20-000644 City Of Fruitland Park, Florida vs. Department Of Management Services, Division Of Retirement Status: Closed Recommended Order on Wednesday, August 25, 2021.

Summary: The City is jointly and severally liable for repayment of DROP funds and retirement benefits paid to employee who violated DROP termination requirements.

S TATE OF F LORIDA

D IVISION OF A DMINISTRATIVE H EARINGS

C ITY OF F RUITLAND P ARK , F LORIDA ,

Petitioner ,

vs. Case No. 20 - 0644

D EPARTMENT OF M ANAGEMENT S ERVICES ,

D IVISION OF R ETIREMENT ,

Respondent .

/

R ECOMMENDED O RDER

On June 7 and 8, 2021, Administrative Law Judge Lisa Shearer Nelson of

the Division of Administrative Hearings (DOAH) conducted a disputed - fact

hearing pursuant to section 120.57(1), Florida Statutes (2020), by Z oom

teleconference.

A PPEARANCES

For Petitioner: Glenn E. Thomas, Esquire

Lewis, Longman & Walker, P.A.

Suite 830

315 South Calhoun Street

Tallahassee, Florida 32301

For Respondent: Thomas E. Wright, Esquire

Department of Management Services

Office of t he General Counsel

Suite 160

4050 Esplanade Way

Tallahassee, Florida 32399

S TATEMENT OF T HE I SSUE

The issue to be determined is whether Petitioner, City of Fruitland Park

(Fruitland Park or the City) , is required to reimburse Respondent,

Department of Ma nagement Services, Division of Retirement (DMS or

Respondent), for the overpayment of retirement benefits paid to Michael

Fewless.

P RELIMINARY S TATEMENT

On December 9, 2019, David DiSalvo, as the Director of the Division of

Retirement, notified the Mayor of Fruitland Park that as a participating

employer in the Florida Retirement System (FRS), Fruitland Park was jointly

and severally liable for repayment of benefits to the FRS Trust Fund in the

amount of $541,780.03 , because it had hired Michael Fewless as its Chief of

Police during the six months following his retirement from an FRS employer.

The letter also informed the Mayor that Fruitland Park was also responsible

for the difference in retirement contributions due during Mr. FewlessÔs

Deferred Retiremen t Option Program ( DROP ) participation period of June

2011 through August 2015, when Mr. Fewless was employed by the Orange

County SheriffÔs Office, based on the special risk membership class associated

with his former position, and for required contributio ns due for the period

that Mr. Fewless was employed by Fruitland Park from September 2015

through August 2018.

On December 19, 2019, the City filed a Petition for Formal Administrative

Hearing, disputing that it owed the repayment of benefits paid to

Mr. Fewless. On February 5, 2020, the case was referred to DOAH for the

assignment of an administrative law judge.

The case was set for hearing to take place on May 4 through 6, 2020, at

the Lake County Courthouse. However, due to the COV I D - 19 pandemic, the

p arties were advised by Order dated April 16, 2020, that the Lake County

Courthouse was no longer available to hold a hearing pursuant to

Administrative Order A2020 - 12 - D by the local C ircuit Chief Judge . The

parties were directed to provide a j oint s tatus r eport no later than April 21,

2020, as to whether they wished to continue the case to a later date, or would

rather conduct the hearing on the dates scheduled using Zoom technology. In

response, the parties stated their preference for a live hearing and pr ovided

additional dates. The case was rescheduled for August 18 through 20, 2020,

and by subsequent Order dated July 29, 2020, the parties were advised that

it would be conducted by Zoom.

The case was continued three additional times, based on discovery i ssues

hampered by the pandemic, and the unavailability of a crucial witness due to

health concerns. Ultimately, the case was rescheduled for June 7 through 9,

2021. It commenced on June 7 and was completed on June 8, 2021. The

parties filed a Joint Pre - h ea ring Stipulation in which certain facts were

identified as admitted. Those stipulated facts are included in the Findings of

Fact below.

Michael Fewless, Gary LaVenia, Kathy Gould, Joyce Morgan, and David

Kent testified for Fruitland Park, and PetitionerÔs Exhibits 1 through 33 and

38 through 44 were admitted into evidence without objection. Ira Gaines,

Tannette Gayle, and Kathy Gould testified for DMS , and RespondentÔs

Exhibits 1 through 15 were admitted, also without objection.

The Transcript of the hea ring was filed on July 27, 2021, and the parties

filed their Proposed Recommended Orders on August 9, 2021. All references

to Florida Statutes are to the 2015 codification, unless otherwise indicated.

F INDINGS OF F ACT

1. FRS is a retirement program for st ate and local government employees

administered pursuant to chapter 121, Florida Statutes. All state agencies

participate in FRS. Local governments have the option of joining the plan if

they meet certain requirements set out in statute and rule.

