19-006581 Lee Hayes Byron vs. Department Of Management Services, Division Of Retirement Status: Closed Recommended Order on Friday, June 26, 2020.

Summary: Pet. proved estoppel and should be allowed to rescind her 2nd election to switch FRS Plans. Division advised and allowed her to believe she must buy into Pension Plan before she could participate in SUSORP, but such requirement was contrary to statute.

her to remain in the Florida Retirement System (FRS) Pension Plan; and, if

so, what are Petitioner ' s options?

Because of the complicated nature of FRS an d Petitioner ' s unique

circumstances, the issues and parties ' positions are summarized herein.

After being hired by the University of Florida, Petitioner had three

retirement plan options: (1) State University System Optional Retirement

Program (SUSORP), ( 2) FRS Investment Plan (Investment Plan), or (3) FRS

Pensio n Plan (Pension Plan). Petitioner had been an FRS member in a

previous job and switched from the Investment Plan to the Pension Plan

solely because she was told she could only participate in SUSORP if she first

bec a me a Pension Plan member. The Division now admits there is no

authority for this requirement , but argues it is not responsible for Petitioner ' s

decision to switch from the Investment Plan to the Pension Plan. Rather, it

blames another sta te agency and non - government agents for her belief that

she could not participate in SUSORP unless she first bought into the Pension

Plan .

Ultimately, the issues in this proceeding are : (1) whether Petitioner was

required to switch from the Investment Pl an to the Pension Plan to

participate in SUSORP; (2) whether the Division is responsible for Petitioner ' s belief that this was a requirement; and (3) if so, whether

Petitioner ' s funds used to buy into the Pension Plan can be returned to the

Investment Plan or transferred to her SUSORP account.

P ROCEDURAL H ISTORY

On May 30, 2018, Petitioner, Lee Hayes Byron, elected to switch her FRS

plan from the Investment Plan to the Pension Plan. On November 1, 2019,

Respondent, Department of Management Services, Di vision of Retirement

(the Division) , issued a letter to Petitioner denying her request to essentially

rescind this election and/or have her " cost associated with buying into the

FRS Pension Plan from the FRS Investment Plan transferred to SUSORP. "

On Nov ember 25, 2019, Ms. Byron submitted a request for an

administrative hearing to the Division. Respondent forwarded Petitioner ' s

request to DOAH on December 11, 2019. The matter was originally scheduled

for hearing for February 5, 2020, but was continued thr ee times: once at the

Division ' s request and twice due to the state of emergency related to the

COVID - 19 health crisis.

A final hearing was held on April 29, 2020, by Zoom. Petitioner testified

on her own behalf and Petitioner ' s Exhibits P1 through P7 we re admitted

into evidence without objection.

1 The Division offered the testimony of Joyce

Morgan (Division Bureau Chief of Contributions), and Respondent ' s Exhibits

R1 through R8 were admitted into evidence without objection.

The final hearing was recorde d by a court reporter, but neither party

ordered a transcript. Petitioner requested 30 days to submit her proposed

recommended order, and the Division had no objections to Petitioner ' s

request. By requesting and agreeing to the extension of time, the parti es

waived the requirements in section 120.57(3)(e), Florida Statutes (2019) , for

the rendering of a recommended order within 30 days of the hearing . See Fla.

Admin. Code. R. 28 - 106.216(2). 2

1 Exhibit P7 is a disk with numerous audio files of telephone conversations between

Petitioner and Division employees, other State employees, rep resentatives, and agents .

2 All references to statutes and admi nistrative rules are to the 2019 versions of the Florida

Statutes and Florida Administrative Code unless otherwise noted.

Accordingly, the proposed recommended orders were due no late r than

May 29, 2020. Both parties submitted timely Proposed Recommended Orders

(PRO s ) , which have been considered in the preparation of this Recommended

Order.

F INDINGS OF F ACTS

P ARTIES AND P ROGRAMS

1. Petitioner, Lee Hayes Byron, is currently employed b y the University of

Florida and eligible to participate in the Investment Plan, Pension Plan, or

SUSORP. She is in an optional (not a mandatory) SUSORP position.

2. Respondent, the Division, is a part of the Department of Manage ment

Services (DMS). The D ivision, as part of DMS , is the state entity responsible

for oversight and administration of the Pension Plan and SUSORP . See §§

121.125 and 121.035 , Fla. Stat. T he Division authorizes provider companies

to assist SUS ORP members with investments. See § 121 .035, Fla. Stat.; Fla.

Adm in . Code R. 60U - 1.011(4).

3. The State Board of Administration of Florida (SBA) is the state agency

responsible for oversight and administration of the Investment Plan. 3 SBA is

not a party to this proceeding . I n coordination with DMS , SBA is responsible

for dissemination of informat ion regarding the FRS plans . See § 121. 4 5 0 1 (10),

Fla. Stat.

4. SUSORP is a defined contribution plan authorized by secti on 121.35 ,

Florida Statutes . The plan is an optional retirement plan in which

3 There was evidence that prior to attempting to undo her election wi th the Division,

Petitioner requested an agency hearing with SBA , w hich was held on May 21, 2019. The SBA

Hearing Officer recommended that SBA grant Petitioner relief by allowing her to rescind the

2nd election. On September 17, 2019, SBA issued a Final Or der rejecting the SBA Hea ring

Officer’s recommendation. Petitioner has appealed the SBA ’ s Final Order, which is now

pending at the Second District Court of Appeal in the matter of Lee Hayes Byron v. State

Board of Administration , Case No. 2D19 - 3930.

" e ligible empl oyees " of the State University S ystem can elect to participate in

lieu of the Pension Plan or Investment Plan. One of the benefits SUSORP

of fers over the FRS p lans is the employer contribution rate is greater.

5. SUSORP and the Investment Plan require an employee to contribute a

m inimum pretax contribution and allow additional funds to be contributed.

