16-007617 Carlene Reny, Petitioner For The Estate Of Anne M. Birch vs. Department Of Management Services, Division Of Retirement Status: Closed Recommended Order on Tuesday, January 16, 2018.

Summary: DOAH and DMS lack subject matter jurisdiction over claim by surviving spouse of same-sex marriage for Option 3 benefit when FRS member elected Option 1 and retirement predated lawful marriage.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CARLENE RENY, PETITIONER FOR THE

ESTATE OF ANNE M. BIRCH,

Petitioner,

vs.

Case No. 1 6 - 7617

DEPARTMENT OF MANAGEMENT

SERVICES, DIVISION OF

RETIREMENT ,

Respondent.

_______________________________/

RECOMMENDED ORDER

On October 10 , 2017 , Robert E. Meale, Administrative Law

Judge of the Division of Administrative Hearings (DOAH),

conducted the final hearing by video conference in Tallahassee

and Lauderdale Lakes , Florida.

APP F EARANCES

For Petitioner: Anthony V. Falzon, Esquire

Anthony V. Falzon P.A.

12000 Biscayne Boulevard , Suite 702

Miami, Florida 33181

For Respondent : Thomas E. Wright, Esquire

Office of the General Counsel

Department of Management Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue is whether Petitioner is entitled to receive

survivor benefits from a joint and survivor annuity, under

Option 3 of the Florida Retirement System (FRS) defined benefit

plan, following the death of her spouse, Anne M. Birch, who , as

an FRS member, elected Option 1 in 2012 when Florida law would

not allow Ms. Birch to elect Option 3 or 4 and designate the

joint annuitant as P etitioner, whom she lawfully married after

electing Option 1 .

PRELIMINARY STATEMENT

By letter dated September 22, 2016, Petitioner advised

Respondent that she was the surviving spouse of Ms. Birch, who

had died on May 24, 2016, and inquired about the sta tus of

Petitioner's claim for surviving spouse benefits from

Ms. Birch's account in the FRS defined benefit plan .

By letter dated October 20, 2016, Respo ndent acknowledged

receipt of the September 22 letter , which Respondent properly

characterized as a request to receive survivor benefits under

Option 3 following the death of Ms. Birch. Respondent's letter

states that Ms. Birch retired on October 1, 2012, when she

entered the Deferred Ret irement Option Program (DROP), stated

that she was unmarried at the time of her retirement , and

elected Option 1, under which the benefits ended with her death.

By letter dated November 9, 2016, Petitioner requested a

formal administrative hearing.

At the hearing, Petitioner called one witness and offe red

into evidence 43 exhibits : Petitioner Exhibits 1 - 43 .

Respondent called two witness es and offered into evidence

24 exhibits: Respondent Exhibit s 1 - 24 . All exhibits were

adm itted except Petitioner Exhibits 41 and 42. A ttachment D to

Petitioner Exhibit 36 was admitted as Petitioner Exhibit 43.

The court reporter filed the transcript on November 1,

2017. The parties filed proposed recommended order s by

December 1 9 , 2017 .

FINDINGS OF FACT

1 . Ms. Birch , who was born on September 12, 1950, and

Petitioner , who was born on August 26, 1956, fell in love and

began to live together in 1992. They jointly owned all

significant property, including their primary residence, with a

right of survivorship and were jointly liable for household

expe nses and deb t, including the mortgage note on their primary

residence . On January 31, 2001, Ms. Birch executed a will that

left any remaining property to Petitioner and named her as the

personal representative of the estate . 1 / Ms. Birch designated

Petitioner as her primary benefici ary for employee benefits that

authorized such designations. On October 11, 2002, Ms. Birch

and Petitioner signed an Amended Declaration of Domestic

Partnership, pursuant to the Broward County Domestic Pa rtnership

Act of 1999, to register themselves as domestic partners under

Broward County Ordinance 1999 - 18.

2 . Fully vested and having accrued substantial benefits

from having worked for Broward County in an FRS - covered position

for nearly 30 years, on O ctober 23, 2012, Ms. Birch entered

DROP, effective October 1, 2012. At that time, Ms. Birch

elected Option 1 for the payment of her benefits, checking the

"no" box in response to the question of whether she was married.

As described in the Conclusions of Law, Option 1 is the maximum

benefit and is payable for the life of the retiree. Ms. Birch's

monthly Option 1 benefit was $3039.25. The monthly Option 3

benefit, which , as described below, is payable until the latter

death of the FRS member or her survi ving spouse, 2 / would have

been nearly $1000 less than the monthly Option 1 benefit. 3 /

3 . Respondent impleme nted Ms. Birch's election by paying

Ms. Birch's Option 1 benefits into her DROP account. I n

August 2013, Ms. B irch became ill with cancer. She eventually

had to quit working and terminated DROP , at which point

Respondent paid Ms. Birch her Option 1 benefits directly . On

June 16, 2014, Ms. Birch and Petitioner were lawfully married in

Massachusetts. Almost two years later, on May 24, 2016,

M s. Birch died, at which time all payments under Option 1 ended.