2. Fruitl and Park is a small city in the State of Florida, having

approximately 10,200 residents. Its annual budget is approximately

$11,000,000.

3. Fruitland Park joined the FRS as a participating employer effective

February 1, 2015. Tannette Gayle was the CityÔs Treasurer while the City

investigated joining FRS and completed the process to do so, and was

responsible for coordinating the process. Ms. Gayle left the CityÔs employ in

June or July of 2015.

4. Prior to the CityÔs participation in the FRS, Ira Gaines , f rom the

Division of Retirement , provided presentations to City employees to explain

the benefits provided by the FRS program. The presentation included

question and answer sessions.

5. Gary LaVenia, the C ityÔs M anager, has been employed by Fruitland

Park f or approximately six and a half years. Mr. LaVenia came to Fruitland

Park as the City was preparing to join FRS. He was not involved in the CityÔs

decision to join FRS or the process leading up to the CityÔs participation in

the plan.

6 . Prior to becoming an FRS employer, Fruitland Park had a different

retirement program, referred to as the ICMA retirement program. Upon

joining FRS, some senior management officials opted to remain with ICMA

rather than joining FRS.

7 . Mr. LaVenia attended a question and an swer session provided by

Mr. Gaines when the City decided to join FRS. He left the Q&A session

believing that senior staff were not required to join FRS and could continue to

be placed in the ICMA retirement program. Mr. LaVeniaÔs understanding

was correct for existing employees, but not for new hires. Mr. Gaines did not

state that new employees could join the ICMA plan if the City joined FRS.

8 . In order to join the FRS, the Fruitland Park City Commission passed

Resolution 2014 - 014, which authorized the C i ty M anager to enter into

agreements with DMS in order for general employees and police officers to

participate in the FRS. The Resolution stated in pertinent Part:

Section 2. It is hereby declared to be the policy and

purpose of the City Commission of Fru itland Park,

Florida that all its General Employees and police

officers, except those excluded by law, shall

participate in the Florida Retirement System as

authorized by Chapter 121, Florida Statutes. All

General Employees and police officers shall be

com pulsory members of the Florida Retirement

System as of the effective date of participation in

the Florida Retirement System so stated herein.

9 . On February 12, 2014, Stephen Bardin, a Benefits Administrator for

FRS, confirmed Fruitland ParkÔs membership in the FRS effective

February 1, 2015, for covered groups of police and general employees, and

further stated, Ñ[e]ach employee filling a full - time or part - time regularly

established position will be a compulsory member of the FRS.Ò Gayle

Tannette, who se rved as City Treasurer when the City joined the FRS,

requested and received confirmation on or about March 9, 2015, that all

employees hired after February 1, 2015 , must join FRS, regardless of age.

She shared that information with Gary LaVenia.

10 . There are some instances where positions, such as the C hief of P olice,

can be designated as senior management and the person holding the position

may opt out of participation with the FRS. However, the position has to be so

designated and a specific document mu st be submitted in order for the person

to be excluded from the FRS. Here, the City did not designate the C hief of

P olice position as a senior management position. Even where a senior

management position employee opts out of FRS participation, the employee is

still occupying a compulsory membership position with an FRS employer.

1 1 . Chapter 121 provides a method for FRS employers to avoid liability for

hiring FRS retirees who do not wait the required six months before becoming

reemployed. The employer proc ures a form or letter signed by the employee

attesting that they are not a retiree under the FRS.

1 2 . Michael Fewless was a member of the Orange County SheriffÔs

Department from February 1985 through August 1, 2015. Beginning in June

2011, he participated in DROP, until he terminated his employment with the

Orange County SheriffÔs Department.

1 3 . DROP is a benefit offered to FRS pension plan participants wherein

the member effectively retires for FRS purposes, but may continue

employment for up to five year s. During this period, the memberÔs benefits

are ÑpaidÒ into an interest - bearing account for the memberÔs benefit until he

or she actually terminates employment. Upon termination , the member

begins collecting monthly benefits and may either collect the acc rued DROP

benefits or roll them into another qualified plan, such as an Individual

Retirement Account (IRA).

1 4 . Mr. Fewless interviewed and was selected for the position of Chief of

Police for Fruitland Park. He was introduced as the new C hief of P olice

selection at a City Commission meeting on July 9, 2015, and sworn in at the

next meeting on July 23, 2015. Mr. Fewless began his employment with

Fruitland Park on August 3, 2015.