Both the Investment Plan and SUSORP allow the employee to allocate the

money in the plan accoun t among approved investment funds. 4

6. The ultimat e benefit from the Investment Plan and SUSORP received

by the employee upon retirement depends on both the amount contributed

and the financial markets. The employee is responsible for managing his or

her SUSORP or Investmen t Plan account through approved providers.

7. In comparison , the Pension P lan requires a fixed pretax contribution by

an employee. The Pension Plan is responsible for investing the contributions and accumulated funds in the member ' s p ension account. Upon retirement,

the employee receives a lifetime monthly ben efit using a formula based on his

or her length of service and salary. The employee has no control over how the

money in the p ension account is invested but is guaranteed a fixed ,

predictable benefit.

P ETITIONER ' S FRS H ISTORY

8. Ms . Byron originally enrolled in FRS as an employee of Sarasota

County on July 11, 2005. At that time she had the option to participate in

either the Investment Plan or Pension Plan.

9. On December 28, 2005, Ms. Byron made a timely election to participate

i n the FRS Investment Plan, effective January 1, 2006. As part of the FRS

system, she had one more chance to switch to the Pension Plan. The

subsequent decision to change FRS plans is referred to as the " 2nd Election. "

10. On April 20, 2018, Petitioner bega n employment with the Un iversity

of Florida in a SUSORP - eligible position. At this point, as explained in the

4 SBA recommends acceptable SUSORP investment products to the DMS; the DMS has final

approval of such products. See § 121.035(6)(c), Fla. Stat.

Conclusions of Law, Petitioner would begin participation in SUSORP unless

she opted to remain in the FRS System (in either the Investment Plan or

Pension Plan) or failed to enroll in a SUSORP - approved investment fund. See

§ 121.35 (3) , Fla. Stat.

I NFORMATION AND C OMMUNICATIONS

11. A handout distributed by the Division titled, " Florida Retirement

System (FRS) Investment Plan ¤ Members With a Remaining FRS Election

Inquiring About State University System Optional Retirement Program

(SUSORP) Membership " (SUSORP Handout) provides information for an

Investment Plan member who wants to participate in SUSORP . The

SUSORP handout states in relevant part:

You w ill need to use your 2nd (and last)

election to transfer from the Investment Plan

to the Pension Plan before you will be eligible to elect participation in the SUSORP .

* * *

There is a cost associated with using your 2nd

election to transfer to t he Pension Plan.

* * *

The estimated transfer cost is calculated using your salary, service credit, membership class, and other actuarial assumptions used in the annual FRS

actuarial valuation. The payment for the amount of

the transfer cost is r equired to complete the

transfer to establish your Pension Plan membership. The amount of money liquidated

from your Investment Plan account to pay for

your transfer cost will not transfer to the

SUSORP.

If the value of your Investment Plan account is les s

than the transfer cost, you may use personal resources including a direct transfer from a

qualified plan … to make up the difference.

Any personal resources paid will not transfer

to the SUSORP.

* * *

Your membership in SUSORP will not begin

until you have completed the transfer process and will be entirely funded by future (after the

transfer) employer and employee contributions

submitted on your behalf.

* * *

Your SUSORP account will begin with a zero balance and will be funded by future employer and employee contributions.

1 2 . The Division ' s witness, Ms. Morgan, confirmed the SUSORP Handout

is a Division document. Ms. Morgan further stated that although this version

of the SUSORP Handout was not provided to Petitioner, it was the Division ' s

position at the time she was eligible for participation in SUSORP .

1 3 . Ms. Morgan also conceded that there is no statutory authority for the

requirement that an employee would need to use his or her 2nd Election to

transfer from the Investment Plan to the Pension Plan before becoming

eligible to elect participation in SUSORP . As explained in the Conclusions of

Law, this is an unpromulgated requirement that has no statutory authority,

and therefore cannot be applied to determine Petitioner ' s sub stantial

interests.

14 . T he Division approves provider companies to provide information and

investment products to SUSORP members. See Fla. Adm in . Code R. 60U -

1.012 (1) (a) . AXA Advisors (AXA) is one of the provider companies listed on

the SUSORP Enrollme nt Form. See Form ORP - ENROLL - 1, available at

https://www.flrules.org/Gateway/reference.asp?No=Ref - 06117 .

15. On April 24, 2018, Petitioner received an email from Patrick Ashe

wi th AXA . Mr. Ashe described AXA as a resource to help Petitioner select the

best retirement plan: Pension, Investment, or SUSORP. Mr. Ashe eventually

spoke to Ms. Byron on the phone and sent her FRS information. He also

provided her with contact information for the Division and an FRS general

phone number.

16 . On May 3, 2018, Mr. Ashe provided Petitioner with a document titled,

" Welcome to the Florida Retirement System for State University System

SUSORP - Eligible Employees " (C omparison Brochure), dated Januar y 2018.

T he Division alleges the Comparison Brochure is published by SBA , not the

Division . Although SBA is responsible for providing educational information

about retirement options to eligible employees, it must do so in coordination

with DMS. See § 121. 4501(1 0 )(a) and (10)(c)7. , Fla. Stat. Regardless of who

published the Comparison Brochure, it is clear that it is an official d ocument

used to advise SUSORP members, and AXA was authorized to advise Ms.

Byron regarding her FRS retirement options and SUSORP .

1 7 . The Comparison Brochure explains the differences between SUSORP ,

the Investment Plan, and the Pension Plan. The Comparison Brochure also

provides deadlines for the elect ion to participate in each plan. According to

the Comparison Brochure, from the d ate of hire, a SUSORP - eligible employee

has 90 days to choose to participate in SUSORP . If he or she does not elect to

participate in SUSORP , the employee has until 4:00 p.m. (E.S.T.) on the last

business day of the eighth month after the month of hire to choose between

the Investment Plan and the Pension Plan. If the employee does not make an

election, FRS automatically enrolls the employee in the Investment Plan. As

explained in the Conclusions of Law, this is contrary to the SUSORP statute.