4 . When Ms. Birch and Petitioner registered as domestic

partners in Broward County, no state allowe d or recognized same -

sex marriage , often pursuant to a "Defense of Marriage Act"

(DOMA). Continuously since 1997 , Florida law banned the

allowance and recognition of same - sex marriage, even if

performed in a jurisdiction where such a marriage were legal,

and restricted "marriage" to a legal union between a man and a

woman and "spouse" to a mem ber of such a union. § 741.212(1)

and (3); Ch. 97 - 268, § 1, at 4957, Laws of Fla. (Florida DOMA). 4 /

5. Massachusetts was the first state to allow and

recognize same - sex marriage , effective in 2004 . Goodridge v.

Dep't of Pub. Health , 798 N.E. 2d 941 (Mass. 2003) (decision

stayed 180 days to allow legislature to enact law consistent

with the court's ruling) . Three or four years after Goodridge ,

Ms. Birch and Petitioner visited Massachusetts, but did not

exercise their right to enter into a lawful marriage at that

time.

6 . A series of court decisions invalidated the federal and

state DOMAs, including the Florida DOMA. On June 26, 2013, the

U.S. Supreme Court in United States v. Windsor , 133 S. Ct. 2675

(2013), held that the federal DOMA, as appl ied to federal tax

law, was unconstitutional. By order entered August 21, 2014, in

Brenner v. Scott , 999 F. Supp. 2d 1278 (N.D. Fla. 2014)

( Brenner I ), Respondent was enjoined from enforcing or applying

the Florida DOMA, although the court stayed its inju nction. The

U.S. Supreme Court lifted the stay, 5 / as reported by the district

court in Brenner v. Scott ¸ 2016 U.S. Dist. LEXIS 91969 (N.D.

Fla. 2016) ( Brenner II ), in which , on March 30, 2016, the court

issued a summary judgment on its injunction in Brenn er I .

Between Brenner I and Brenner II , on June 26, 2015, the U.S.

Supreme Court held that state DOMAs were unconstitutional in

Obergefell v. Hodges , 135 S. Ct. 2584 (2015).

7 . Petitioner testified that she and Ms. Birch would have

been lawfully married by October 2012, when Ms. Birch retired,

but for the Florida DOMA. This testimony is credited. Long

prior to 2012, Ms. Birch and Petitioner organized their

financial affairs as though they were lawfully married , sharing

assets and liabilities equ ally . Petitioner testified credibly

that she and Ms. Bi rch always "played by the rules " : thus,

Ms. Birch and Petitioner would have been deterred fr om getting

married prior to Ms. Birch's retirement, such as when they were

visiting Massachusetts in 2007, due to the legal futility of

attempting to obtain recognition in Florida of a marriage

lawfully performed elsewhere.

8 . Less persuasive is Petitioner's testimony that, in

October 2012, Ms. Birch would have elect ed Option 3, if this

option had been available to her , and it is impossible to find

on this record that she would have done so. There is no

evidence that Ms. Birch and Petitioner rearranged their

financial affairs to achieve, to the extent possible, an

Option 3 election. Household income wa s $1000 per month greater

under Option 1 than Option 3, so life insurance on Ms. Birch or

an annuity for Petitioner could have mitigated Ms. Birch's

inability to choose Option 3 when she retired. Prior to

retiring, Ms. Birch did not attempt to elect Optio n 3 in writing

or orally. Even after retiring, as noted below, Ms. Birch

displayed ambivalence about whether she wanted to change her

election .

9 . As a named defendant in Brenner I , on April 14, 2015,

Respondent responded to the injunction against its enforcement

or application of the Florida DOMA by issuing Information

Release #2015 - 184 (Release). S ent to FRS members who retired

prior to January 2, 2015, and elected Option 1 or 2 , the Release

states:

. . . FRS retirees and . . . DROP

participants who were in legally - recognized

same - sex marriages at the time they retired

or began DROP participation and chose

Option 1 or Option 2 will have an

opportunity to change benefit payment

options in light of . . . Brennan . These

retirees will be able to chan ge their

retirement payment option from their current

selection to Option 3 or Option 4 to provide

a continuing monthly benefit to their

spouse. The retirees impacted by this

change have an effective retirement date or

DROP begin date on or before January 1,

2015.

10 . The Release provides that an eligible retiree

interested in a second election must contact Respondent in

writing, identify the retiree's spouse, and certify that the

retiree and spouse were married in a state or country that

allowed same - sex marriage when the FRS member retired . The

Release states that Respondent will respond with an estimate of

the new benefit payment under the option that the retiree

intends to select and provide the retiree with the paperwork

necessary to make the seco nd election.

11 . Available on Respondent's website, 6/ the Release

provides the opportunity of a second election of Option 3 or 4

to any FRS member 7 / who retired prior to January 2, 2015 ; chose

Option 1 or 2 when she retired; and was in a same - sex marriage

when she retired . The Release places no limit on how far in the

past the retirement took place. 8 /

12 . The thrust of Petitioner's case is directed toward

backdating her lawful marriage to Ms. Birch to a point prior to

Ms. Birch's retirement. As noted above, the timing of the

lawful marriage is a problem under the Release, which requires a

lawful marriage at the time of retirement, but another problem

under the Release is the fact that the Release provides to the

FRS retir ee, not her surviving spouse, the opportunity for a

second election, nor, as discussed immediately below, is this a

technical requirement that can be overcome by Petitioner's

serving as a representative of Ms. Birch -- the second election is

extended only to living FRS retirees. The virtue of the Release

for Petitioner is that it confers the opportunity of a second

election without any proof that, at the time of the first

election, the FRS member would have elected Option 3 or 4. I f

Petitioner does not rely on the Release, she must also prove

that Ms. Birch w ould have elected Option 3 or 4, which, as noted

above, she has failed to prove.

