20-001840 Rebecca Hernandez vs. Department Of Management Services, Division Of Retirement Status: Closed Recommended Order on Monday, September 21, 2020.

Summary: Beneficiary was entitled to recover her mother's FRS death benefits, including (1) mother's vested contributions from her prior Investment Plan account and (2) the "buy in" fee her mother paid to transfer into the Pension Plan.

S TATE OF F LORIDA

D IVISION OF A DMINISTRATIVE H EARINGS

R EBECCA H ERNANDEZ ,

Petitioner ,

vs. Case No. 20 - 1840

D EPARTMENT OF M ANAGEMENT S ERVICES ,

D IVISION OF R ETIREMENT ,

Respondent .

/

R ECOMMENDED O RDER

A video teleconference hearing was held pursuant to notice with sites in

Lauderdale Lakes and Tallahassee, Florida , on July 2, 2020, before Robert L.

Kilbride, Administrative Law Judge of the Division of Administrative

Hearin gs.

A PPEARANCES

For Petitioner: Larry Allan Karns, Esquire

Spink, Shrouder & Karns, P.A.

9700 Griffin Road

Cooper City, Florida 33328

For Respondent: Gayla Grant, Esquire

Nikita S. Parker, Esquire

Department of Management Services

4050 Esplanade Way , Suite 160

Tallahassee, Florida 32399

S TATEMENT OF T HE I SSUE

Whether Petitioner , Rebecca Hernandez ( " Hernandez " ), is entitled to the

$22,943.8 1 her late mother, Darlene Rice ( " Rice " or " Mother " ) , paid to buy

into t he Florida Retirement System Pension Plan ( " Pension Plan " ) , as well as

other monies transferred from Rice's Investment P lan account to the Pension

P lan account, or is Hernandez only entitled to the $2,654.17 in employee

contributions that Rice paid into th e Pension Plan while an active member of

that plan .

P RELIMINARY S TATEMENT

In a letter dated May 10, 2019, the Department of Management Services,

Division of Retirement ( " Departme nt " ), notified Hernandez of its

determination that since her Mother was not v ested in the Pension Pla n at

the time of her death, Hernandez w as only entitled to receive the three

percent employee contributions that her Mother made into the Pension Plan

before she passed away , t otal ing $2,654.17.

Hernandez disputed the Department ' s decision and timely reques ted an

administrative hearing. The request for hearing was forwarded to the

Division of Administrative Hearings ( " DOAH " ) on April 15, 2020 , and the

undersigned was assigned to the case. An evidentiary hearing was held on

July 2, 2020.

During the hearing, Hernandez d id not testify, but submitted 13 exhibits ,

whic h were admitted into evidence. The Department offered the testimony of

Kathy Gould, Chief of Retirement Calculations, Division of Retirement;

Matthew Larrabee ( " Milliman C ompany " ), Principal and Con sultant Actuary

for the Department ; Allison Olson, Director of Policy, Risk Management and

Compliance, State Board of Administration; and Garry Green, Operations

and Management Consultant, Division of Retirement. The Department

o ffered 22 exhibits . Twenty (20) of the Department's exhibits were admitted

into evidence.

Both parties requested a T ranscript of the proceedings. After being

granted an extension of time, the p arties submitted their p roposed

recommended o rders, which have been reviewed, researched , and considered

by the undersigned in the preparation of this Recommended Order .

After reviewing the proposed recommended orders, the undersigned held a

telephone conference with the parties to request memorandums of law on

addi tional legal issues which were discussed. Those memorandums were

received and have also been considered by the undersigned. 1

For purposes of this Recommended Order, all citations to applicable

statutes or rules include the statutes or rules in effect at the time of the

action or conduct under consideration.

At the outset, it is worth noting , many of the material facts underlying

this dispute were readily established at the hearing. That is -- monies paid or

contributed by Rice to transfer from the Investme nt Plan to the Pension Pla n

were determined . 2 Rather , the real crux of the dispute was: d id the agency

prove its position by a preponderance of the evidence based on the facts

applying the plain and ordinary meaning of the Florida Retirement System

("FRS") laws? Was the Department's inter pretation and application of FRS

laws correct in this very unique and unusual case?

1 The legal memorandums provided were very helpful, insightful , and appreciated.

2 The direct testimony offered by the Department's witnesses, as well as testimony solicited

from them on cross examination, was useful and helped to provide an appropriate context

and timeline for the dispute. However, the heart of this case is not dependent on how the

Department 's witnesses or Respondent interpreted the F lorida R etirement S ystem ("FRS")

laws and rules. In the context of an adminis trative hearing, questions of law and the proper

interpretation of the law, of course, is not the ir responsibility. It would be an error for the

undersigned to rely u pon their interpretation of FRS laws. See generally Lindsay v. Allstate

Ins. Co. , 561 So. 2d 427 (Fla. 3d DCA 1990); T.J.R. Holding Co., Inc. v. Alachua Cty, 617 So.

2d 798 (Fla. 1st DCA 1993). Nor is the case resolved by simply concluding that Rice was

adequately informed of the Department's position on benefits or the loss of benefits. She n o

doubt , was fully informed of the Department's position on the issues .

Moreover, do the statutes and definitions relied on by the Department to

limit Hernandez's benefits to her mother's three percent payroll d eductions

lay out a persuasive and sound legal basis to reject Petitioner's claim t o

additional funds paid into FRS system by her mother, Darlene Rice?

In short, this case presents a classic legal dispute, not as much a factual

one.