1 8 . Regarding changes made after an initial election, the Comparison

Brochure provides:

SUSORP Plan Investment Plan Pension Plan

Can I change No. If you elect You have a one - time 2nd Election that

plans after I the SUSORP, you you can use during your FRS career to change to the other FRS retirement plan, provided you are actively

make my initial will remain in this plan for as long as employed by an FRS - participating

election? you remain at this employer at the time your 2nd El ection

employer in a SUSORP - eligible is received.

4 (Footnote in original , see

position. ¶20 below ).

19 . The Comparison Brochure explains that once an employee chooses to

participate in SUSORP , the employee cannot change to a different plan, and

will remain in SUSORP as long as the employee is in a SUSORP eligible

position. Once an employee elects to participate in the Investment Plan or the Pension Plan, he or she has only one opportunity (the 2nd Election) during

his or her entire FRS career to change between the Investment and Pension

Plans.

20 . Regarding chang ing to SUSORP from the Investment Plan or Pension

P lan, footnote 4 in the Comparison Brochure explains:

If you are enrolled in the Investment Plan and

move to a SUSORP - eligible position, you must use

your 2nd Election (if available) to buy back into the

Pension Plan in order to enroll in the SUSORP.

You are not permitted to make a direct transfer

from the Investment Plan to the SUSORP (unless in a mandatory SUSPORP position).

Again, during the hearing, Ms. Morgan admitted there was no statutory

authority for the requirement that Petitioner use her 2nd Election to buy

into the Pension Plan before she could enroll in SUSORP .

21 . On May 4, 2018, Mr. Ashe sent Ms. Byron a follow - up email that

explained the procedure to switch from the Inves tment Plan to the Pension

Plan so she could enroll in SUSORP:

It sounds like you are currently in the Investment Plan so if you decide to stay in that plan just verify

with [FRS] that you want to make sure you

automatically are re - enrolled in that plan. I f you

elect to switch to either the Pension or the SUSORP

plan then we would just fill out the 1 page 2nd

election form and fax that to FRS to utilize the

switch. That would put you in the Pension Plan. From there if you would like to enroll in the

SUSORP plan then I will get those forms to you and

we will get that set up . … The main factor on

whether the switch would be in your best interest

would be based on the differential between the

Pension and Investment Plans at your current

number of years in the FRS system.

* * *

In the Investment Plan the university is contributing 3.3% to match your mandatory 3% contribution and in the SUSORP plan they would contribute 5.14% in addition to your 3%

contribution. The differential involved in switching

t o the Pension Plan so that you could then enroll in

the SUSORP plan would be the major factor in

whether picking up the extra employer contribution would be beneficial in the long run . (emphasis

added).

2 2 . Mr. Ashe ' s email erroneously indicate d Ms. Byron must use her 2nd

Election to go into the Pension Plan before she c ould enroll in SUSORP . He

also acknowledge d she should weigh whether the cos t to buy into the Pension

Plan wa s worth the extra contributions available if she ultimately decided to

go into S USORP . In this email, Mr. Ashe reiterate d he had the authority to

provide the SUSORP paperwork and " get that set up. "

2 3 . Ms. Byron testified she believed Mr. Ashe was authorized by the

Division to advise and enroll her into SUSORP. Although the Division a rgues

other p eople who spoke with Ms. Byron wer e not Division employees , it does

make this same assert ion regarding Mr. Ashe . See Resp. PRO, ¶¶ 44 - 47

(claiming Ernst and Young ' s employee was an SBA agent , not a Division

agent). Given that AXA was a a pprove d by the Division as a provider

company , the undersigned finds that AXA and Mr. Ashe were authorized by

the Division to provide Ms. Byron with information abo ut SUSORP and

administer her SUSORP account . See § 121.35(6), Fla. Stat.

2 4 . On May 29, 2018, Ms. Byron called the FRS Financial Guidance Line

and was put in contact with " Mike with Ernst & Young. " During the call,

Ms. Byron explain ed to Mike that she was in the Investment Plan, but

want ed to " move to th e SUSORP. " Specifically, she call ed because she

u nderstood she would " have to maybe pay a fee to get into the pension plan

and then move to the SUSORP. " She had been told that she should call the

FRS Financial Guidance Line to figur e out what that fee might be. Mike

confirmed Petitioner would need to be a member of the Pension Plan before

getting into SUSORP . Again, this information is not accurate and contrary to

the SUSORP statute and Division rules . He also state d there is a 90 - day

window for her to move to SUSORP . During the call , Mike could not give

Petitioner a quote for the buy in cost of switching from the Investment Plan

to the Pension Plan and indicate d it could take up to six weeks to get that

information. He also informed her i t could take a full month to process the

paperwork and payment amou nt to become a Pension Plan member. He

urge d her to submit the 2nd Election form to switch from the Investment

Plan to the Pension Plan before the end of the month (May 31, 2018), and

then not to pay the cost if she concluded it is was too much or did not want to

go forward with the switch.

Ms. Byron : Okay. So, what is the risk of

submitting the [ 2nd Election] form? I know I only

get one chance to make the change. If I submit the

form and change my mind, does that count as my

chance?

Mr. Mike : I mean, you have the full month

following to rescind.

* * *

Ms. Byron : And if I don ' t submit the form, then

nothing happens. If I do submit the form, and I

don ' t want to pay it, I have to not pay it and

nothing happens … [i]f it automatically happens

and I still don ' t want to do it, I have a month.

Mr. Mike : Yeah.

25. Based on the information she received from Mr. Ashe and her

conversation with Mike, Ms. Byron understood she had 90 days, or until

July 19, 2018, to buy into the Pension Plan and then elect to participate in

SUSORP . Because she had been led to believe only Pension Plan participants

could elect to participate in SUSORP, she reasonably concluded she would

need to use her 2nd Election to change from the Investment Plan to the

Pension Plan befor e she could participate in SUSORP.