1 5 . The City was aware when Mr. Fewless was hired that he was retiring

from O range County, which is an FRS employer. Mr. Fewless did not realize

that Fruitland Park was a participating employer with FRS when he first

applied for the position as C hief of P olice. At some point, when FRS was

mentioned, he advised someone (presumably t he interview team) that he

could not work for an FRS employer because he was retiring from Orange

County SheriffÔs Office, which was also an FRS employer. 1

16. People who interviewed for the C hief of P olice position were informed

by the city manager that they could either participate in the FRS retirement

program or become a member of the ICMA retirement program. Mr. Fewless

was provided this information during his interview. However, the ability to

participate in the ICMA program was limited to those peo ple who were

already employees when Fruitland Park joined FRS. New employees hired

after the City joined FRS did not have the option to choose the ICMA

program as an alternative to FRS. Mr. Fewless was advised that he could join

the ICMA program as opposed to the FRS program in error.

17. Mr. Fewless wanted to make sure that if he took the job with

Fruitland Park, he would not be jeopardizing his retirement. Between July 1

and August 3, 2015, Mr. Fewless called the FRS Hotline at least twice, with

questions regarding this employment with Fruitland Park. One of those calls

was on July 9, 2015, before he was introduced as the next Chief of Police at

the Fruitland Park City Commission meeting. During this call, he spoke with

David Kent about reemployment. Mr. K ent worked in the section that

assisted local governments and some agencies with joining FRS, and

Fruitland Park was the first ÑjoinÒ upon which he worked.

18. There are varying accounts as to the contents of these calls. However,

whether or not Mr. Fewles s was actually told that he could work at an FRS

employer as long as he did not join the FRS Plan is not relevant to the CityÔs

liability as asserted by DMS. It is clear from the evidence submitted that

Mr. Fewless truly believed that to be the case. It is equally clear that the City

had been provided information, prior to hiring Mr. Fewless, that any new

1 Ironically, waiting six months to start at Fruitland Park might not have been a barrier for

Mr. FewlessÔs employment. Mr. LaVenia testified credibly that had Mr. Fewless said he had

to wait six months, Mr. LaVenia would have brought the issue to t he City Commission,

because Mr. Fewless was an excellent candidate and the person serving as an interim chief

was doing a fine job, so time was not of the essence.

general employee or member of the police force would have to be placed in the

FRS Plan. Moreover, Mr. Fewless made the calls to the FRS Hotline on his

own behalf, and not on behalf of the City.

19. Mr. Fewless also consulted with Anita G eraci, an attorney who

provided legal services to the City. Ms. Geraci provided the following

response:

Chief Fewless:

I received your question concerning the CityÔs

pensi on and FRS from Captain English.

I reviewed the FRS website for guidance. Attached

is a response give n to FAQ that relates to the

Investment Plan portion of the FRS. If you are not

in the Investment Plan, but rather are in the

Pension Plan portion of FRS than the attached does

not necessarily apply to you.

Also I have attached two brochures the state

publishes that may be helpful to you. One relates to

the Investment Plan and the other to the Pension

Plan. As you will see in both brochures, it states,

Ñ After becoming an FRS retiree, being hired by a

private employer or a non - FRS public employer will

have no impact on your [Investment Plan

distributions or Pension Plan benefits] (except for

disability retirement, see below).Ò

From the information I revie wed, including Florida

Statutes, and FAC, it does not appear your

participation in the CityÔs pension will have a

negative effect on your FRS retirement program,

whether Investment Plan or Pension Plan. There is

a 6 month waiting period for employment; how ever

it appears that the waiting period is only applicable

if your new employer is a FRS employer.

I strongly recommend you call MyFRS for guidance

to make sure this is accurate. (emphasis added) .

20. Based upon the information he learned from the FRS Ho tline and the

information provided by Fruitland Park, Mr. Fewless believed that he could

be a member of the ICMA retirement program when he began his

employment with the City. Fruitland Park placed him in this retirement

program . H is employment was not rep orted to FRS, and no documentation

was submitted in order for him to opt out of FRS (which, in any event, he

could not do, given that the position was not designated as senior

management and the City would still be considered as a participating

employer). Likewise, neither the City nor Mr. Fewless made contributions on

his behalf to the FRS.

21. Mr. Fewless also called the hotline shortly after his employment to ask

whether the date he was sworn in as Chief of Police made a difference in

terms of his retire ment. He was not informed at that time that there was any

problem presented by his employment with the City. However, the person

who answered his call represented herself as an employee of Ernst and

Young, as opposed to the Division of Retirement, and Mr. Fewless did not

specifically state that Fruitland Park was an FRS employer.

22 . No employee of the City spoke with anyone at the Division of

Retirement regarding Mr. FewlessÔs employment after his retirement from

Orange County under the FRS. No documentati on was submitted by the City

to DMS to determine whether he was a state retiree.

23. In the summer of 2018, FRS conducted an audit of Fruitland ParkÔs

retirement account. As a result of the audit, in August 2018, Respondent

notified Fruitland Park and Mr. Fewless that Mr. Fewless was a mandatory

participant in FRS, and that his employment by the City in August 2015

violated the termination provisions of the FRS for those persons who

participate in the DROP program.