13 . By limiting the second election to the FRS retiree,

the Release limits the potential of adverse selection in

allowing a second election, possibly years after the first

election . 9 / T here are three possibilities at the time of the

second electio n : both spous es are alive, only the FRS retiree

is alive, and only the surviving spouse is alive. The Release's

restriction of the right to make the second election to the FRS

retiree means that the second and third possibilities do not

result in second elections: re spectively the FRS retiree would

not reduce her payment to provide an annuity to a spouse who is

already deceased 10/ and a surviving spouse has no right to make

an election under the Release. The couple may gain a minor

financial advantage by the opportun ity to revisit the payment

option several years after the retirement of the FRS member, so

that they may be better informed of the health of each of them.

But the surviving spouse would gain a significant financial

advantage by the opportunity to revisit the payment option after

the death of the FRS member.

14 . Shortly after Respondent issued the Release , Ms. Birch

filed with Respondent a Spousal Acknowledgement Form that she

had signed on May 8, 2015. This form indicates that Ms. Birch

is married, but nothing else. At about the same time, though,

Ms. Birch contacted Respondent by telephone to discuss the

Release and any choices that she may now have under the Release.

By le tter dated May 26, 2015, Respondent calculated monthly

benefit am ounts under Options 1 through 4, but t he letter warns:

"Your benefit option will not be changed unless you complete and

return the required forms noted in this letter" and indicate a

choice of repaying in a single payment or installments the

excess benefits of Option 1 over the smaller benefits paid under

Option 3 or 4 .

1 5 . T he May 26 letter requires fu rther action on

Ms. Birch's par t and predicates a ny right to a second election

upon a la wful marriage at the time of retiremen t . T he record

provides no basis for finding that any of Respondent's

representatives misstated the lawful - marriage condition. To the

contrary, in at least one conversation with Ms. Birch,

Respondent 's representative insisted on verification of a la wful

mar riage as of October 2012.

1 6 . Additionally, Ms. Birch was not requesting a right to

make a second election; at most, she was gathering information

to prepare to decide whether to ask to change her election. B y

J une 26, 2015, pursuant to a note documenting a telephone

conversation between Ms. Birch and a representative of

Respondent, Ms. Birch decided to keep Option 1 rather than make

a second election of Option 3 . 1 1 /

17 . I n May 2016, Ms. Birch finally made a clear attempt to

change her election to Option 3. By letter dated May 12, 2016,

M s. Birch stated that she was lawfully married to Petitioner on

June 12, 2012, and asked for "the change in beneficiary for my

pension, due to the one ti me option given " in the Release. Eve n

at this late date, Ms. Birch wa s not yet ready to elect Option 3

because t he letter concludes: "I would like to see the

breakdown of monetary options to make an informed decision."

However, on May 20, 2016 , d uring a telephone call with a

representative of Respondent, Ms. Birch provided the date of

birth of Petitioner and asked Respondent to expedite her request

because she did not have long to live. On the same date,

Ms. Birch signed an Option Selection form electing Option 3.

1 8 . By letter dated July 18, 2016, Respondent acknowledged

the death of Ms. Birch and informed Petitioner that all pension

benefits ended at that time. By letter dated September 22,

2016, Petitioner asked for reconsideration and supplied copies

of various documents, the relevant provisions of which have been

referenced above. By letter dated October 20, 2016, Respondent

denied the request for reconsideration .

CONCLUSIONS OF LAW

19 . Due to the unusual circumstances of this dispute,

DOAH and Respondent lack subject - matter jurisdiction over

Petitioner's request for retirement benefits. Administrative

jurisdiction is limited to " a ll proceeding s . . . in which the

substantial interests of a party are determined by an agency."

§ 120.569(1), F la. Stat. (2016). (All references to statutory

sections without further identifica tion are to Florida

Statutes.)

20 . Three conditions must be met for a dministrative

jurisdiction: (1) substantial interests ( 2 ) are determined

(3) by an agency . T his proceeding does not satisfy the

requirement of "substantial interests." A claim of right to

money is a substantial interest , O'Connor v. Zane , 79 So. 3d 105

(Fla. 1st DCA 2012) (dictum), but not when the nonagency party

is pursuing a unilateral expect ation of receiving a benefit in a

transaction that has not been statutorily recognized as a basis

for an administrative hearing. See, e.g. , Univ. of S. Fla.

Coll. of Nursing v. Dep't of Health , 812 So. 2d 572, 574 (Fla.