Nonetheless, the fol lowing chronology of events is helpful to establish the

back drop for the dispute between Hernandez and the Department.

F INDINGS OF F ACT

Based on the evidence presented and the record as a whole, the following

facts were established:

1 . Darlene Rice was a Broward county teacher and member of F RS

beginning September 1, 2011 . Sometime in 2016 , she became interested in

transferring from the FRS Investment Plan to the FRS Pension Plan and

actively began to investigate that option.

2 . Petitioner, Rebecca Herna ndez, is the daughter of Rice and is entitled

to Rice's benefits from FRS as determined by the Order of Summary

Administration entered by the Circuit C ourt of Broward Cou nty, Florida , on

October 2, 2018.

3 . Prior to transferring from the Investment Plan an d as a part of her

investigation , Rice contacted the FRS guidance line , on numerous occasions

to seek guidance and inquire about the process to t ransfer into the Pension

Plan. Resp. Ex. 20 . The calls were recorded. 3

4 . More precisely , on March 7, 2017, Ri ce called the FRS guidance line to

obtain information and ask questions regarding her contemplated transfer

3 The unde rsigned listened to all nine audio recordings.

from the Investment Plan to the Pension Plan. On this call, the

representative informed Rice that if she terminated FRS employment prior to

having e ight years of service, she " could not really recover anything. " Resp.

Ex. 20 .

5 . During another call to the FRS guidance line, Rice was told that if she

left the Pension Plan before vesting, monies she paid to " buy in " would be

lost.

6 . Rice also acknowle dged during one call that if something happened to

her, she understood she would lose everything. 4

7 . Ultimately, a fter multiple telephone consultations and discussions with

the FRS guidance line, Rice made the decision to transfer plans and buy into

the Pension Plan.

8 . To do so, Rice was required to complete and submit a 2 nd Election

Retirement Plan Enrollment Form dated March 7, 2017. Re sp. Ex s. 2

and 16. 5

9 . On March 9, 2017, the Department sent a letter to Rice, confirming her

2nd E lection into the Pe nsion Plan. Resp. Ex. 16. The letter included the

following:

You have elected to move from the FRS Investment

Plan and buy into the FRS Pension Plan. The

effective date of this election is April 1, 2017. This

is your final Plan Choice Election under the Fl orida

Retirement System. You must remain in the FRS

4 The undersigned reasonably infers that this comment was based on what she had been told

during previous phone calls to the F RS guidance line. The extensive information and

consultation provided to Rice by the FRS guidance line was commendable, useful to her, and

no doubt, very well intended. The representatives were patient and thorough with Rice.

Regardless, their general admo nitions and advice to Rice do not carry the force of law, nor do

they necessarily dictate the outcome of this case. Rather, as will be explained, the correct

decision in this case is derived by identifying and interpreting the applicable FRS laws and

rules to the facts.

5 The top of the form notified her that " b efore using your 2nd Election, be sure you

understand the impact of changing from one plan to another. " By signing the form, at

Option 2, Rice also acknowledged language that stated " I want to use m y existing

Investment Plan account balance and possib ly other personal resources to ' buy ' into the

Pension Plan. " Othe r disclosures were also made to her on page 3 of the form.

Pension Plan until your retirement from FRS -

covered employment. As a member who is

switching from the FRS Pension Plan using the

available balance in your FRS Investment Plan

account. If your account is n ot sufficient to cover

the cost of the buy - in, you will need to submit

personal funds.

* * *

If you terminate employment prior to vesting in the

Pension Plan benefit (less than 6 or 8 years) you

are only entitled to receive:

A refund of your contr ibutions paid into the

Pension Plan since April 1, 2017 (the effective date

of your 2nd election).

* * *

If you feel that this retirement Plan election was

made in error, you may be able to cancel it È

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.

10 . Rice ' s election to transfer from the Investment Plan to the Pension

Plan w as slated to become effective on April 1, 2017.

11 . On Apri l 18, 2017, Rice was informed by the Department that it

received her notification of her second election and the accrued liabil ity

(costs) to transfer to the Pension P lan was $58,366 .00 ; $35,422.19 was

liquidated from her investment account and transferred to the FRS Trust

Fund and $22,943.81 was the out of pocket cost to her to complete the

transfer. Resp. Ex. 7.

12 . On June 6, 2017, the Department sent a letter to Rice confirming

receipt of her personal payment of $22,943.81, which finalized her transfer to

the Pension Plan effective April 1, 2017. Resp. Ex. 8 .

13 . Less than a year later, o n March 17, 2018, Rice passed away

unexpectedly . Her death certificate listed a pulmonary embolism as the

primary cause of death. Pet. Ex. 8. 6 Rice did not have at least eigh t years of

service credit in FRS at the time of her passing .

14 . After her mother's passing, Hernandez was contacted by the FRS

guidance line to discuss the process and survivor benefits related to the

Pension Plan. 7

15 . Naturally, Hernandez was sh ocked and dismayed when the

representative informed her that she was only entitled to the total

contributions her mother made while she was working and in the Pension

Plan. He also regrettably informed Hernandez that she was not entitled to

recover the buy - in costs paid by her mother, nor was she entitled to the

balance she had in the Investment P lan when the transfer was made.

16 . During this telephone discussion, Hernandez lamented that she and

her mother had made the decision together to transfer her fro m one plan to

the other.

17 . On June 28, 2018, the Department sent a formal letter to Rice's

daughter, Hernandez , acknowledging her mother ' s death and notifying her

that since her mother did not have eight years of ser vice, the benefit

available to Hernand ez was limited to a refund of retirement contributions in

the amount of $2,654.17. Resp. Ex. 9.