26. On May 31, 2018, Ms. Byron submitted a " 2nd Election Retirement

Plan Enrollment Form " ( 2nd Election form) by facsimile to the number

designated on that form. Ms. Byron selected the following option:

Option 1: Chang e from the FRS Investment

Plan or Hybrid Option to the FRS Pension

Plan. I want to transfer from the Investment Plan

to the Pension Plan and use my existing

Investment Plan account balance and possibly

other personal resources to ' buy ' into the Pension

Pla n.

The 2nd Election form does not make any reference to SUSORP .

27. On May 31, 2018, Petitioner called the FRS Financial Guidance Line

to confirm that the 2nd Election form was received by FR S. During this call,

Ms. Byron wa s transferred to Misty, who ide ntifie d herself as an Investment

Plan administrator. Ms. Byron indicate d she wants to make sure the 2nd

Election form had been received, but Misty could not confirm this . Misty

explains it may take a few hours to show up " in her system. " Ms. Byron wa s

conc erned she may not be talking to the right person.

Ms. Byron : Okay. Now, am I – are you sure I ' m

with the right person? Because I ' m switching from

investment to the pension with the intention of

eventually switching to SUSORP.

Ms. Misty : You ' re switching f rom investment plan

to pension with the intent ion of switching to the

[sic] something entirely outside of the pension?

Ms. Byron : To SUSORP.

Ms. Misty : Okay. I don ' t know what that is, I

apologize. Let ' s go ahead and get you over to

pension just to be su re since they are a separate

department.

* * *

Ms. Byron: Who ' s in charge of switching from the

investment to the pension?

Ms. Misty: We [ SBA and the Division] would both

be involved in it. ( emphasis added).

She then instruct ed Ms. Byron to pre ss Option 4 for th e Pension department

when she returned back to the automated system.

28. From this conversation and the o ther conversations Ms. Byron had

with people on the FRS Financial Guidance Line, the undersigned finds both

the Division (as the age ncy administering the Pension Plan) and SBA (as the

agency administering the Investment Plan) were responsible for processing

Ms. Byron ' s 2nd Election form.

29. On June 4, 2018, FRS sent Ms. Byron a " Confirmation of 2nd Election

– Pension Plan " (Confirmat ion). It indicate d that her election to move from

the Investment Plan to the Pension Plan was effective as of June 1, 2018, but that it was not finalized. The Confirmation informed Petitioner " you will need

to buy into the FRS Pension Plan using the availa ble balance in your FRS

Investment Plan account. If your account is not sufficient to cover the cost of

the buy in, you will need to submit personal funds. "

3 0. Although the Confirmation did not state whether it wa s sent from

SBA or the Division, the secon d page indicate d :

If you feel this retirement Plan election was made

in error, you may be able to cancel it. Please call

the MyFRS Financial Guidance Line at 1 - 866 - 446 -

937, Option 2. Failure to notify us no later than

4:00 PM EST on the last business day of the month

following your election month will void your right

to cancel this election.

The Confirmation directed members to contact the Division (not SBA ) at the

same number, O ption 3, for specific questions.

31. Based on the date of the submittal of her 2nd Election form ( May 31,

2018 ), Ms. Byron had until June 29, 2018, to rescind her 2nd Election form,

and thereby reverse her decision to go from the Investment Plan to the

Pension Plan.

32. At this point, however, even though she had executed the 2nd Election

form, Petitioner ' s election transfer from the Investment Plan to the Pension

Plan wa s not final because she ha d not submitted the buy i n payment. The

Confirmation did not address what would happen if the buy in amount wa s

not submitted, or if it wa s, what would happen if an employee canceled the

2nd Election and did not remain in the Pen sion Plan. The Confirmation did

not make any reference to SUSORP .

33. On June 18, 2018, Ms. Byron spoke with Leah at the Division. In this

call, Ms. Byron explaine d she received the Confirmation, but she ha d not

received a bill fo r the buy in amount. Leah replied that a letter with the

amount was generated on June 14, 2018, but has not been mailed out.

Ms. Byron was concerned about the last day she has to rescind th e election.

Ms. Byron: So what is my deadline for canceling?

I ' m just panicking about if it ' s – if it ' s not what I

want to do because I don ' t have the bill yet, when

can I cancel the second election?

Ms. Leah: Typically they give you a 60 - day period.

Let me double check. One moment. Okay. So you ' ll

have until no later than the last business day of the month following the election.

34. During the call, Ms. Byron presse d Leah on the letter with the buy in

figure, and questioned her as to why the Confirmati on was sent if the electio n

was not final. Leah determined the letter was issued by the Investment Plan

( SBA ), not by the Pension Plan (the Division), and transferred Ms. Byron to

Rick with the Investment Plan.

35. It is apparent from the audio recording that Ms. Byron wa s

exaspe rated (justifiably), but remained patient. Once transferred to Rick ,

Ms. Byron was informed that any questions regarding the buy in had to go

through the Pension Plan . Rick offer ed to transfer her back to the " pension

department. "

36. On June 21, 2018, before the deadline to rescind her 2nd Election,

Mr. Ashe sent Ms. Byron two documents: (1) a SUSORP enrollment form , and

(2) a risk tolerance questionnaire to identify Ms. Byron ' s investment s trategy

for SUSORP . There wa s no discuss ion of the buy in payment to transfer into

the Pension Plan.

37. On July 3, 2018, Ms. Byron call ed the FRS Financial Guidance Line

and wa s transferred to Durriya with Ern st & Young. Duri ng this call,

Ms. Byron explained she received an invoice for the buy in amount to switch

to the Pension Plan and need ed a " letter of acceptance " for the financial firm

handling her Investment Plan to r elease the funds. Durriya said could not

help her and offer ed to transfer Ms. Byron to someone else.

38. Durriya transfer r ed Ms. Byron to Phyllis at the Division who was able

to help her. Phyllis state d she would request for the letter and it would be

mailed to Ms. Byron as soon as possible.