2d DCA 2002) (due to healthcare exe mption to statutory bid law,

as set forth in former section 287.057(4)(f)6. (now section

287.057(3)(e)5.), frustrated bidder with "mere unilateral

expectation of receiving a benefit" lacks substantial interest);

Herold v. Univ. of S. Fla. , 2002 Fla. App. L EXIS 1449 (Fla. 2d

DCA 2002) (university professor's unilateral expectation of

promotion to full professor does not constitute a substantial

interest). T he Florida legislature has not statutorily

recognized a basis for an administrative hearing on the iss ues

presented by this case. This case does not present the question

of whether administrative jurisdiction attaches to a benefits

claim arising under the Release, which was authorized by the

district court's injunction, not any statute. This case

present s the easier question of whether administrative

jurisdiction attaches to a benefits claim arising out of a

combination of constitutional law and equity that transcend the

grounds for plan administration set forth in the statutes or

even in the extra - statut ory Release.

21 . T his proceeding probably does not satisfy the

requirement of substantial interests that "are determined."

Respondent has already determined any interests of Petitioner

when Respondent discontinued the payment of benefits when

Ms. Birch died. It is unnecessary to determine whether the

ongoing wit hholding of benefits would satisfy this criterion.

22 . This proceeding does not satisfy the requirement of

substantial interests that are determined "by an agency" -- i.e.,

Respondent. Within the meaning of section 120.569, substantial

interests are dete rmined by an agency only when the agency is

substantially exercising its core regulatory duties. I n Vincent

J. Fasano, Inc. v. Sch ool B oard , 436 So. 2d 201 (Fla. 4th DCA

1983) (per curiam), a contractor and school board entered into a

contract for the con struction of a school, and the contractor

failed to complete construction within the time specified in the

contract. Following a formal administrative hearing conducted

by the school board, the school board entered a final order

assessing liquidated damag es for tardy performance. Quashing

the final order on the ground that the s chool board lacked

jurisdiction, the court stated:

A breach of contract is normally a matter

for judicial rather than administrative or

quasi - judicial consideration.

What an agency may hear and determine must

be within the framework of the powers

conferred upon the agency. [citation

omitted] An agency has no authority "to

administratively adjudicate claims made

against it by persons with whom it has

contracted for the purcha se of materials or

the rendition of services. Disputes such as

these are traditionally settled in the

courts of this state by adversary

proceedings in which the agency as a

contracting party is treated as any other

citizen." [citation omitted]

Id. at 20 2 - 03.

23 . Even an insubstantial exercise of core regula tory

duties may not suffice . In Diaz v. State , 65 So. 3d 78 (Fla. 3d

DCA 2011), a provider agreement between an operator and Agency

for Persons with Disabilities (APD) was terminable at any time

wit hout cause. Without cause, APD terminated the agreement

prior to its expiration, and the operator filed a request for a

f ormal administrative hearing. APD declined the request,

reasoning that, because the provider agreement was terminable

without cause, a court, not an agency, was the forum for the

adjudication of a dispute involving a voluntary contract.

Sustaining APD's decision, the court stated that the relevant

statute designated the provider agreement as a "voluntary

contract" and that APD terminat ed the contract in accordance

with its express conditions. The court rejected as irrelevant

the operator's argument for administrative jurisdiction based on

various statutory provisions specifying administrative hearings

for the imposition of certain sanc tions and the recovery of

Medicaid overpayments by the Agency for Health Care

Administration . The court's use of "voluntary" seems to have

meant a contract with a term only as long as both parties

desired, as distinguished from a binding contract that man dated

the mutual performance of contractual undertakings over a

preagreed term. Given the insubstantiality of the provider

agreement, it represented an insubstantial exercise of APD's

core regulatory duties.

24 . By statute, as relevant to this case, the core

regulatory duties of Respondent include the calculation and

payment of pension benefits. §§ 121.025 and 121.031. It is

questionable whether Respondent's core regulatory duties extend

to administering rights and responsibilities under the Release ,

w hich responds to an injunction, not a statute. There can be

little doubt that Respondent's core regulatory duties do not

extend to a request for benefits that does not fall within the

scope of the Release , but instead depends on Respondent 's

recognition of rights that transcend the Rele ase, the IRS ruling

and notices discussed below , and arguably even the four federal

decisions mentioned above . If legislative relief proves

unavailable, the sole source for relief then must be judicial.

25 . In an abundance of caution, the following Conclusions

of Law assume that DOAH and Respondent have subject - matter

jurisdiction over Petitioner's request for benefits. Even so,

a s noted below, there is one claim over which DOAH and

Respondent lack jurisd iction and other claims that Petitioner

lacks standing to raise.

26 . As an applicant, Petitioner bears the burden of

proving her entitlement to be nefits from Ms. Birch's FRS

acc ount. Dep't of Transp. v. J.W. C. Co. , 396 So. 2d 778

(Fla. 1st DCA 1981). Petitioner must prove her entitlement to

benefits by a preponderance of the evidence. § 120.57(1)(j).

27 . An FRS member choosing to participate in DROP retires

when she enters DROP. § 121.091(13)(b)3. The member is

required to elect a payment option prior to receiving her first

retirement payment. § 121.091(6)(a). The election of a payment

option is irrevocable once the member cashes a payment or a

payment is deposited into a DROP account. § 121.091(6)(h). A

lawful spouse of an FRS member has a right only to "acknowledge"

the member's selection of Option 1 or 2. § 121.091(6)(a).