18 . At Hernandez's request, the Department manually calculated th e

amount Rice paid into the FRS . When Rice transferred to the Pension Plan,

the Department ' s sy stem, which is called the Integrative Retirement

Information System ( " IRIS " ) , only showed the accumulati on of the

contributions that she paid into the Pension Plan after the transfer, since her

contributions in the Investment Plan had already been liquidat ed for the

transfer. Resp. Ex. 1.

6 The cause of her death is mentioned primarily to show that her death was unex pected. The

undersigned infers from the evidence, particularly the CD recordings, that Rice had no

forewarning or suspicions regarding her health when she made the transfer .

7 The date of this phone call is not in the record .

19 . Kathy Gould ( " Gould " ) , the Department ' s Bureau Chief of Retirement

C alculations, testified that the manual calculatio n revealed that a total of

$16, 042.58 was contributed by Rice since her participation began in the FR S.

20 . Based on the calculations and figures provided , her total contributions

had two components: (1) $13,388.41 while Rice was in the Investment Plan

and (2) $2,654.17 while Rice was in the Pension Plan .

21 . In addition to a return of these sums, Petiti oner also seeks the return

or refund of the " buy in " fee -- $22,943.81 -- Rice paid to transfer to the Pension

Plan .

Testimony of Kathy Gould

22 . Gould 's team handles the calculation of costs in volved with transfers

from the Investment Plan to the P ension P lan .

23 . She testified that there are two plans under the FRS, the P ension Plan

and the I nvestment P lan. At all times related to Rice's tenure under the FRS,

t he funds for the FRS retirement plans came from employer and employee

contributions. Employee con tributions are currently three percent of salary .

24 . In the Pension P lan a member vests after eight years of servi ce. If a

member dies before the member vests, it was her position that the beneficiary

would be eligible to receive the accumulated contribut ions . She ref erred to

the applicable statute, section 121.091(7) , Florida Statutes .

25 . Conversely, t he State Board of Adminis tration administers the

I nvestment plan , and is separate from Respondent. A member vests after

only one year in the I nvestment pl an.

26 . Exhibit 1 was a screenshot of Rice's profile in the IRIS . This is a

computer database that contains the Department's membership information.

27 . Rice's total employee balance as reflected in Respondent ' s Exhibit 1

was $2,654.17 . This include s o nly Rice's payroll contr ibutions while a

member of the Pension P lan.

28 . Rice's "personal payment" to buy into the Pension P lan was

$22,943.81. Gould explained that i f a member of the Investment P lan left

after only five months , the member would be entitl ed to receive the

employee's contributions only . Tr. pp. 55 - 56. This would not include the

employer's contributions.

29 . After one year , an employee is fully vested in the Investment Plan and

would be entitled to all contributions made, both employee and employer, if

employment was terminated while still in the Investment Plan.

30 . The payment that Rice made to buy in to the Pension P lan was in the

form of a personal check , not a deduction from her payroll.

31 . Re spondent 's E xhibit 21 is an email Gould pre pared for the

Department's legal counsel. Gould analyzed Rice's reported salaries while she

was a member of the Investment P lan and multi plied them by three percent

to provide the total amount that Rice had paid into both plans . This totaled

$16,042.58 . Th is was the amount from Rice's first payroll through her last

payroll while in the FRS . The amount was the total of both the Investment

Plan and the Pension P lan.

32 . Gould admitted that there are essentially two types of contributions

into the FRS , employ er contributions and employee contributions . She

acknowledged t hat the $22,943.81 Rice paid to transfer to the P ension P lan

was not an employer contribution.

33 . Rice was not in the I nvestmen t P lan when she died. When she died,

Rice was participating in the Pension P lan . As a result , Gould admitted that

the state would pay out any benefits utilizing the statutes relating to the

P ension P lan.

34 . The calculation of the buy - in amount performed by the Department in

Rice's case was done on the " calculator " provid ed by their actuary, Milliman.

Testimony of Matthew Richard Larrabee

35 . Matthew Larrabee ( " Larrabee " ) was called by the Department. He is a

p ension actuary with Milliman and specializes in governmental pension

plans.

36 . He discussed the Departmen t's use of a " calculator " that is designed by

Milliman. It is provided and created to allow agency staff to determine

actuarial pension calculations without relying upon a certified actuary. The

actuarial accrued liability ( " AAL " ) determined by the calcula tor, establishes

the " buy - in " or purchase price for a member tha t chooses to transfer from the

Investment Plan to the Pension P lan.

37 . The components of the buy - in cost to transfer fro m the Investment

Plan into the Pension Plan consist primarily of the p rojected monthly annuity

amount, the state multiplier percentage for the employee's position , the years

of service, and the member ' s pay le vel. There is also an assumption of

projected pay increases and th e life expectancy of the member. Age i s also a

fact or in the formula.

38 . The funds collected and related to the transfer into the Pension Plan

are deposited into a commingled, legally restricted pension trust.

39 . Respondent ' s E xhibits 4, 5, and 6 were prepared by the Department's

staff at different dat e intervals using the Milliman calculator. These exhibits

represent output sheets produced by th e calculator , which was developed by

Milliman under Larrabee's s upervision. The sheets are accurate. The y show

different actuarial accrued liability amounts bas ed, in part, on age. 8

40 . The final calculation in Respondent's E xhibit 6 is for a transfer date of

April 2017 for Rice . The calculated actuarial accrued liability was $58,366 .00 .