24 . DMS voided Mr. FewlessÔs DROP particip ation and retirement, and

reinstated him as a participant in FRS. It also suspended his retirement

benefit payments. By letter dated August 16, 2018, DMS directed the City to

make the required contributions for the period of service beginning with the

date Mr. Fewless started his employment with the City, as well as the

difference in retirement contributions for the time period he participated in

DROP while employed by the Orange County SheriffÔs Office from June 2011

through July 2015, based upon the speci al risk membership class associated

with his former position. It is noted that the bulk of the payments attributed

to DROP participation were for a period when the City was not a participant

in the FRS.

25. Fruitland Park was not directed by DMS to repay a ny retirement

benefits received by Mr. Fewless until the Notice of Agency Action upon

which this case is based.

26. Mr. Fewless petitioned for , and received , a section 120.57(1) hearing in

response to the notice of intended agency action that would have re quired

him to repay his DROP payout and the retirement benefits he had received.

27. After the administrative hearing, on October 11, 2019, DMS and

Mr. Fewless entered into a Settlement Agreement in order to resolve the

issues related to his termination o f DROP and his retirement benefits. As

part of the Settlement Agreement, Mr. Fewless agreed to dismiss his petition

and enter into a repayment agreement. DMS agreed that Mr. Fewless was

entitled to a new benefit calculation based on the additional service credit he

earned for the years he participated in DROP, and the years he worked for

Fruitland Park. Mr. FewlessÔs recalculated pension benefit (excluding the

time he was employed by Fruitland Park) was determined to be $7,082.36. In

addition, the Settlemen t Agreement provided that the Division was to release

to him all withheld monthly benefits from September 2018 to the time the

Settlement Agreement was entered, in the amount of $81,940.56. The

Settlement Agreement also provided a repayment component, stat ing:

d. Monthly benefit and Repayment Amount . Since

the City of Fruitland Park has not yet paid all

outstanding contributions related to Mr. FewlessÔs

employment with the City of Fruitland Park,

Mr. FewlessÔs current benefit calculation is

$7,082.36 per mo nth. Mr. and Mrs. Fewless agree

to a $644.57 monthly deduction from every monthly

FRS retirement benefit Mr. and Mrs. Fewless [are]

entitled to receive until such time as the FRS Trust

Fund is made whole as provided herein. This

deduction will result in a monthly retirement

benefit to Mr. and Mrs. Fewless in the amount of

$6,417.79 per month. The $664.57 monthly

deduction will be taken from every monthly

retirement benefit from September 2018 and

forward until such time as the FRS Trust Fund

recovers $541,7 08.03 in aggregate from Mr. and

Mrs. Fewless and the City of Fruitland Park, or

until Mr. and Mrs. Fewless are deceased. The

Division, in exchange, will agree that the exclusive

mechanism for recovery of the overpayment money

from Mr. and Mrs. Fewless shal l be the $664.57

amount agreed upon herein, provided that Mr. and

Mrs. Fewless comply with the terms of this

Settlement.

28. Kathy Gould, the Bureau Chief for the bureau that performs

retirement calculations, acknowledged at hearing that the amount being

collected from Mr. FewlessÔs benefits will never recoup the debt owed in his

lifetime, and that, despite statutory language to the contrary, DMS felt it had

the discretion to make sure that there is no additional hardship on members.

However, also part of the Settlement Agreement is the obligation on the part

of DMS to seek reimbursement for the entire debt from Fruitland Park. The

Settlement Agreement states:

f. Good Faith Effort to Pursue City of Fruitland

Park . The Division agrees it will pursue the Ci ty of

Fruitland Park in good faith for the full amount of

the overpayment money ($541.708.03) and

contributions (yet to be determined) owed to the

FRS Trust Fund related to Mr. FewlessÔs

employment with the City of Fruitland Park. The

Division will send an intended final agency action

letter to the City of Fruitland Park within thirty

(30) days of dismissal of the petition indicating that

it owes to the FRS Trust Fund the full amount of

the overpayment money and the contributions. If

the City of Fruitland P ark challenges the DivisionÔs

intended final agency action, the Division agrees to

pursue any litigation in good faith through final

hearing or settlement, and will attempt to recover

the full amounts referenced therein. If the Division

is successful in re covering $541,708.03 in aggregate

from Mr. and Mrs. Fewless and the City of

Fruitland Park, through litigation or settlement,

the $644.57 monthly deduction will cease

prospectively as the FRS Trust Fund will have been

made whole. If the Division is success ful in

recovering all contributions due from the City of

Fruitland Park, the result will be a higher benefit

from September 2018 and forward because he will

have obtained all service credit he is due. If the

Division is successful in recovering the entire

$541,708.03 exclusively from the City of Fruitland

Park, the Division agrees to refund Mr. and Mrs.