28 . A n FRS member has four options for the payment of

benefits . Option 1 is the maximum retirement benefit payable to

the FRS member during her lifetime. Option 2 is a decreased

retirement benefit payable until the FRS member's death, but for

not less than ten years ; if the FRS member dies within ten years

after retiring, the payment continues to a beneficiary until the

expirati on of ten years. Option 3 is a decreased retirement

benefit payable until the latter death of the FRS member or her

"joint annuitant." Option 4 is a decreased retirement benefit

payable until t he latter death of the FRS member or her "joint

annuitant ," e xcept that the survivor receives two - thirds of the

benefit paid w hen both persons were alive. § 121.091(6)(a)1. - 4.

A "joint annuitant" in Options 3 and 4 includes a member's

spouse . § 121.021(28).

29 . In Windsor , supra , two persons entered into a lawful

same - sex marriage in Ontario, Canada in 2007. Two years later,

one of the spouses died and left her estate to the surviving

spouse, who claimed the federal estate tax deduction for a

surviving spouse. When the Internal Revenue Service (IRS)

denied the claim due to the federal DOMA, the Court held that

the operative provisions of the federal DOMA violated the Due

Process Clause of the Fifth Amendment of the United States

Constitution.

30 . In Brenner I , supra , the court held that the Florida

DOMA and related constitutional and statutory authority that

barred the allowance or recognition of a same - sex marriage

violated the Due Process and Equal Protection clauses of the

Fourteenth Amendment of the United States Constitution. Due to

the number of plaintiffs, it is difficult to determine if any of

the claims sought, as here, marital rights prior to the

commencement of a lawful same - sex marriage, but it appears not.

The court enjoined Respondent , the Florida Surg eon General, and

one court clerk from ap plying or enforcing the Florida DOMA to

same - sex marriages, but stayed the injunction.

31 . In Obergefell , supra , the Court held that various

state DOMAs violated the Due Process and Equal Protection

clauses of the Fourteenth Amendment of the United States

Constitution by not allowing or recognizing a same - sex marriage.

None of the claims sought marital rights prior to the

commencement of a lawful same - sex marriage.

32 . In Brenner II , supra , t he court rejected a mootness

defense . Acknowledging the ongoing resistance of defendants to

compliance with Brenner I , the court noted the existence of

other statutes, not challenged by the Brenner plaintiffs, that

continued not to recognize same - sex marriage and the

legislature's choice " n ot to pass legislation to bring Florida

law into complian ce[, which] does not help the defendants."

33 . In Revenue Ruling 2013 - 17, the IRS advised that ,

effective September 16, 2013, for federal tax purposes, same - sex

persons could qualify as spouses if they had been married in a

state that allowed same - sex marriage at the time of the

marriage . However, for substantial reasons, 1 2 / the IRS declined

to recognize as married those person s who had entered into a

registered domestic partnership s , civil union s , or other formal

relationship s that, under state law, were not recognized as a

marriage. The IRS also announced that it would c onstrue gender

specific languag e in the Internal Revenue Code (IRC), such as

"husband" or "wife," to include same - sex persons who are

lawfully married.

34 . The IRS later required that all qualified plans

conform to Windsor by corrective amendments effective no later

than June 26, 2013, although plan sponsors could adopt

amendments recognizing lawful same - sex marriages "for some or

all purposes" earlier than June 26, 2013. The IRS recognized

that plan sponsors were not requ ired to amend plans that did not

affirmatively differentiate between same - sex and opposite - sex

spouses. The deadline for any required amendment for a

government plan was the close of the first legislative session

after December 31, 2014. IRS Notice 2014 - 19. Accord IRS

Notice 2015 - 86. S ignificant ly, these notices maintained the

requirement that the plan participant be in a lawful same - sex

marriage at the relevant time ; in other words, these notices did

not require that a plan sponsor relate back a same - s ex marriage ,

such as to the date of retirement . A lthough the Release is not

so limited, these notices did not require that a plan sponsor

retroactively accommodate persons in same - sex marria ges earlier

than June 26, 2013 -- the date of Windsor .

35 . In her proposed recommended order, Petitioner makes

four arguments. Petitioner describes the second pair as more to

the point , in the context of the present case, than the first

pair, Petitioner's prop osed recommended order, ¶ 33, b ut the

first pair of arguments are noteworthy. I f successful, the

first argument would invalidate the Release, at least in the

present case, and the second argument would disqualify the FRS

defined benefit plan.

36 . Petitioner's first argument is that the Release is an

in valid rule, evidently because it is unadopted. Neither the

Administrative Law Judge or Respondent may rely on an unadopted

rule in determining whether to sustain proposed agency action.

§ 120.57(1)(e)1. Section 120.57(1)( e)2.a. applies the

procedures of section 120.56(1)(b), and section 120.57(1)(e)2.c.

applies section 120.56(4)(c) to a challenge alleging an

unadopted rule.

37 . Section 120.56(1)(b) provides that Petitioner must

show that she is substantially affected by an unadopted rule and

state the grounds for determining that the rule is invalid.

Petitioner has failed to carry either of these burdens.

Petitioner is not substantially affected by the Release: t he

invalidation of the Release , in whole or in part, wou ld provide

Petitioner with no relief whatsoever in this case .