Larrabee explained that this calculation is a sound estimation or valuati on of

the financial present value of the total future retiremen t benefits for a given

member -- in this case , Rice.

8 Different dates are notated on the calculator sheets based on differing dates being

considered for the effective transfer date by Rice when the individual sheet was run.

41 . The actuarial accrued liability calculation and resulting " buy in "

amount is premised on the fact that the actuaries do not take into acco unt a

potential re fund feature, such as the return of funds sought by Hernandez. 9

42 . Larrab ee went on to explain that if potential refunds, such as those

requested by Hernandez, were accounted for in the actuarial calculations, the

cost to " buy in " would only be " modestly higher . " This is because the

mortality rates for people like Rice in the ir 50's or 60's are " quite low. " As a

result, the added costs to cover such an infrequent contingency, if that were

an option, " would be low . "

Allison Olson

43 . All ison Olson ( " Olson " ) is the Director of Policy, Risk Management and

C ompliance for the State Board of Administration ( " SBA " ) . Her duties include

the review and determination of compliance with contracts and policies by

outside vendors for the FRS Investmen t P lan . She also review s complaints

that are received from Investment P lan members.

44 . The I n vestment P lan is a defined contribution plan , similar to a

traditional 401(k). The SBA is a separate agency from the Department . A

member has an option of making an election , as part of their initial choice , to

be a m ember of the Investment P lan. Vesting for the I nvestment P lan occurs

after one year of service. Then the member owns the contributions in their

account.

45 . Under the Investment Plan , each account i s funded by e mployer

contributions a s well as a mandatory three percent monthly employee

contribution.

46 . Members in the FRS with questions about their accounts may consult

with representatives on a financial guidance line managed by the SBA

vendor. 10

9 No evidence was offered to explain why this type of feature was not built into the actuarial

calculation, or w hy it was not offered as an option to potential transferees.

10 As previously noted, Rice took advantage of this service on numerous occasions.

47 . The Department offered into evidence Respondent's Exhibit 14 , a n

FRS Investment Plan Summary Plan Description (sometimes referred to as

an " SPD " ). However, this SPD was not issued until July 2018. Because it was

issued after Rice passed away and there wa s no proof she ever received it or a

prior version, it was excluded as evidenc e and not considered based on the

objection of Petitioner. 11

Garry Green

48 . Gary Green ( " Green " ) is the Chief of Research and E ducation for

Respondent. H e handles the administra tive aspects of the actuarial contract

and services provided by Milliman .

49 . The liquidation of an investment plan account is the sale of all assets

that the member has in the account. It includes all money, both employer and

employee contributions.

50 . After applying to transfer from one plan to another, an employee has

60 days to " roll in " her " buy in " money, or to cancel the transfer. The money a

member pays to buy - in to the Pension Plan , is deposited in to the pension

trust fund with all the ot he r assets of the trust fund. His view was that i f t he

member is not vested in the Pension P lan , the contributions used to " buy in "

are not refundable.

51 . Respondent's Exhibit 6 calculates the actuarial accrued liability of

$58,366.00. It is a calculatio n of the total cost to buy in to the Pension Plan.

He explained that it is not a statement of the liquidated assets from Rice's

I nvestment P lan or any funds owed to Rice.

11 It should be noted that, aside from notices she received in the enrollment forms she signed

or guidance from FRS guidance line representatives, the re was no proof presented by

Respondent that any of the mandatory educational components required by section

121.4501(10)(a) - (g), Florida Statutes, e ntitled " Education Components, " were complied with ,

or offered to Rice. This is particularly significant in this case since material " must be

prepared under the assumption that the employee is a n unsophisticated investor. "

§ 121.4501(10) (e) , Fla. Stat .

Additional Facts Established by Discovery

52 . Petitioner ' s E xhibits 9 - 1 and 9 - 2 e stablish that Rice contributed

$16,042.58 in employee contributions into the FRS. $2,654.17 was into the

Pension P lan and $13,338.41 was while Rice was a member of the Investment

P lan.

53 . The Department admitted that Rice paid $22,943.81 of her personal

funds on or before June 6, 2017, to transfer from the I nvest ment Plan to the

Pension P lan. Request f or Admission No. 19 .

54 . The Department admitted that Petitioner is entitled to receive

$2,654.17, the amount of contributions after Rice was in the Pension P lan.

Request f or Admission No. 21 .

55 . The Department admitted that it received the Order of Summary

Adminis tration and Death C ertificate. Requests f or Admission Nos. 25

and 26 .

56 . The Department admitted that Rice contributed at least $13,38 8.41

into the Investment P lan. Request f or Admission No. 29.

C ONCLUSIONS OF L AW

57 . The Division of Administrative Hearings has jurisdiction over the

parties and subject matter of this proceeding. § 120.57(1), Fl a . Stat .

58 . Administrative p roceeding s at DOAH are " de novo . " § 120.57(1)(k) ,

Fla. Stat . This means that the undersigned is charged to reconsider the facts

and conclusions anew. The Department 's decision about Rice's death benefits

is considered preliminary, and carries no presumption of correctness. Miles v.

Florida A & M Univ . , 813 So. 2d 242 (Fla. 1 st DCA 2002); Fla. Dep ' t of

Transp. v. J.W.C. Co., 396 So. 2d 778, 785 (Fla. 1st DCA 1981) .