Ms. Byron expressed concern that the letter might not get to her by July 19,

20 18 , th e date she need ed to elect to participate in SUSORP .

Ms. Byron : So help me with the deadline. I was

hired April 2 0th . I have made my intention known

to go into the SUSORP , but I can ' t physically do

that with the money until all of this happens. And

I ' m w orried it won ' t happen by July 2 0th , July

19th, which is my deadline for selection. Am I going

to be okay?

Ms. Phyllis : Let ' s see. Okay. So you have until

August 16th for us [the Division], but you need it

by July 1 9th ?

Ms. Byron : That ' s when my selectio n of the –

which plan I want to be in has to be in. And I

submitted my , I want to be in SUSORP [ ] , but I

can ' t physically be in … SUSORP until all the

money ' s there [ Pension P lan]. Does that matter?

* * *

Ms. Phyllis : Okay. So, basically you are switching

from investment to pension and then to SUSORP, right?

Ms. Byron : Yeah. (emphasis added).

39. Phyllis did not advise Petitioner she could start participation in

SUSORP without first switch ing from the Inve stment Plan to the Pension

Plan or buyi ng into the Pension Plan . At this point , Petitioner ' s 2nd Election

was not finalized because she ha d not submitted the buy in funds. Had she

been informed that she did not have to be in the Pension Plan first , Petitioner

could have simply not submitted the buy in funds , kept her existing funds in

the Investment Plan, and started in SUSORP .

40. Rather, P hyllis advised she would place a notation in the system that

Ms. Byron wa s attempting to make an election to participate in SUSORP,

and " asked them to rush i t. " Ms. Byron then ask ed Phyllis about the deadline

for her to get into SUSORP . Phyll is could not help her, but offered to transfer

her to the Optional Retirement Program department. W hat is clear from the

call is that Ms. Byron is very concerned about get ting the buy in funds to the

Division to participate in the Pension Plan because she believe d she had to be

a Pension Plan member before the SUSORP election deadline.

41. On August 3, 2018 (after both the deadline to rescind her 2nd Election

form and the deadli ne to enroll in SUSORP had passed), Ms. Byron contacted

the D ivision and spoke to Leah. At the outset of the call, Ms. Byron inform ed

Leah that call ed to see if her 2nd Election status wa s final because she had

submitted the funds to buy into the Pe nsion Plan. Although it is unclear from

the record how much Petitioner paid to buy into the Pension Plan, she used

her entire savings from her Investment Plan plus additional monies. The

Investment Plan was valued at approximately $138,000.

42. Leah confir med the switch from the Investm ent Plan to the Pension

Plan had gone through, and advised Ms. Byron that she had 13 years of

service under the Pension Plan. Ms. Byron wa s audibly upset and state d ,

" Well, I actually didn ' t want to end up in the pension, I w anted to end up in

the SUSORP, so how do I make sure that that choice is recorded? We had to

do the pension first and transfer it to SUSORP. " From the audio recording , it

is clear Leah was confused.

43. Leah then placed Ms. Byron on hold and ha d a separate call with

another Division employee, Phyllis. Leah relay ed the conversation with

Ms. Byron to P hyllis and Phyllis suggest ed Leah call another extension. Leah

then check ed back in with Ms. Byron to let her know she wa s still looking for

someone who can hel p her. Ms. Byron agree d to stay on hold.

44. On a separ ate line (which Ms. Byron could not hear), Leah receive d an

automated r ecording announcing that she had reached the " Florida Division

of Retirement Optional Progr am O - R - P unit. " Leah then spoke with Ji m at

the Division. Leah explained to Jim that Ms. Byron did not want to remain in

the Pension Plan, but rather want ed to transfer to SUSORP. Leah remain ed

confused.

[ Mr. Jim] : You don ' t transfer to SUSORP. You ' re

either in it or you ' re not in it. There is no way to

buy into it … there ' s no way to get from investment

by going through pension to get to SUSORP. You

take a job that ' s eligible for SUSORP and you make

the choice to be in it or not.

* * *

Ms. Leah : Well, she had questions about the form s

that she would need to submit, but doesn ' t look like

she ' s going to be –

Mr. Jim : Just put up the wall. She ' s not going to be

able to do it.

45. What Jim told Leah is consistent with the SUSORP statute: it does

not matter whether one is in the Investme nt Plan or Pension Plan; one is in

SUSORP when he or she is eligible. Jim seemed to be telling Leah that what

Ms. Byron wanted (to have her retirement funds in SUSORP) was not

possible , but that Leah should not do anything about it. Jim agreed to speak

wit h Ms. Bryon but joke d with Leah that it was Friday, and he had one hour

left on his sh ift. He also sarcastically told Leah she may want to stay on the

line as it might be " entertaining or e ducational. " Again, Ms. Byron did not

hear this conversation betwee n Leah and Jim .

46. Leah then patched Ms. Bryon through to Jim . At this point,

Ms. Byron, Jim , and Leah we re all on the call.

Ms. Byron: I submitted my second election form to

go from investment to pension with the intention of

going into SUSORP and I nee d to check if you have

all my forms necessary to make that happen.

Jim : So, you ' ve just taken a job with one of the

universities?

Ms. Byron : Yes.

Mr. Jim : Okay. It looks like everything ' s in place.

47. Jim inform ed Ms. Byron a letter of acceptance to SU SORP was mailed

to her o n July 5, 2018, and that she could call back to make sure everything

ha d been p rocessed in a few days. He did not tell Ms. Byron what he had

explained to Leah: " You don ' t transfer to SUSORP. You ' re either in it or

you ' re not in it. "

48. After Ms. Byron end ed the call, Jim and Leah continue d to discuss

Ms. Byron ' s situation.

Mr. Jim : Great. Understand now, Ms. Byron just

spent a whole bunch of money. That money ' s gone

except that it purchased her some years of pension

service.