38 . Petitioner has also failed in her challenge of the

Release as an unadopted rule. First, Petitioner never alleged

this matter. Second, Petitioner failed to prove that the

Release is a ru le. A rule is an "agency statement of general

applicability that implements, interprets, or prescribes law or

policy . . .. § 120.52(16). An agency's interpretation of a

statute that is "readily apparent" from a literal reading of the

statute is not a r ule. St. Francis Hosp. v. Dep't of HRS , 553

So. 2d 1351, 1354 (Fla. 1st DCA 1989) (dictum). An agency is

not engaging in policymaking when it performs a literal reading

of a statute, nor is it engaged in policymaking when it complies

strictly with a cour t injunction, so, for the same reason, this

exercise is not a rule.

39 . Additionally, s ection 120.56(4)(c) authorizes an

agency's reliance on an agency statement that would otherwise be

an unadopted rule if rulemaking is not feasible and practicable.

Rulemaking is not feasible because "[r] elated matters are not

sufficiently resolved to enable the agency to address a

statement by rulemaking. " § 120.54(1)(a)1.b. The related

matter that is not sufficiently resolved is the legislature's

response to Brenn er I and II : rulemaking awaits the enactment

of statutes to be implemented.

40 . More ambitious, Petitioner's second argument is to

disqualify the FRS defined benefit plan, which is a qualified

plan, 1 3/ from the federal income tax benefits accorded to the

plan 's trust and FRS members . 1 4 / IRC § 401(a) , 26 U.S.C.

§ 401(a) . The above - discussed IRS ruling and notices require a

qualified plan to conform to the decisional law as to the

treatme nt of same - sex spouses, so, if the plan affirmatively

precluded the recognition of same - sex spouses, the sponsor had

to amend the plan , effective June 2013, to document that same -

sex spouses would be treated as spouses for all purposes. 1 5 /

Ef fectively, the Florida DOMA was eliminated from the plan when

the Supreme Court lifted the stay in Brenner I and Respondent

could no longer enforc e or apply the Florida DOMA: a t this

point, the only purpose to be served by an amendment would be to

address the treatment of same - sex spouses prior to the lifting

of the stay .

4 1 . The Release serves as the amendment required to

address the treatment of same - sex spouses prior to the lif t ing

of the stay in Brenner I . There is no requirement that an

amendment of a qualified government plan be by statute or rule.

A mong other requirements, a qualified plan is required only to

be a "definite written program and arrangement." 26 C.F.R.

§ 1.401 - 1(a)(2). This language "should be broadly construed to

encompass various formats, including a collection of writings

which creates a specific permanent plan." Engineered Timber

Sales, Inc. v. Comm'r , 74 Tax Ct. 808, 827 (1980) (dictum).

42 . Additionally , Petitioner lacks standing to challenge

the qualified status of the plan because, were her c laim

successful, she would be entitled to no relief . Lastly , DOAH

and Respondent lack subject matter jurisdiction over a claim

that the FRS defined benefit pl an is not qualified under IRC

§ 401 ( a). Such a determination emanates from the IRS or a

court , s ee , e.g. , In re Gilbraith , 523 B .R. 198 (Bank. Ct.

D. Ariz. 2014) , not from the state agency serving as the plan

sponsor .

43 . Petitioner's third argument is that Respondent is

equitably estopped from rejecting Petitioner's request to allow

Ms. Birch to change to Option 3 because Respondent had granted

Ms. Birch's request in May 2015 , and Ms. Birch and Petitioner

had detrimentally relied on Respondent's acceptance o f

Ms. Birch's second election .

44 . The elements of equitable estoppel are "(1) a

representation as to a material fact that is contrary to a

later - asserted position; (2) reliance on that misrepresentation;

and (3) a change in position detrimental to the party claiming

estoppel, caused by the representation and reliance thereon."

(citations omitted) Hamilton Downs Horsetrack, LLC v. Dep't of

Bus. & Pro f'l Reg . , 226 So. 2d 1046, 1051 (Fla. 1st DCA 2017)

(citations omitted). "Generally, estoppel may only be applied

in cases of misrepresentations of fact, not misstatements of

law." (citation omitted) Id. When invoked against the

government, the person claiming that the government is estopped

"must demonstrate the existence of affirmative conduct by the

g overnment which goes beyond mere negligence, must show that the

government misconduct will cause serious injustice, and must

show that the application of estoppel will not unduly harm the

public interest." (citations omitted) Id. at 1052.

45 . Petition er has proved neither a misstatement nor

detrimental reliance. As stated in the F indings of Fact , none

of Respondent's representatives misstated or misrepresent ed any

fact or law, and Ms. Birch and Petitioner never took any action

and never failed to take any action due to their "knowledge"

that Ms. Birch would be allowed to elect Option 3.

Additionally, equitable estoppel typically may not be invoked

offensively, except to avoid an opposing party's defense;

equitable es toppel is essential ly a defensive tool. Bair v.

City of Clearwater , 196 So. 3d 577, 584 - 85 (Fla. 2d DCA 2016).

46 . Petitioner 's fourth argument is for the retroactive

application of the above - discussed case law. Petitioner cites

Schuett v. FedEx Corp. , 119 F. Supp. 3d 1155 (N.D. Cal. 2016).