59 . These fundamental concepts of administrative law become particularly

meaningful in this case when viewed in light of the recent change to Article V

of the Florida Constitution addressing a gency deference, which states:

SECT ION 21. Judicial interpretation of statutes

and rules. Ð In interpreting a state statute or rule,

a state court or an officer hearing an

administrative action pursuant to general law may

not defer to an administrative agency ' s

interpretation of such statute or rule, and must

instead interpret such statute or rule de novo.

See also , MB Doral, LLC, v. Dep't of Bus. & Prof'l Reg., 895 So. 3d 850, 853

(Fla. 1st DCA 2020).

60 . The Dep artment of Management Services is the state agency

delegated the authority by th e Legislature to administer the FRS pursuant to

c hapter 121 .

6 1 . The Department has the burden of proof in this proceeding. Amico v.

Div . of Ret. , Dep' t of Admin . , 352 So. 2 d 556 (Fla. 1st DCA 1977); Seward v.

Dep't of Admin., Div. of Ret . , 366 So. 2d 82 (Fla. 1st DCA 1978).

Introduction

6 2 . This case is unique and requires the analysis and application of an

intricate and complex series of FRS statutes and rules. This becomes

particularly challenging since there is little case law providing guidance , or

interpreting the FRS, including the issues raised in this case .

6 3 . Adding to that, not every factual scenario which may arise involving

the recovery rights of a beneficiary upon the early death of an unvested

employee is adequately addressed, contemplate d , or covered in the FRS laws

and rules. This is one of those scenarios.

6 4 . The undersigned has attempted to outline below the rele vant statutes

and rules cited by the parties, as well as others that have a material bearing

on the outcome of this case.

A pplicable Statutes

6 5 . Rice did not have eight years of service in the FRS . Accordingly, her

death benefits available to her estate are provided by s ection 121.091(7) . This

section is found in Part I of the chapter, under General Provisions :

Section 121.0 91(7)

(7) DEATH BENEFITS.

(b) If the employment of a member is terminated by

reason of his or her death prior to being vested,

except as provided in paragraph (f), there shall be

payable to his or her designated beneficiary the

member ' s accumulated contr ibutions .

6 6 . Another section, s ection 121.021(26), defines " accumulated

contributions . " This section is also found in Part I of the chapter under

General Provisions. It provides:

Section 121.021(26)

(26) " Accumulated contributions " means the sum

of:

(a) A member ' s contributions , w ithout interest,

subsequent to December 1, 1970; and È. 12

6 7 . Because these two statutory sections are found in Part I, General

Provision , their terms apply to either the Pens ion or Investment Plans .

68 . Other provisions disc ussed or relied upon by the parties are found in

s ection 121.4501. They are outlined in sequential order below. Interestingly,

and of significance to this case, t hese provisions are found only in Part II of

the c hapter relating to the FRS Investment Plan .

69 . These provisions state in relevant part:

12 The three percent payroll deduction was not implemen ted until 2011. As a result,

"accumulated contributions" in Part I could not have meant payroll deductions when it was

passed several years prior. See generally , U. S . v. Steiger , 318 F .3d 1039, 1051 (11th Cir.

2003) ("It is generally presumed that Congress acts intentionally and purposely when it

includes particular language in one section of a statute but omits it in another. BFP v.

Resolution Trust Corp. , 511 U.S. 531, 536, 128 L. Ed. 2d 556, 114 S. Ct. 1757 (1994)(citing

Chicago v. Envtl. Def. Fund , 511 U .S. 328, 338, 128 L. Ed. 2d 302, 114 S. Ct. 1588

(1994) (internal quotation marks omitted)). That presumption is made even stronger when, as

here, Congress has amended a statute to include certain language in some, but not all,

provisions of the statute." I d . at 1051.) See also , U.S. v. Councilman , 418 F.3d 67 ( 1st Cir.

2004) and In Re: Search Warrant , 362 F.Supp. 2d 1298, 1300 ( M.D. Fla. 2006).

Section 121.4501

2(j)

" Member contributions " or " employee

contributions " means the sum of all amounts

deducted from the salary of a member by his or her

employer in accordance with s. 121.71(3) and

credite d to his or her individual account in the

investment plan, plus any earnings on such

amounts and any contributions specified in

paragraph (5)(e). "

4 (f) 2 , 3 and 5 :

2. If the employee chooses to move to the pension

plan, the employee must transfer from his or her

investment plan account, and from other employee

moneys as necessary, a sum representing the

present value of that employee ' s accumulated

benefit obligation immediately following the time of

such movement, determined assuming that

attained service equals the sum of service in the

pension plan and service in the investment plan.

Benefit commencement occurs on the first date the

employee is eligible for unreduce d benefits, using

the discount rate and other relevant actuarial

assumptions that were used to value the pension

plan liabilities in the most recent actuarial

valuation. For any employee who, at the time of the

second election, already maintains an accrued

benefit amount in the pension plan, the then -

present value of the accrued benefit is deemed part

of the required transfer amount. The division must

ensure that the transfer sum is prepared using a

formula and methodology certified by an enrolled

actuary. A refund of any employee contributions or

additional member payments made which exceed

the employee contributions that would have

accrued had the member remained in the pension

plan and not transferred to the investment plan is

not permitted.

3. Notwithstanding subparagraph 2., an employee

who chooses to move to the pension plan and who

became eligible to participate in the investment

plan by reason of employment in a regularly

established position with a state employer after

June 1, 2002; a di strict school board employer after

September 1, 2002; or a local employer after

December 1, 2002, must transfer from his or her

investment plan account, and from other employee

moneys as necessary, a sum representing the

employee ' s actuarial accrued liabil ity. A refund of

any employee contributions or additional member

payments made which exceed the employee

contributions that would have accrued had the

member remained in the pension plan and not

transferred to the investment plan is not permitted.