Fewless all monthly deductions that were withheld

pursuant to this settlement. (emphasis added). [ 2 ]

29 . In conjunction with entering into the Settlement A greement, the

General Counsel for DMS provided a Settlement Description Letter for

Michael Fewless Settlement Agreement to the Department of Financial

Services, Bureau Chief of Auditing. The letter stated that ÑMr. Fewless has a

colorable claim against Ret irement for Estoppel.Ò However, there is no

indication, either in the Settlement Letter or in the evidence presented at

hearing, that the City was misled in any way regarding Mr. FewlessÔs status

when it hired him as Chief of Police .

2 According to the terms of the Settlement Agreement, if DMS recovers from the City all that

it seeks, Mr. Fewless will emerge from the settlement benefiting both from receiving the

DROP money and a pension benefit calculated as if he never participated in DROP. While

this result does not appear to be authorized by chapter 121, the legality of th e Settlement

Agreement is beyond the scope of this Recommended Order.

30 . DMS then issued i ts Notice of Intended Agency Action against the

City, informing the City that it was jointly and severally liable for

Mr. FewlessÔs DROP payment, as well as the retirement benefits received.

C ONCLUSIONS OF L AW

31. DOAH has jurisdiction over the subject ma tter and the parties to this

action pursuant to sections 120.569 and 120.57(1).

32. The burden of proof in an administrative hearing is on the party

asserting the affirmative of the issue unless the burden is established by

statute. Wilson v. DepÔt of Admi n., Div. of Ret. , 538 So. 2d 139, 141 - 42 (Fla.

4th DCA 1989); Balino v. DepÔt of HRS , 348 So. 2d 349 (Fla. 1st DCA 1977).

In this case, DMS is asserting that the City must reimburse FRS for the

money paid to Mr. Fewless and that the City is required to pay other sums

based on Mr. FewlessÔs employment with the City in violation of DROP

termination requirements. DMS , therefore , has the burden of proof to

demonstrate its entitlement to the funds it is seeking.

33. The City, on the other hand, is seeking to avo id payment by

establishing the affirmative defense of estoppel, which, in this case, also

requires the establishment of an agency relationship between Mr. Fewless

and the City at the time Mr. Fewless made inquiries regarding his retirement

status to DMS. I t is the CityÔs burden to establish any affirmative defense.

34. DMS is the state agency charged with the responsibility of

administering the state retirement system pursuant to sections 121.025

and 121.031.

35. Generally, chapter 121 sets the parameters for the implementation of

the FRS. The following statutory provisions are particularly relevant to this

proceeding. Section 121.011 addresses the preservation of rights for those

employees that belong to a different retirement plan and become eligible for

participation in FRS under some circumstances. It provides in pertinent part:

(3) PRESERVATION OF RIGHTS. Ð

(b) The rights of members of any retirement system

established by local or special act or municipal

ordinance shall not be impaired, nor shall thei r

benefits be reduced by virtue of any part of this

chapter.

1. If an eligible member of any such retirement

system elects to transfer to the Florida Retirement

System in a referendum held in accordance with

this chapter by the governing body administerin g

such local retirement system, he or she shall be

transferred to the Florida Retirement System on

the date that his or her unit is accepted for

membership therein and shall be subject to the

provisions of the Florida Retirement System

established by this chapter and at retirement have

his or her benefits calculated in accordance with

the provisions of s. 121.091. However, the

governing body shall preserve the rights of

employees of any existing local retirement system

not electing to transfer to the Florid a Retirement

System.

2. Whenever any employee of a governmental

entity which has a local retirement system becomes

eligible to participate in the Florida Retirement

System by virtue of the consolidation or merger of

governments or the transfer of function s between

units of government, such employee shall elect

either to continue to participate in the local

retirement system or to become a member of the

Florida Retirement System. For any such employee

who elects to continue to be a member of the local

retir ement system, the Florida Retirement System

employer is authorized to make the required

employer contributions to the local retirement

system and may make appropriate deductions from

the employeeÔs salary as required by the local plan

to preserve his or he r retirement benefits.

36. Section 121.011 would govern the transfer of existing employees at the

time that Fruitland Park joined FRS. It would not govern the treatment of

new hires.

37. Section 121.021 provides definitions for terms used in chapter 121,

and provides the following definitions that are relevant to this proceeding:

(10) ÑEmployerÒ means any agency, branch,

department, institution, university, institution of

higher education, or board of the state, or any

county agency, branch, department b oard, district,

school board, municipality, metropolitan planning

organization, or special district of the state which

participates in the system for the benefit of certain

of its employees, or a charter school or charter

technical career center that parti cipates as

provided in s. 121.051(2)(d). Employers are not

agents of the department, the state board, or the

Division of Retirement, and the department, the

state board, and the division are not responsible

for erroneous information provided by

representat ives of employers.