In Schuett , a same - sex couple who had lived together for

27 years and raised two children were married in a civil

ceremony in California at a time that same - sex marriage was not

allowed. The following day, one mem ber of the couple,

Ms. Taboada - Hall, died. She had been a vested participant in a

defined benefit plan sponsored by her employer, which did not

allow her to elect a joint and survivor annuity on the ground

that she was not in a lawful marriage. Six days after the

ceremony, the U.S. Supreme Court decided Windsor , and, days

later, judicial decisions applied the Windsor ruling to pending

California cases. The surviving spouse then filed a judicial

action to obtain a ruling that the ceremony constituted the

commencement of a lawful marriage. After obtaining a favorable

ruling, the surviving spouse filed a claim for a joint and

survivor annuity with the sponsor of Ms. Taboada - Hall's defined

benefit plan. The sponsor denied the claim on the ground that,

at th e time of the death of Ms. Taboada - Hall, the plan

incorporated the federal DOMA's definition of spouse. The court

declined to issue a judgment on the pleadings in favor of the

plan sponsor on one count of the three - count complaint. The

count alleged that the plan sponsor violated the Employee

Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq .

(ERISA), by failing to administer the plan in accordance with

applicable law -- thus breaching a fiduciary duty, as prohibited

by ERISA § 502(a)(3) , 29 U.S.C. § 1132(a)(3) .

47. Schuett is not applicable to Petitioner's claim . The

court that related the marriage back was a state court

construing California law, not the Schuett court. Also , the FRS

defined benefit plan is a government plan, ERISA § 3(32), 29

U.S.C. § 1002(32), and ERISA does not apply to a government

plan. ERISA § 4(b)(1), 29 U.S.C. § 1003(b)(1). 1 6/

48. Likewise, Petitioner's reliance on decisions from

jurisdictions that recognize common law marriage is misplaced.

Florida has not recognized common law marriage for 50 years.

§ 741.211.

49. More generally, Petitioner contends that her marriage

should relate back to the date of Ms. Birch's retirement on the

ground that U. S. Supreme Court decisions invalidating statutes

on constitutional grounds are retroactive. See, e.g. , Harper v.

Va. Dep't of Taxation , 509 U.S. 86 (1993); s ee generally Peter

Nicolas, "Backdating Marriage," 105 Cal. L. Rev. 395 (2017).

The law review a rticle cites limited instances of administrative

action to backdate a marriage, but only at the federal level; no

Florida agency has implicit authority to perform this act, and,

as noted above, the IRS declined to do so for substantial legal

reasons.

50. The present facts support a backdating of the

marriage, if a court determines that this relief is available,

but this, alone, would not justify granting Petitioner's request

for the Option 3 benefit. As noted above, the facts do not

support the finding that Ms. Birch would have selected Option 3,

if she had been allowed to select any of the four options whe n

she retired in October 2012, and the actuarial considerations

discussed in connection with the focus of the Release on living

FRS retirees would militate against an unconditional 1 7/

determination that Petitioner may now, after the death of

Ms. Birch, elect Option 3 benefits .

RECOMMENDATION

It is

RECOMMENDED that Respondent enter a final order denying

Petitioner's request for benefits under Option 3 from

Ms. Birch's FRS account and dismissing Petitioner's Request for

Administrative Hearing .

DONE AND ENTERED this 16th day of January , 2018 , in

Tallahassee, Leon County, Florida.

S

ROBERT E. MEALE

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

this 16th day of January , 2018 .

ENDNOTES

1/ The record does not indicate whether Petitioner was ever

appointed to serve as the personal representative of the estate

of Ms. Birch.

2/ Certain persons besides a surviving spouse may qualify as the

joint annuitant under Options 3 and 4, but, because these

alternatives are irrelevant to the present case, this

recommended order will refer to the joint annuitant as a

surviving spouse.

3/ The recor d does not disclose the amount of the Option 3

benefit at the time of Ms. Birch's retirement. However,

effective June 1, 2015, when Mr. Birch's monthly Option 1

benefit had risen to $3218.71, her monthly Option 3 benefit,

which, as described below, would pay a reduced amount from

Option 1 for the longer period of the life of the retiree or her

spouse, would have been $2357.64 and her monthly Option 4

benefit would have been $2623.53, which would have been reduced

to $1749.02 upon the death of Ms. Birch or Petitioner, whoever

was the first to die.

4/ Related provisions of Florida law challenged in Brenner I

were Article 1, section 27 of the Florida Constitution , and

section 741.04(1), Florida Statutes. Like section 741.212,

these provisions remain "on the books."

5/ Brenner II does not indicate when or in what decision the

U.S. Supreme Court lifted the stay in Brenner I .

6/ https://www.rol.frs.state.fl.us/forms/ir15 - 184.pdf .

7/ Textually, the Release provides retirees the opportunity to

change "the ir" elections from Option 1 or 2 to Option 3 or 4,

describes the opportunity as impacting retirees, and provides

retirees with the right to elect an option to provide

continuing benefits to their spouses.