5. If the employee chooses to transfer from the

investment plan to the pension plan and retains an

excess account balance in the investment plan after

satisfying the buy - in requirements under this

paragraph, the excess may not be distributed until

the memb er retires from the pension plan. The

excess account balance may be rolled over to the

pension plan and used to purchase service credit or

upgrade creditable service in the pension plan.

(6)

(6) VESTING REQUIREMENTS. Ð

(a) A member is fully and immediate ly vested in

all employee contributions paid to the investment

plan as provided in s. 121.71, plus interest and

earnings thereon and less investment fees and

administrative charges.

(b)1. With respect to employer contributions paid

on behalf of the member to the investment plan,

plus interest and earnings thereon and less

investment fees and administrative charges, a

member is vested after completing 1 work year

with an employer, including any service while the

member was a member of the pension plan or an

optional retirement program authorized under s.

121.051(2)(c) or s. 121.055(6).

Applicable Rules

7 0 . There are several Florida Administrative Code Rules which apply to

this case as well. They state , in pertinent part:

a. Rule 60S - 4.008(1)(a) :

If the dea th of an FRS Pension Plan member

oc curs, other than in - line - of - duty, prior to the

member becoming vested, the member ' s desig nated

beneficiary shall receive a refund of the member ' s

accumulated contributionsÈ.

b. 19 - 11.007 (3) (e) :

For members transferring to the Pension Plan, if

the member's Investment Plan account balance was

less than the calculated amount required to buy

back into the Pension Plan, the election will require

a personal payment.

Applicable Case Law

71 . Against this backdrop of intricate a nd complex statutes and rules, the

undersigned has weighed and considered several Florida appellate cases

which aid in understanding several important principles which apply to the

FRS laws.

72 . Beginning in 1956, the Florida Supreme Court recognized that pension

statutes covering public employees should be liberally construed in favor of

the employee. In Greene v. Gray , 87 So. 2d 504 ( Fla. 1956) , the Court first

announced this principle by stating:

The law is therefore settled in this country that the

legi slature has power to provide deferred

compensation or pensions to officers and employees

for public services rendered and that such acts

should be liberally construed in favor of the

grantee .

Id. a t 507.

73 . The Court reconfirmed this principle in Sco t t v. Williams , 107 So. 3d

379, 385 (Fla. 2013). There the Court reiterated: " [w] e note, however, that

' pension statutes are to be liberally construed in favor of the intended

recipients. ' Bd. of Trustees of Town of Lake Park Firefighters ' Pension Plan v.

T own of Lake Park , 966 So. 2d 448, 451 (Fla. 4th DCA 2007)(citing Greene v.

Gray , 87 So. 2d 504, 507 (Fla.1956)) . "

74 . This principle of law was recently restated in New v. Department of

Management Services., Division of Retirement , 236 So. 3d 1154 ( Fla. 2 nd DCA

2018). There the Fifth District Court of Appeal held: " [p] ension statutes must

' be liberally construed in favor of the intended recipients. ' Scott v. Williams ,

107 So. 3d 379, 384 Ï 85 (Fla. 2013) (quoting Bd. of Trustees of Town of Lake

Park Firefight ers' Pension Plan v. Town of Lake Park , 966 So. 2d 448, 451

(Fla. 4th DCA 2007)). " 13

7 5 . Other longstanding, but equally important, principles of statutory

construction ar e noteworthy. As stated by the Florida Supreme Court in

Knowles v. Beverly Enterprises - Florida, Inc. , 898 So. 2d 1, 5 (Fla. 2004 ):

It is well settled that legislative intent is the

polestar that guides a court ' s statutory construction

analysis. See State v. Rife , 789 So. 2d 288, 292 (Fla.

2001); McLaughlin v. State , 721 So. 2d 1170, 1172

(F la. 1998). In determining that intent, we have

explained that " we look first to the statute ' s plain

meaning. " Moonlit Waters Apartments, Inc. v.

Cauley , 666 So. 2d 898, 900 (Fla. 1996). Normally,

" [w]hen the language of the statute is clear and

unambiguous and conveys a clear and definite

13 The New case is also significant in that it recognizes, as does the undersigned in this case ,

that the language of chapter 121 does not always resolve or address unique issues which

arise in the pension statutes. ( " Section 121.055(1)(h)(1) alone does not resolve this issue

because it does not address the transfer of functions between the state and local governments

or the change in the employer of a public employee enrolled in FRS and eligible for SMSC. " )

New at 1157.

meaning, there is no occasion for resorting to the

rules of statutory interpretation and construction;

the statute must be given its plain and obvious

meaning. " Holly v. Auld , 450 So. 2d 217, 219 (Fla.

1984) (quoting A.R. D ouglass, Inc., v. McRainey , 102

Fla. 1141, 137 So. 157, 159 (1931)).

7 6 . In this case, particu larly with respect to the application of the phrase

" member contributions " found in section 121.4501( 2) (j), it is acutely

important to consider whether a defini tional statute found in only one part of

a chapter is applicable to other parts of the same chapter. In short , it is not .