Ms. Leah : Right.

Mr. Jim : Okay. Her new SUSORP account starts

at zero. Oh, did I hear a great intake of breath?

Ms . Leah : Are you serious?

Mr. Jim : Absolutely serious.

49. At no point during th e conversation between Ms. Byron and Leah or

Jim was Ms. Byro n informed she did not have to use her 2nd Election and

buy into the Pension Plan before she could participate in SUSORP. In fact, at

no time during these numerous emails and telephone conversations did

anyone affiliated w ith DMS , the Division, AXA, Ernst & Young, or SBA tell

Ms. Byron that she wa s e ssentially e nrolled in SUSORP (unless she choos e to

go with an FRS plan or fail ed to pick a provider) when she started the

position at the University of Florida . No one told her that she d id not need to

exercise her 2nd Election or buy into the Pension Plan to participate in

SUSORP .

C ONCLUSIONS OF L AW

50. The Division of Administrative Hearings has jurisdiction over the

subject matter of, and the parties to, this proceeding . See §§ 120.569 and

120.57(1), Fl a . Stat.

51. The Division is part of DMS and is responsible for the administration

of both the Pension Plan and SUSORP . § 121.025, Fla. Stat. (noting DMS

" shall be the administrator of the retirement and pension systems assigned

or transferred to [it] by law. " ).

E LECTION TO P ARTICIPATE IN SUSORP

52. Section 121.35, Optional retirement program for the State

University System , provides, in pertinent part, as follows:

(2) ELIGIBILITY FOR PARTICIPATION IN

OPTIONAL PROGRAM. —

(a) Participation in the optional retirement

program provided by this section shall be limited to

persons who are otherwise eligible for membership

or renewed membership in the Florida Retirement Sys tem and who are employed in one of the

following State University System positions:

1. Positions classified as instructional and

research faculty which are exempt from the career

service under the provisions of s. 110.205(2)(d).

* * *

(3) ELECTI ON OF OPTIONAL PROGRAM. —

* * *

(c) Any employee who becomes eligible to

participate in the optional retirement program on or after January 1, 1993, shall be a compulsory participant of the program unless such employee

elects membership in the Flo rida Retirement

System. Such election shall be made in writing and filed with the personnel officer of the employer. Any

eligible employee who fails to make such election

within the prescribed time period shall be deemed

to have elected to participate in t he optional

retirement program.

* * *

2. Any employee whose optional retirement

program eligibility results from a change in status

due to the subsequent designation of the employee ' s

position as one of those specified in paragraph

(2)(a) or due to the employee ' s appointment,

promotion, transfer, or reclassification to a position specified in paragraph (2)(a) shall be enrolled in the

optional retirement program upon such change in status and shall be notified by the employer of such

action. If, wi thin 90 days after the date of such

notification, the employee elects to retain

membership in the Florida Retirement System , such

continuation of membership shall be retroactive to

the date of the change in status.

3. Notwithstanding the provisions of this

paragraph, effective July 1, 1997, any employee who is eligible to participate in the Optional Retirement

Program and who fails to execute a contract with

one of the approved companies and to notify the department in writing as provided in subsection (4)

within 90 days after the date of eligibility shall be deemed to have elected membership in the Florida Retirement System , except as provided in

s. 121.051(1)(a). (emphasis added).

53. The statut ory language clearly indicates an FRS member that becomes

eligible for a SUSORP position automatically is enrolled in SUSORP unless

he or she (1) chooses to remain in the FRS system or (2) fails to contract with

one of the approved companies (such as AXA) within 90 days.

5 Aga in, as the

5 This is consist ent with section 121.4501(4)(a) 2., which provides:

Division admitted, there is no Division requirement that an existing

Investment Plan member buy into and elect to switch to the Pension Plan

prior to participating in SUSORP . This is consistent with the information

Jim provided to Leah on August 3, 2018, but contrary to what was stated by

the AXA representative , contrary to the Comparison Brochure, and contrary to the position taken by the Division in the SUSORP Handout.

54. In fact, nothing in section 121.35, or elsewhere in c hapter 121,

requi res an Investment Plan participant to utilize his or her 2nd

Election to

transfer to the Pension Plan before joining SUSORP . The Division concedes

as much noting that " Section 121.4501(4), Fla. Stat. governs transfers

between the Investment Plan and Pensio n Plan. It does not appear to have

any provision that requires a transfer from the IP to the Pension Plan for a

member who becomes eligible to participate in the SUSORP. " R esp. PRO , ¶¶

45 and 46. The Division (which administers SUSORP ) does not cite to any

authority, nor could the undersigned find any statute or rule, requiring that SUSORP participants first be Pension Plan members. Although the Division denies responsibility for the misrepresentation, t he Division acknowledges

that informing Petitioner she had to buy in to the Pension Plan before

participating in SUSORP was a misrepresentation that has no statu tory

basis. Resp. PRO , ¶ ¶ 44 - 47.

55. Not only was the requirement that Ms. Byron use her 2nd Election to

pa rticipate in SUSORP without statutory bas is, but it is actually contrary to

the language in section 121.035. The Administrative Procedure Act prohibits

the Division (which is respon sible for the administration of SUSORP and the

Pension Plan) and the undersigned from imposing an unwritten rule or a rule that is an invalid exercise of delegated legislative authority:

With respect to employees who become eligible t o participate

in the investment plan pursuant to [ ] s. 121.35(3)(i), the

employee may elect to participate in the investment plan in lieu of retaining his or her membership in the [SUSORP]. The

election must be made in writing or by electronic means and

m ust be filed with the third - party administrator.

An agency or an administrative law judge may not

base agency action that determines the substantial interests of a party on an unadopted rule or a rule

that is an invalid exercise of de legated legislative

authority. This subparagraph does not preclude

application of valid adopted rules and applicable provisions of law to the facts.