(11) ÑOfficer or employeeÒ means any person

receiving salary payments for work performed in a

regularly established position and, if employed by

a municipality, a metropolitan planning district, or

a special district, employed in a cove red group.

The term does not apply to state employees

covered by a leasing agreement under s. 110.191,

other public employees covered by a leasing

agreement, or a coemployer relationship.

* * *

(15) ÑSpecial risk memberÒ or ÑSpecial Risk Class

memberÒ me ans a member of the Florida

Retirement System who meets the eligibility and

criteria required under s. 121.0515 for

participation in the Special Risk Class.

* * *

(39)(b) ÑTerminationÒ for a member electing to

participate in the Deferred Retirement Optio n

Program occurs when the program participant

ceases all employment relationships with

participating employers in accordance with

s. 121.091(13), however:

2. For termination dates occurring on or after

July 1, 2010, if the member becomes employed by

any s uch employer within the next 6 calendar

months, termination will be deemed not to have

occurred, except as provided in

s. 121.091(13)(b)4.c. A leave of absence constitutes

a continuation of the employment relationship.

* * *

(44) ÑDROP participantÒ means any member who

elects to retire and participate in the Deferred

Retirement Option Program as provided in

s. 121.091(13).

* * *

(52) ÑRegularly established positionÒ means:

(b) With respect to a local agency employer

(district school board, county agenc y, Florida

College System institution, municipality,

metropolitan planning organization, charter

school, charter technical career center, or special

district), other than a water management district

operating pursuant to chapter 373, a regularly

establishe d position that will be in existence for a

period beyond 6 consecutive months, except as

provided by rule.

38. Section 121.051(1)(a) provides that, with the exception of certain

elected officials, participation in the FRS is compulsory for all officers a nd

employees. Section 121.055 addresses the senior management service class

within the FRS, and provides in relevant part:

(1)(b)1. Except as provided in subparagraph 2.,

effective January 1, 1990, participation in the

Senior Management Service Class is c ompulsory

for the president of each community college, the

manager of each participating municipality or

county, and all appointed district school

superintendents. Effective January 1, 1994,

additional positions may be designated for

inclusion in the Senio r Management Service Class

if:

a. Positions to be included in the class are

designated by the local agency employer. Notice of

intent to designate positions for inclusion in the

class must be published once a week for

2 consecutive weeks in a newspaper of general

circulation published in the county or counties

affected, as provided in chapter 50.

b. Up to 10 nonelective full - time positions may be

designated by each local agency employer

reporting to the department; for local agencies

with 100 or more regu larly established positions,

additional nonelective full - time positions may be

designated, not to exceed 1 percent of the regularly

established positions within the agency.

c. Each position added to the class must be a

managerial or policymaking position filled by an

employee who is not subject to continuing contract

and serves at the pleasure of the local employer

without civil service protection, and who:

(I) Heads an organizational unit; or

(II) Has responsibility to effect or recommend

personnel, budge t, expenditure, or policy decisions

in his or her areas of responsibility.

2. In lieu of participation in the Senior

Management Service Class, members of the Senior

Management Service subparagraph 1., may

withdraw from the Florida Retirement System

altoge ther. È

39. It is clear, from the evidence presented in this proceeding, that the

City could have, but did not, designate the position of Chief of Police as a

member of the senior management service class, and if it had, the person in

that position could withdraw from FRS. However, even assuming that the

City had chosen to designate the position, it would not change the result in

this case because the issue is not whether Mr. Fewless was required to be a

member of the FRS, but whether the City was an FRS employer at the time

that he became a City employee. Section 121.091(9) provides:

(9) EMPLOYMENT AFTER RETIREMENTL

LIMITATION. Ð

(a) Any person who is retired under this chapter,

except under the disability retirement provisions

of subsection (4), may be employed by an employer

that does not participate in a state - administered

retirement system and receive compensation from

that employment without limiting or restricting in

any way the retirement benefits payable to that

person.

* * *

(c) Any person who se retirement is effective on or

after July 1, 2010, or whose participation in the

Deferred Retirement Option Program terminates

on or after July 1, 2010, who is retired under this

chapter, except under the disability retirement

provisions of subsection (4 ) or as provided in

s. 121.053, may be reemployed by an employer

that participates in a state - administered

retirement system and receive retirement benefits

and compensation from that employer. However, a

person may not be reemployed by an employer

partici pating in the Florida Retirement System

before meeting the definition of termination in

s. 121.021 and may not receive both a salary from

the employer and retirement benefits for

6 calendar months after meeting the definition of

termination, except as prov ided in paragraph (f).

However, a DROP participant shall continue

employment and receive a salary during the period

of participation in the Deferred Retirement Option

Program, as provided in subsection (13).

1. The reemployed retiree may not renew

members hip in the Florida Retirement System.

2. The employer shall pay retirement contributions

in amount equal to the unfunded actuarial liability

portion of the employer contribution that would be

required for active members of the Florida

Retirement System in addition to the

contributions required by s. 121.76.