77 . In Bortell v. White Mountains Ins . Group, LTD. , 2 So. 3d 1041, 1045 - 46

(Fla. 4th DCA 2009), the court stated:

First, " [t]he legisl ative use of different terms in

different portions of the same statute is strong

evidence that different meanings were intended. "

Maddox v. State , 923 So. 2d 442, 446 (Fla. 2006)

(quoting State v. Mark Marks, P.A. , 698 So. 2d 533,

541 (Fla. 1997)). " When the legislature has used a

term ... in one secti on of the statute but omits it in

a nother section of the same statute, we will not

imply it where it has been excluded. " Leisure

Resorts, Inc. v. Frank J. Rooney, Inc. , 654 So. 2d

911, 914 (Fla. 1995).

7 8 . Similarly, in L.G . v. State , 939 So. 2d 1141, 1143 (Fla. 1st DCA 2006),

the court found that the lower court had erred in interpreting statutes in pari

materia :

In so interpreting the statute, the court overlooked

pertinent rules of statutory construction,

particularly the rule stating that where the

legislature has used a term in one part of the

statute, but has omitted it from another part of the

same provision, the court " will not imply it where it

has been excluded. " Leisure Resorts, Inc. v. Frank

J. Ro oney, Inc ., 654 So. 2d 911, 914 (Fla. 1995).

Stated differently, " it is a basic principle of

statutory construction that courts ' are n ot at liberty

to add words to statutes that were not placed there

by the Legislature. ' " Seagrave v. State , 802 So. 2d

281, 287 (Fla. 2001) (quoting Hayes v. State , 750 So.

2d 1, 4 (Fla. 1999)).

79 . The court continued:

The trial court ' s implicit incorporation of the

limiting language of subsection (46) into subsection

(44) is contrary to long - recognized principles

governing statutory construction. Where the

legislature has used a term in one part of the

statute and excluded it in another, it is improper to

imply the term in a provision where it has been

otherwise excluded. Because the legislature did not

include language in t he probation definition

limiting the imposition of probation for certain

specified delinquent acts, the lower court erred in

so doing.

80 . I n our case, the definition of " member contributions " in the Investment

Plan statute is specifically defined to mean " the sum of all amounts deducted

from the salary of a member by his or her employer È . " § 121.4501(2) (j) , Fla.

Stat . This same definition , or a similar explanation of the term " member ' s

contribution , " is not found in the Pension Plan part of the statute,

s ection 121.021(26).

8 1 . Without using the same definition or explanation for the phrase, it is

reasonable to conclude that the Legislature intended a different meaning.

The LegislatureÔs use of different terms in different sections of the same

statute is strong evidence that different meanings were intended. Beshore v.

Dep ' t of Fin . Servs. , 928 So. 2d 411 (Fla. 1st DCA 2006) .

8 2 . In sum, " member contribution s " is a specifically defined term in the

Investment Plan statute. It is not defined in the Pension P lan statute. The

definition used in the Investment Plan statute cannot be carried over and

used in the Pension Plan statute.

Ultimate Conclusions of Law and Fact

83 . Several reasonable conclusions are established by (1) applying the

plain and ordinary mean ings of the applicable FRS statutes; (2) applying the

case law which requires a liberal construction of the pension statutes in favor

of the intended recipients; and (3) applying several principles of statutory

construction.

8 4 . First and foremost, the def inition of " member contributions " (defined

as the sums of all amounts deducted from the salary of an employee) found in

section 121.4501(2) (j) is limited to the question of benefits related only to the

Investment Plan . It does not control or apply when ben efits under the

separate Pension Plan are under review. There are several reasons for this

conclusion.

8 5 . C onsidering the instructions announced in Bortell , the Legislature

unmistakingly chose not to use or extend the more restrictive or limiting

definiti on of " member contributions " found in the Investment Plan part to the

Pension Plan part.

86 . In particular, the section 121.4501(2) (j) Investment Plan definition of

" member ' s contribution " is not used to define " member contributions " found

annexed to " accu mulated contributions " in section 121.021(26). It is also

notable that there is no definition at all of " member contributions " found in

Part I, General Provisions, applicable to Pension Plans.

8 7 . The undersigned must, therefore, utilize the plain and ordi nary

definition of these unambiguous words. See , generally , Knowles and Bortell .

8 8 . The phrase in section 121.061(26) defining " accumulated

contributions " is " the sum of a memberÔs contributions. "

89 . The dictionary definition of " cont ributions " is defin ed as:

1 : The act of contributing: such as

a : the giving or supplying of something (s uch as

money or time) as a part or share .

https://merriam - webster.com/dictionary/contri butions (last visited

September 17, 2020).

90 . The dic tionary definition of the word " sum " is defined as:

2: the whole amount : aggregate

5a(1) : the result of adding numbers

https://merriam - webster.com/dictionary/sum (last visited September 17,

2020) .

91. Therefore, t he plain meaning of "accumulated contributions" would be:

t he whol e monetary amount Rice gave or supplied to the Pension Plan.

92 . While the literature and forms issued by the Department warn that

the " buy in " fee may be nonrefundable, there is nothing in the law or rules

that states , either directly or indirectly , that a vested amount would not be

recoverable.

93 . In the absence of any such language , and considering that the p ension

statutes must be liberally construed in favor of the recipient, the undersigned

concludes that Rice Ôs contributions vested in the Investment P lan should be

refunded . Likewise, there is nothing in the statutes or rules which indicate s

that her buy - in fee of $22, 943.81 is nonrefundable.

9 4 . Since Rice gave or supplied both the " buy in " f ee and vested amounts

from her Investment P lan, she is ent itled to recover both.

The Amount of $2,654.17

9 5 . The Department concedes that the sum of $2,654.17 , representing

Rice's contributions to the Pension Plan before she passed away , are

recoverable. The undersigned recommends that those funds be remitted to

Hernandez.