8/ The date of January 2, 2015, in a document dated three months

later implies that, from January 2, 2015, forward, Respondent

complied with the injunction and treated same - sex marriages the

same as opposite - sex marriages. Obviously, Respondent's

compliance with the Brenner I injunction required the

recognition of same - sex marriages on a prospective basis.

9/ The Release confers a slight advantage upon the same - sex

couple by allowing the FRS retiree to make the second election

based on additional knowledge that she may have acquired since

retiring a s to her health and the health of her spouse.

10/ The Release does not address the contingency of a lawful

same - sex spouse at the time of the retirement of the FRS member,

the termination of the marriage by death (or divorce), and a

remarriage.

11/ The June 26 note documenting the telephone conversation is

hearsay -- actually, double hearsay -- so it has not been received

for the truth of Ms. Birch's statement, but only as evidence

tending to impeach Petitioner's testimony that Respondent

informed Ms. Birch that she could change her election or that

Ms. Birch would have elected Option 3, if this option had been

available in October 2012.

12/ In an introduction to new Treasury regulations covering

lawful same - sex marriages, the IRS explained why it did not

treat domestic partnerships like lawful marriages:

Some couples have chosen to enter into a

civil union or registered domestic

partnership even when they could have

married, and some couples who are in a civil

union or registered domestic partnership

have chosen not to convert those

relationships into a marriage even when they

have had the opportunity to do so. In many

cases, this choice was deliberate, and

couples who enter into civil unions or

registered domestic partnerships may have

done so with the e xpectation that their

relationship will not be treated as a

marriage for purposes of federal law. For

some of these couples, there are benefits to

being in a relationship that provides some,

but not all, of the protections and

responsibilities of marriage . For example,

some individuals who were previously married

and receive Social Security benefits as a

result of their previous marriage may choose

to enter into a civil union or registered

domestic partnership (instead of a marriage)

so that they do not l ose their Social

Security benefits. More generally, the

rates at which some couples' income is taxed

may increase if they are considered married

and thus required to file a married - filing -

separately or married - filing - jointly federal

income tax return eating couples in

civil unions and registered domestic

partnerships the same as married couples who

are in a relationship denominated as

marriage under state law could undermine the

expectations certain couples have regarding

the scope of their relationshi p. Further,

no provision of the Code indicates that

Congress intended to recognize as marriages

civil unions, registered domestic

partnerships, or similar relationships.

Accordingly, the IRS will not treat civil

unions, registered domestic partnerships, or

other similar relationships as marriages for

federal tax purposes.

80 Fed. Reg. No. 205, pp. 64378, 64379 (Oct. 23, 2015).

13/ § 121.30.

14/ See , e.g. , Citrus Valley Estates v. Comm'r , 99 T.C. 379, 397 -

98 (1992). Here, the main benefits would be the nonrecognition

of income by FRS members until the receipt of benefits and the

tax - exempt status of the trust that holds the plan assets.

15/ It is assumed that the FRS defined benefit pl an is subject

to such provisions. As a government plan, though, the FRS

defined benefit plan is exempt from various requirements imposed

on qualified plans sponsored by other types of sponsors, such as

the requirement of the payment of benefits in a joint and

survivor annuity. I.R.C. § 401(a)(37) (last sentence).

16/ Typically, ERISA preempts state - law claims of equitable

estoppel concerning qualified plans. See , e.g. , Salomon v.

Transamerica Occidental Life Ins. Co. , 801 F.2d 659 (4th Cir.

1989). B ut ERISA equitable estoppel does not apply to this case

because the FRS defined benefit plan is not subject to ERISA.

17/ These cascading contingencies reinforce the essential nature

of Petitioner's claim as judicial, not administrative. If a

court were to get this far, it could fashion a remedy that would

mitigate the effects of adverse selection by, for instance,

calculating the benefit based on the weighted averages of the

elections of similarly situated persons. In other words, if,

among 10 FRS memb ers, 6 chose Option 3 and 4 chose Option 1, and

Option 3 paid $2000 per month and Option 1 paid $3000 per month,

Petitioner could be deemed to be entitled to a monthly benefit

of $1200, rather than the full $2000 due under Option 3. (The

calculation is $1 2,000 (6 x $2000) plus $0 (4 x $0) equals

$12,000, which, divided by 10, yields a monthly benefit of

$1200. Such calculations would likely constitute

nonquantifiable damages, which cannot be awarded

administratively. See Laborers' Internat'l Union v. Bur roughs ,

541 So. 2d 1160, 1162 (Fla. 1989) (citing Broward Cnty. v.

LaRosa , 505 So. 2d 422 (Fla. 1987)).

COPIES FURNISHED:

Thomas E. Wright, Esquire

Office of the General Counsel

Department of Management Services

4050 Esplanade Way , Suite 160

Tallahassee, Florida 32399

(eServed)

Anthony V. Falzon, Esquire

Anthony V. Falzon , P.A.

12000 Biscayne Boulevard , Suite 702

Miami, Florida 33181

(eServed)

Elizabeth Stevens, Director

Division of Retirement

Department of Management Services

Post Offic e Box 9000

Tallahassee, Florida 32315 - 9000

(eServed)

J. Andrew Atkinson, General Counsel

Office of the General Counsel

Department of Management Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399 - 0950

(eServed)

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.