3. A retiree initially reemployed in violation of this

paragraph and an employer that employs or

appoints such person are jointly and severally

liable for reimbursement of any retirement

benefits paid to the retirement trust fund from

which the benefits were paid, including the Florida

Retirement Trust Fund and the Florida

Retirement Investment Plan Trust Fund, as

appropriate. The employer must have a written

statement from the employee that he or she i s not

retired from a state - administered retirement

system. Retirement benefits shall remain

suspended until repayment is made. Benefits

suspended beyond the end of the retireeÔs 6 - month

reemployment limitation period shall apply toward

the repayment of ben efits received in violation of

this paragraph. (emphasis added)

40. Section 121.091(13) describes the DROP program, the eligibility

requirements, and the limitations on employment once a participant

terminates his or her employment. Section 121.091(13)(c )5.d. and (13)(c)6.

provide s :

d. A DROP participant who fails to terminate all

employment relationships as provided in

s. 121.021(39) shall be deemed as not retired, and

the DROP election is null and void. Florida

Retirement System membership shall be

ree stablished retroactively to the date of the

commencement of DROP, and each employer with

whom the member continues employment must pay

to the Florida Retirement System Trust Fund the

difference between the DROP contributions paid in

paragraph (1) and the c ontributions required for

the applicable Florida Retirement System class of

membership during the period the member

participated in DROP, plus 6.5 percent interest

compounded annually.

6. The retirement benefits of any DROP participant

who terminates all employment relationships as

provided in s. 121.021(39) but is reemployed in

violation of the reemployment provisions of

subsection (9) are suspended during those months

in which the retiree is in violation. Any retiree in

violation of this subparagraph and any employer

that employs or appoints such person without

notifying the division to suspend retirement

benefits are jointly and severally liable for any

benefits paid during the retirement limitation

period. The employer must have a written

statement from the retiree that he or she is not

retired from a state - administered retirement

system. Any retirement benefits received by a

retiree while employed in violation of the

reemployment limitations must be repaid to the

Florida Retirement System Trust Fund, an d his or

her retirement benefits shall remain suspended

until payment is made. Benefits suspended beyond

the end of the reemployment limitation apply

toward repayment of benefits received in violation

of the reemployment limitation.

41. This case is not about whether Mr. Fewless has any liability to FRS

based on his violation of the termination provisions related to DROP, but

rather, whether Fruitland Park has liability for employing him in violation of

those provisions.

42. DMS has met its burden of pr oof that the City is liable under section

121.091(13) to repay any benefits paid to Mr. Fewless (here, the DROP

benefit, his monthly pension benefit, and his health insurance subsidy), as

well as the difference between the DROP contributions paid by his em ployer

while in DROP and the contributions required for the applicable FRS class of

membership during the period the member participated in DROP, plus

6.5 percent interest compounded annually.

43 . The City and Mr. Fewless focused on whether there was anot her

retirement plan in which Mr. Fewless could be placed instead of the FRS. The

issue, however, is not whether Mr. Fewless participated in FRS while

employed by Fruitland Park, but whether Fruitland Park was a participant

in FRS at the time that Mr. Fewle ss was hired. It clearly was.

44. The City argues that DMS is equitably estopped from seeking

payment from the City because of the alleged representations that DMS

employees made to Mr. Fewless when he called to enquire about his

retirement and how it wou ld be affected if he took the job as Chief of Police

for Fruitland Park. The elements of equitable estoppel are: 1) representation

about a material affect that is contrary to a later - asserted position;

2) reasonable reliance on that representation; and 3) a change in position

detrimental to the party claiming estoppel, caused by the representation and

reliance thereon. Council Bros. v. City of Tallahassee, 634 So . 2d 264, 266

(Fla. 1st DCA 1994). Equitable estoppel is not normally applied to

governmental en tities without extraordinary circumstances, and will not be

applied based on mistakes of law, as opposed to mistakes of fact. Hamilton

Downs Horsetrack, LLC v. DepÔt of Bus. & ProfÔl Reg., 226 So. 3d 1046 (Fla.

1st DCA 2017); Salz v. DepÔt of Admin., Div. of Ret., 432 So. 2d 1376, 1378

(Fla. 3d DCA 1983).

45. Equitable estoppel does not apply in this instance for several reasons:

first, DMS has taken the position with the City, both before and after the

telephone calls by Mr. Fewless, that a person retirin g from an FRS position

cannot be reemployed by an entity that participates in FRS. It has also

steadfastly maintained that participation in FRS was compulsory for new

hires once the City joined FRS.