§ 120.57(1) (e) 1., Fla. Stat.; also s ee generally, One Beacon Ins. v. Ag. for

Health Care Admin ., 958 So. 2 d 1 127 (Fla. 1st DCA 2007)(noting w here there

is a conflict between a statute and an administrative rule, the statute takes

precedence). Therefore, based on this record, there was no justi fication for

conditioning Ms. B y r on ' s participation in SUSORP on fir st buying into the

Pension Plan.

E STOPPEL

56. Petitioner argues the Division should be estopped from denying the

rescission of her 2nd Election based on the misrepresentation to her that she

was required to buy into the Pension Plan before becoming a SUSO RP

participant. The Division argues it is not responsible for this

misrepresentation .

57 . " As a general rule, equitable estoppel will be applied against the state

only in rare instances and under exceptional circumstances. " Dep ' t of Rev. v.

Anderson , 40 3 S o. 2d 397, 400 (Fla. 1981). Detrimental reliance or estoppel

based on government communication requires:

(a) a representation as to a material fact that is

contrary to a later - asserted position;

(b) reliance on that representation; and,

(c) a change in position detrimental to the party claiming estoppel, caused by the representation

and reliance thereon.

Council Bros., Inc. v. City of Tallahassee , 634 So. 2d 264, 266 (Fla. 1st DCA

1994). Equitable estoppel must include some positive act upon which

M s. Byron had a right to rely and did rely to her detriment. See Hoffman v.

State, Dep ' t of Mgmt. Servs., Div. of Ret. , 964 So. 2d 163, 166 (Fla. 1st DCA

2007); Wise v. Dep ' t of Mgmt. Servs., Div. of Ret. , 930 So. 2d 867, 873 (Fla. 2d

DCA 2006).

58. Ms. B yron must prove the elements of estoppel by clear and convincing

evidence. Hoffman, 964 So. 2d at 166. " Clear and convincing " evidence

requires the following:

[T]hat the evidence must be found to be credible;

the facts to which the witnesses testify must b e

distinctly remembered; the testimony must be

precise and lacking in confusion as to the facts in

issue. The evidence must be of such a weight that it

produces in the mind of the trier of fact a firm

belief or conviction, without hesitancy, as to the trut h of the allegations sought to be established.

In re Davey , 645 So. 2d 398, 404 (Fla. 1994) ( quoting Slomowitz v. Walker ,

429 So. 2d 797, 800 (Fla. 4th DCA 1983)).

59. The representation can be based on an agency ' s mistake. See Council

Bros. , 634 So. 2d at 267; and Salz v. Dept. of Adm., Div. of Ret. , 432 So. 2d

1376 (Fla. 3d DCA 1983). In Salz , a teacher was informed in writing by the

Teachers Retirement System (TRS) that she could purchase eight years of

credit for her out - of - state teaching time to appl y toward her Florida

retirement. The teacher made plans for her retirement based upon that

representation. Subsequently, the Division advised that the representation

had been made in error . The appellate court rejected the same argument

made in this case : the official who initially gave the mis representation was

not authorized to do so. The court held th at the Division , which was

authorized by statute to administer the TRS, was estopped from denying the

teacher the credit.

6

6 The Division did not argue in the hearing and does not argue in its PRO that estoppel

should not apply because the misinformation provided to Petitioner was a mistake of law , not

fact . Even if it had, th is defense would be inapplicable. In Kuge v. Div ision of Re tirement ,

60. The Division argues Ernst & Y oung, not the Division, misinformed

Ms. Byron that she was required to be a Pension Plan member before she

could elect to be in SUSORP. Resp. PRO , ¶ ¶ 44 - 45. Ms. Byron, however, was

first told of this requirement by Mr. Ashe (AXA) , an approved SUSORP

provid er . That misrepresentation , however, was reinforced by the

Comparison Brochure , which was printed by SBA in coordination with DMS .

Section 121.4501 specifically provides as follows:

(10) EDUCATION COMPONENT. —

(a) The state board, in coordination with the

department , shall provide for an education

component for eligible employees in a manner

consistent with this subsection.

(b) The education component must provide system

members with impartial and balanced information about plan choices. The education com ponent must

involve multimedia formats. Program comparisons must, to the greatest extent possible, be based upon the retirement income that different retirement

programs may provide to the member. The state board shall monitor the performance of the contra ct

to ensure that the program is conducted in accordance with the contract, applicable law, and the rules of the state board.

(c) The state board , in coordination with the

department, shall provide for an initial and ongoing

transfer education component to provide system members with information necessary to make informed plan choice decisions. The transfer

education component mu st include, but is not

limited to, information on:

449 So. 2d 389 (Fla. 3d DCA 1984), the Division gave an employee information regarding

credit calculations, which the employee used in making an employment decision. Later, the

Division d enied the credit because the calculation was contrary to statute. The Division

argued the mistake could not be grounds for estoppel because it was a " mistake of law. " The

court expressly rejected this contention, noting that, " [i]t is true that such repres entations

were based on a misunderstanding of the law applicable to [the employee's] case, but this does not convert the factual representati ons into legal representations. " Id . at 391 – 392.

* * *

7. The program choices available to employees of

the State University System and the comparative

benefits of each available program, if applicable.

(emphasis added).

61. Moreover, DMS , not S BA , is statutorily responsible for administering

SUSORP and is responsible for the dissemination of information regarding

the requirements of SUSORP . Section 121.35 provides:

(1) OPTIONAL RETIREMENT PROGRAM

ESTABLISHED. — The Department of Management

Service s shall establish an optional retirement

program under which contracts providing

retirement and death benefits may be purchased

for eligible members of the State University System

who elect to participate in the program.

* * *

(6) ADMINISTRATION OF PROGRAM. —

(a) The optional retirement program authorized

by this section shall be administered by the department . The department shall adopt rules

establishing the responsibilities of the institutions in the State University System in administering the optional retirement program. (emphasis added).