The Amount of $13 , 388.41

9 6 . It is undisputed that this amount is the total employee contributions

made by Rice while she was still in the Investment Plan. It is also undisputed

that she was fully vested in the Investment Plan when she made the transfer

to the Pension Plan.

9 7 . In the absence of statutory language in the Pension Plan part limiting

the scope of " accumulated contributions, " the undersigned must apply its

plain meaning and liberally construe section 121.021(26) in favor of the

reci pient, Hernandez.

9 8 . It is also worth noting that Florida Administrative Code

Rule 60S - 4.008 (1)(a) characterizes the amo unt recoverable as " a refund of the

member's accumulated contributions. " This term, under a dictionary

definition, denotes paying back money to someone. No one disputes that Rice

was vested in the Investment Plan when she made the transfer in 2017.

Therefore, her vested contributions to the Investment Plan should be paid

back as well.

9 9 . Moreover, using the plain and ordinary definition of the words " the

sum of a member's contributions , " the accumulated amount of Rice's

contributions to the Investment Plan are recoverable and the undersigned

recommends that $13, 388.41 be remitted to Hernandez .

The Amount of $22,943.81

100 . T he most speci fic statute addr essing benefits due at death prior to

vesting is section 121.091(7). That section does not require that a n invested

decedent should lose or forfeit the " buy in " fee. Nor does the Pension statute

limit what the decedent's estate may recover to only amounts deducted from

the employee's salary as argued by the Department . The undersigned can

only conclude that the Legislature intended a different outcome by not using

the same definition of "member contribution s" found in the Inves tment Plan

sta tute, section 121.4501(2) (j).

101 . The point is fairly straightforward and simple -- t he undersigned is

precluded by law from c arrying over the definition of " member contributions "

found in section 121.4501(2)(j) to give meaning to words found in another

par t, sections 121.091 (7) and 121.021(26). To do so would be error, and in

direct contravention of the law outlined in Bortell .

10 2 . Further, in the absence of a clear statute prohibiting the return of

the $22, 943.81 , the Department is asking the unde rsigned to engraft a

meaning on to the plain and ordinary meanin g of " accumulated

contributions . " This would also be an error. See L.G., 939 So. 2d at 1141.

10 3 . The Department has not carried its burden in this case and all sums

listed above should be remitted to Hernandez under the unique scenario

presented. In this case , it is not particularly relevant to determine how or

why the actuarial accrued liability amount was set. In fact, t here does not

seem to be any dispute about that.

10 4 . Rather, what does matter is that the Department, and now the

undersigned, must apply the plain and ordinary meaning of

section 121.091(7) , and must liberally construe the statute in favor of the

intended beneficiary, Hernandez.

Other Matters Raised

10 5 . The undersigned has n ot ov erlooked the Department 's citation to

secti on 121.012. It correctly points out that the provisions of Part I are also

applicable to Part II and III. While this is true, the converse is not true -- the

provisions of Part II and III are not applicable to Part I.

10 6 . As a result, since Part I does not have a definition of " member 's

contribution " similar to the definition found in Part II, the provisions of

section 121.012 do not chart the outcome of this case.

10 7 . The Department also ass erts for the first time in its P ropo sed

Recommended O rder that Hernandez lacks standing. This novel argument

was not previously adequately raised in a pleading, not argued at the

he aring , and was not a part of the Department 's proof at hearing. The

argument has , therefore , been waived.

10 8 . Regardless, Hernandez does have standing for a variety of reasons,

not the least of which is that the Department referred her case to DOAH and

mailed her important beneficiary correspondence related to the case. Resp.

Ex. 9. The Broward Circu it Court also designated her as the beneficiary of

Rice's estate.

10 9 . Clearly, her substantial interests were affected and being determined

by these proceedings. Hernandez , therefore, meets the test for standing

outlined in Agrico Chemical Company v. Dep artmen t of E n v iron mental

Regulation , 406 So. 2d 478 , 482 (Fla. 2d DCA 1981) , in that she will suffer an

injury in fact and that injury is of the type or nature which this proceeding is

designed to protect .

R ECOMMENDATION

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

R ECOMMENDED that the Department of Management Services, Division of

Retirement , pay to Rebecca Hernandez, Darlene Rice ' s daughter and

beneficia ry, the sums of $2,654.17, $13, 388.41 , and $22,943.81, totaling

$38,986.39 , p lus the appropriate statutory rates of interest which have

accrued from Oc tober 2, 2018, the date of the circuit c ourt ' s Order of

Summary Administration, to the date of payment.

D ONE A ND E NTERED this 21st day of September, 2020 , in Tallahassee,

Leon Count y, Florida.

S

R OBERT L. K ILBRIDE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 21st day of September , 2020 .

C OPIES F URNISHED :

Gayla Grant, Esquire

Department of Management Services

4050 Esplanade Way , Suite 160

Tallahassee, Florida 32399

(eServed)

Larry Allan Karns, Esquire

Spink, Shrouder & Karns, P.A.

9700 Griffin Road

Cooper City, Florida 33328

(eServed)

Nikita S. Parker, Esquire

Department of Management Services

4050 Esplanade Way , Suite 160

Tallahassee, Florida 32399

(eServed)

David DiSalvo, Director

Division of Retirement

Department of Management Services

Post Office Box 9000

Tallahassee, Florida 32315 - 9000

(eServed)

William Chorba, General Counsel

Office of the General Counsel

Department of Management Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399 - 09 50

(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 exceptions to this Recommended

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

case.