46. Second, the only statements upon which the City cou ld rely are the

statements made to Mr. Fewless in his calls to DMS. City personnel were not

a part of those calls, were not present when Mr. Fewless made them, and

could only rely on Mr. FewlessÔs understanding of those calls. There is no

credible, persuas ive evidence that DMS represented to the City that they

could employ Mr. Fewless and place him in a separate retirement plan, and

that by doing so, he would not be violating his DROP termination.

47. Third, there is no credible evidence that the City chan ged its position

in reliance on any statement made to Mr. Fewless. Mr. LaVenia advised

Mr. Fewless that he could join the ICMA program as opposed to FRS during

the interview process, before Mr. Fewless called FRS. Similarly, the City

offered the job to Mr. Fewless before the telephone calls to DMS. In short, the

City established its position, from which it did not change, before Mr. Fewless

called FRS to inquire about his retirement and reemployment.

48. Fourth , the statements that Mr. Fewless attributes to Mr. Kent are

statements of law, as opposed to fact. Petitioner compares the statements to

those in Salz v. Department of Administration, Division of Retirement, supra .

In Salz , the agency informed a plan member that she could purchase credit

for retirem ent for years she taught at an out - of - state, private school when the

law only allowed for the purchase of credits for teaching at public schools.

She purchased the credits and the Division consistently represented to her

the number of years of creditable s ervice she had, and she made her

retirement decisions based on these representations. As stated by the court,

the representations regarding how many years of creditable service she

possessed were representations of fact.

49. Similarly, in Kuge v. Departm ent of Administration, Division of

Retirement, 449 So. 2d 389 (Fla. 3d DCA 1984), the Department provided to

an employee an estimate of how long she would have to work in order to vest

for retirement purposes. The representations regarding how much credita ble

service she had Ñwere representations of fact, not of law. It is true that such

representations were based on a misunderstanding of the law applicable to

the case, but this does not convert the factual representations into legal

representations.Ò Id . a t 391. Here, Mr. FewlessÔs questions dealt with the

effect certain actions would have on his retirement. Questioning the effect of

oneÔs actions is not the same as asking how many years of service a person

has accrued, or asking for the calculation of a pe rsonÔs pension. Questioning

the effect of a personÔs course of action necessarily requires an analysis of

how the law reacts to the possible course of action, which is by its nature a

legal conclusion.

50. The City also contends that Mr. Fewless was its a gent when he called

FRS. However, Mr. Fewless testified that he was acting on his own behalf

when he called FRS, and at the time of the July 9, 2015, telephone call,

M r . Fewless had not been introduced to the City Commission as the person

selected for the Chief of Police position, much less begun his responsibilities

on behalf of the city.

51. While the law clearly requires that the City pay the amount DMS is

seeking in this case, it is equally clear that the result is a harsh one for a city

as small as Fr uitland Park. It is noted that DMS went to significant lengths

to ameliorate the effects of Mr. FewlessÔs DROP termination violation on

Mr. Fewless and his wife. However, equity does not occur in a vacuum, and

the effects of the agencyÔs intended action in this case will have a significant

effect on the fiscal health of a small community. It is recommended that DMS

allow the City to repay the FRS trust fund on an installment plan, over the

course of three to five years, so as to lessen what may be devastati ng effects

on the financial position of the City.

R ECOMMENDATION

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

R ECOMMENDED that the Department uphold its initial decision to require the

City of Fruitland Park to pay back the reti rement benefits that Mr. Fewless

received, including his DROP benefit, monthly retirement benefits for

September 2015 through August 2018, and health insurance subsidy for the

same time period. It is also R ECOMMENDED that the City be required to pay

the ot her contributions listed as unpaid in DMSÔs December 2, 2019, notice of

intended agency action. Finally, it is R ECOMMENDED that, given the amount

of funds involved, that DMS allow the funds to be repaid in installments over

a three - to - five - year period.

D O NE A ND E NTERED this 25th day of August , 2021 , in Tallahassee, Leon

County, Florida.

S

L ISA S HEARER N ELSON

Administrative Law Judge

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

www.doah.state.fl.us

Filed with the Clerk of the

Di vision of Administrative Hearings

this 25th day of August , 2021 .

C OPIES F URNISHED :

Thomas E. Wright, Esquire Glenn E . Thomas, Esquire

Department of Management Services Lewis, Longman & Walker, P.A.

Office of the General Counsel Suite 830

Suite 160 315 South Calhoun Street

4050 Esplanade Way Tallahassee, Florida 32301

Tallahassee, Florida 32399

Gayla Grant, Esquire David DiSalvo, Director

D epartment of Management Services Division of Retirement

Suite 160 Department of Management Services

4050 Esplanade Way Post Office Box 9000

Tallahassee, Florida 32399 Tallahassee, Florida 32315 - 9000

William Chorba, General Counsel

Office of the General Counsel

Department of Management Services

Suite 160

4050 Esplanade Way

Tallahassee, Florida 32399 - 0950

N OTIC E 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 exceptions to this Recommended

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

case.