62. Even if a Division employee did not provide Ms. Byron the original

misrepresentation, Division employees allowed Ms. Byron to continue to

believe that she must be a Pension Plan member to enter SUSORP. T he

Division participated in the FRS Financial Guidance Line . Th is process was

not transparent, and there was little, if any, coordination . Ms. Byron was

passed around among divisions, departments, state employees, and outside

agents when she tried to obta in help and information. Had she been properly

advised, Petitioner could have either not made the 2nd Election, or could

have rescinded the 2nd Election with in the proper timeframe or withh eld the

buy in costs so that her 2nd Election would not become fina l.

63. Instead , n o one she spoke with from the FRS Financial Guidance Line

or the Division corrected this misrepresentatio n even though Ms. Byron

mentioned it repeatedly . S he got the proverbial runaround. Jim, a Division

employee, in particular seemed to u nderstand Petitioner ' s plight but was

cavalier and unhelpful. Even though at that point, Ms. Byron had already

made her decision and missed the deadline to change it, he advised that the

Division " put up a wall " rather than explain to Ms. Byron what had

ha ppened.

64. There was clear and convincing evidence that the Division ' s

representatives, agents, and vendors made mi sstatements that affirmatively

led Ms. Byron to erroneously believe she must buy into the Pension Plan to

participate in SUSORP . This is su fficient to establish estoppel against the

Division. See Hamilton Downs Horsetrack, LLC v. Dep ' t of Bus. & Prof ' l

Regulation , Div. of Pari - Mutuel Wagering , 226 So. 3d 1046, 1052 (Fla. 1st

DCA 2017 ) (finding estoppel where government officials assured horse track

there was " nothing wrong " with a race and that there were " no rules "

governing flag - drop racing — a statement consistent with what horse track

had previously been told by the Division, but then months later, the Division

changed its position).

65. In Wise , the appellate court found equitable estoppel against t he

Division, reversing its f inal o rder . There, the Division failed to inform the

employee of her job status as required by statute, and the employee took

certain action s based on that omission. T he administrative law judge, who se

recommend ed order was rejected by the Division , found that the Division ' s

failure to provide the proper notice and document ation were omissions

equivalent to tacit representations. Wise , 930 So. 2d at 871 - 873. Here, the

D ivision not only made explicit misrepresentations through AXA and the

Comparison Brochure, it tacitly allowed Ms. Byron to believe the mistaken

requirement.

66. There is no dispute regarding the second and third prongs to establish

estoppel against the Div ision. The unrefuted evidence at the hearing

supports a finding that Ms. Byron relied on th e flawed representation when

she made her 2nd Election and used her existing retirement funds to change

from the Investment Plan to the Pension Plan . This was to her substantial

detriment. As such, the Division is estopped from denying her request to

rescind her 2nd Election .

R EMEDY

67. The effect of rescinding Petitioner ' s 2nd Election would be to return

the Investment Plan funds Petitioner used to buy into the Pensi on Plan back

to the Investment Plan. The Division argues that it is willing to release her

from the Pension Plan, but that it cannot transfer the funds back to the

Investment Plan because that plan is overseen by SBA . See § 121.4501, Fla.

Stat. (authorizin g SBA to establish and administer the Investment Plan). 7

Although it seems like the most appropriate remedy, the undersigned has no

authority to require SBA (a non - party) to " readmit " Ms. Byron into the

Investment Plan.

68. If SBA does not allow Ms. Byro n to return to the Investment Plan,

DMS and the Division should allow Petitioner to " rollover " or move these

monies to SUSORP . Section 121.35(4) allows the Div ision to accept such a

rollover:

(f) The Optional Retirement Trust Fund

[SUSORP] may accept for deposit into member

contracts contributions in the form of rollovers or direct trustee - to - trustee transfers by or on behalf of

members who are reasonably determined by the

department to be elig ible for rollover or transfer to

the optional retirement program pursuant to the

7 This seems to be the subject matter of Petitioner’s case against SBA currently before the

Se cond District Court of Appeal. See Pet. PRO, ¶ 5.

Internal Revenue Code if such contributions are

made in accordance with rules adopted by the department. Such contributions shall be accounted

for in accordance with any appl icable requirements

of the Internal Revenue Code and department

rules.

69. Alternatively, if the monies from the Pension Plan cannot be

transferred to SUSORP , the Division should refund the monies to Petitioner.

The undersigned makes no conclusions as to whether Petitioner would be

allowed to transfer the buy in funds from her Pension Plan to another eligible

retirement plan, as defined in 26 U.S.C. § 402(c)(8)(B) (the Internal Revenue

Code), or whether there would be any tax implications for such a rollov er or

distribution.

R ECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Management Services, Division of

Retirement, enter a final order rescinding Petitioner ' s 2nd Election and

either : ( 1) return the buy in monies to the Investment Plan, (2) transfer the

buy in monies from her Pension Plan to SUSORP , or (3) refund these monies

to Petitioner .

D ONE A ND E NTERED this 26th day of June , 2020 , in Tallahassee, Leon

County, Florida.

H ETAL D ES AI

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 Administrativ e Hearings

this 26th day of June , 2020 .

C OPIES F URNISHED :

Lee Hayes Byron

2414 River Ridge Drive

Sarasota, Florida 34239

Thomas E. Wright, Esquire

Office of the General Counsel

Department of Management Services

4050 Esplanade Way , Suite 160

Tallahasse e, Florida 32399

(eServed)

William Chorba, General Counsel

Office of the General Counsel

Department of Management Services

4050 Esplanade Way , Suite 160

Tallahassee, Florida 32399

(eServed)

David Di S alvo, Director

Division of Retirement

D epartment of Management Services

Post Office Box 9000

Tallahassee, Florida 32315 - 9000

(eServed)

N OTICE OF R IGHT T O S UBMIT E XCEPTIONS

All parties have the right to submit written exceptions within 15 days from

the date of this Recommended Order. Any exce ptions to this Recommended

Order should be filed with the agency that will issue the Final Order in this case.