggested, in any way, that

Petitioner would be able to draw full state and federal

disability benefits simultaneo usly and never gave any intimation

that it would not seek to recover any benefit overpayments.

Rather, Respondent began the process of seeking recovery within

two weeks after having been pr ovided with evidence of

PetitionerÓs eligibility for and receipt o f Social Security

benefits. Thus, Respondent is not estopped from seeking such

recovery of benefits as authorized by law.

Waiver

33 . Petitioner has asserted that Respondent, by its

affirmative acts or its forbearance from taking acts , has waived

the r ight to recover the state disability benefits that were not

reduced by Social Security disability benefits. Petitioner, as

the party asserting the issue of waiver as a defense, has the

burden of proving by a preponderance of the evidence that the

elements of waiver apply in this case . See DepÓt of Transp. v.

J.W.C. Co., Inc. , supra ; Mercede v. Mercede Park Italian Rest. ,

supra .

34 . The First District Court of Appeal has established the

elements that must be established for the doctrine of waiver as

follows:

Waiver is the intentional or voluntary

relinquishment of a known right, or conduct

which infers the relinquishment of a known

right. Thomas N. Carlton Estate v. Keller ,

52 So. 2d 131 (Fla. 1951); Enfinger v. Order

of United Commercial Travelers , 156 So. 2d

38 (Fla. 1st DCA 1963); Fireman's Fund

Insurance Company v. Vogel , 195 So. 2d 20

(Fla. 2d DCA 1967). The essential elements

of waiver are (1) the existence at the time

of the waiver of a right, privilege,

advantage, or benefit which may be waiv ed;

(2) the actual or constructive knowledge of

the right; and (3) the intention to

relinquish the right. Gulf Life Insurance

Company v. Green , 80 So. 2d 321 (Fla. 1955);

Gilman v. Butzloff , 155 Fla. 888, 22 So. 2d

263 (1945); Wilds v. Permenter , 228 So. 2d

408 (Fla. 4th DCA 1969). Waiver may be

express, or implied from conduct or acts

that lead a party to believe a right has

been waived. Thomas N. Carlton Estate ,

supra ; Davis v. Davis , 123 So. 2d 377 (Fla.

1st DCA 1960). However, when waiver is to

be implied from conduct, Ð the acts, conduct,

or circumstances relied upon to show waiver

must make out a clear case. Ñ Fireman's Fund

Insurance Co. , supra, at 24, citing Gilman

v. Butzloff , supra .

Taylor v. Kenco Chemical & Mfg . Corp. , 465 So. 2d 581, 587 (Fla.

1st DCA 1985).

35 . Petitioner has shown no statements, conduct, or acts

on the part of Respondent that would indicate that Respondent

intentionally or voluntarily relinquished its right to recover

the overpayments of s tate disability benefits that should have

been reduced by Social Security disability benefits received by

Petitioner. Rather, t he evidence demonstrates that Respondent

was unaware of PetitionerÓs eligibility for and receipt of

Social Security benefits unt il February 6, 2011. When it was

provided with information regarding the federal benefits,

Respondent immediately took action to recover benefit payments

that were not reduced as provided by rule . Thus, Respondent has

not waived the recovery of benefits as authorized by law.

Ultimate Conclusion

36 . Respondent has demonstrated by a preponderance of the

evidence that it is entitled to recovery of overpayments of

disability benefits to Petitioner resulting from the alleged

failure to reduce such payments b y offsetting social security

benefits. Respondent has further demonstrated by a

preponderance of the evidence that the amount subject to

recovery is $13,925.82.

37 . Petitioner failed to demonstrate that Respondent is

precluded from recovery of overpayments of disability benefits

by application of the doctrines of estoppel or waiver.

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 finding that Respondent is entitled to recovery of

overpayments of disability benefits in the amount of $13,925.82 .

DONE AND ENTERED this 19t h day of April, 2012 , in

Tallahassee, Leon County, Florida.

S

E. GARY EARLY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

t his 19th day of April, 2012 .

ENDNOTE

1/ Petitioner and his wife are both doctors. To avoid

confusion, but with full acknowledgement that she is entitled to

the title of Dr. Halperin, PetitionerÓs wife will be referred to

in this Recommended Order as ÐMrs. Halperin.Ñ

COPIES FURNISHED :

Sonja P. Mathews, Esquire

Department of Management Services

Office of the General Counsel

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399

Karen Halperin Cyphers

Qualified Representative

1537 Woodgate Way

Tallahassee, Florida 32308

Jason Dimitris, General Counsel

Department of Management Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399 - 0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of t his Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.