93-005528 Robert P. Hatcher vs. Division Of Retirement Status: Closed Recommended Order on Thursday, January 6, 1994.

Summary: Employee who is member of Teachers' Retirement System is not eligible to transfer to Florida Retirement System where reemployment was not bona fide.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ROBERT P. HATCHER, )

)

Petitioner, )

)

vs. ) CASE NO. 93-5528

)

DEPARTMENT OF MANAGEMENT SERVICES, )

DIVISION OF RETIREMENT, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case at West

Palm Beach, Florida, on November 18, 1993, before Michael M. Parrish, a duly

designated Hearing Officer of the Division of Administrative Hearings.

Appearances for the parties at the hearing were as follows:

APPEARANCES

For Petitioner: Allan L. Hoffman, Esquire

1610 Southern Boulevard

West Palm Beach, Florida 33406

For Respondent: Jodi B. Jennings, Esquire

Division of Retirement

Cedars Executive Center, Building C

2639 North Monroe Street

Tallahassee, Florida 32399-1560

STATEMENT OF THE ISSUES

The issue in this case is whether the Petitioner, Mr. Robert P. Hatcher, is

eligible to retire under the Florida Retirement System rather than under the

Teachers' Retirement System.

PRELIMINARY STATEMENT

At the hearing, Petitioner testified on his own behalf and also presented

the testimony of Carol Hatcher, Petitioner's wife; John Spriggs, Assistant

Director of Personnel for the Palm Beach County School Board; and Bill Owens,

Director of Human Resources for the Okeechobee County School Board. Petitioner

introduced Exhibits 1 through 4 into evidence. Respondent presented the

testimony of June Ferguson, Retirement Administrator, Bureau of Retirement

Calculations. The parties stipulated to submit the deposition of Bill Owens

into evidence, with the understanding that Mr. Owens would not be available for

the hearing. The deposition of Mr. Owens was jointly submitted, and the

exhibits attached thereto were introduced as Respondent's Exhibits 1 through 7.

Respondent further introduced Exhibits 8 through 11. Respondent's exhibit

marked as 12 for identification was not admitted into evidence.

Respondent requested official recognition of the case of Frances Kauffman

and Linda Meadows v. Division of Retirement, DOAH Case Nos. 88-5048 and 88-5049,

issued May 30, 1989, aff'd per curiam, 559 So.2d 585 (Fla. 2d DCA 1990), which

request was granted. Petitioner requested that the Hearing Officer take notice

of Chapter 121 of the Florida Statutes, which request was also granted. The

parties did not order a transcript of the hearing.

At the conclusion of the hearing the parties were allowed until December 8,

1993, within which to file their proposed recommended orders. Both parties

filed timely proposed recommended orders containing proposed findings of fact

and conclusions of law. The proposals submitted by both parties have been

carefully considered during the preparation of this Recommended Order. The

Hearing Officer has found the proposed recommended order submitted by the

Respondent to be particularly persuasive and the findings of fact and

conclusions of law which follow have in large part been drawn from that

document. Specific rulings on all findings of fact proposed by the parties are

contained in the appendix hereto.

FINDINGS OF FACT

1. The Petitioner was employed by the Hillsborough County School Board on

August 25, 1959, and was enrolled in the Teachers' Retirement System (TRS) at

that time.

2. The Petitioner worked for the Palm Beach County School Board for 27

years, from 1966 through May 15, 1992.

3. The Petitioner worked with no breaks in service during all years in

which the Legislature provided open enrollment periods for members of the TRS to

transfer to the Florida Retirement System (FRS). The Petitioner was aware of

the open enrollment periods, but declined all opportunities to transfer to the

FRS. In this regard, the Petitioner specifically rejected membership in the FRS

for the 1974 and 1978 open enrollment periods by signed ballots dated November

27, 1974, and November 2, 1978.

4. Petitioner voluntarily terminated his employment with the Palm Beach

County School Board on May 15, 1992.

5. Following his termination with the Palm Beach County School Board,

Petitioner began seeking employment with an agency that participated in the FRS

in order to become eligible to transfer from the TRS to the FRS.

6. The Petitioner's first contact with the Okeechobee County School Board

(OCSB) was approximately two years ago when Dr. Mary Gray, Petitioner's

acquaintance, introduced Petitioner to Mr. Owens. The Petitioner approached Mr.

Owens in an attempt to obtain employment with the OCSB.

7. The Petitioner sought employment with the OCSB for the sole purpose of

obtaining entry into the FRS.

8. Mr. Owens recruited and interviewed the Petitioner for the position of

Custodian I at the OCSB. At the time the Petitioner was recruited and

interviewed, Mr. Owens knew the Petitioner wanted to work for the OCSB for the

sole purpose of establishing retirement eligibility. The Petitioner requested

that he be hired to work only long enough to establish retirement eligibility by

working for a state employer that was a member of the Florida Retirement System.

Prior to the Petitioner's request, the OCSB had never had such a request before.

9. The OCSB hired the Petitioner with the knowledge that he had health

problems and believing that he would not be able to perform the duties of

custodian for more than a short period of time.

10. By letter dated June 23, 1993, the OCSB approved the Petitioner's

employment as Custodian I for the OCSB effective June 30, 1993. The Custodian I

position was classified as a regular position, not a short-term position.

11. The Petitioner reported to work at the Okeechobee High School on June

30, 1993. He answered phones for several hours, performed some inventory work,

then resigned that afternoon. The OCSB acknowledged receipt of the Petitioner's

resignation letter, effective June 30, 1993, by letter dated August 2, 1993.

12. The Petitioner submitted an application for membership in the FRS to

the OCSB on June 30, 1993.

13. Prior to his employment with the OCSB, the Petitioner investigated the

possibility of transferring from the TRS to the FRS. The Petitioner was neither

told nor did he receive any written communication by the DOR that he could

transfer to the FRS based upon employment for one day.

14. By letter dated August 16, 1993, the Respondent notified the

Petitioner that he could not obtain entry into the FRS because his employment

was not bona fide, but that he could retire under the TRS.

15. If the Petitioner were to retire under the TRS, his Option 1 monthly

benefit payment would be $2,571.64; his Option 3 monthly benefit payment would

be $2,396.25. Under the FRS, Petitioner's Option 1 monthly benefit payment

would be $3,054.91; his Option 3 monthly benefit payment would be $2,771.20.

CONCLUSIONS OF LAW

16. The Division of Administrative Hearings has jurisdiction over the

parties to and the subject matter of this cause, pursuant to Section 120.57(1),

Florida Statutes.

17. Chapter 121, Florida Statutes, established the Florida Retirement

System in 1970.

18. The Teachers' Retirement System was established pursuant to Chapter

238, Florida Statutes. The administration of the Teachers' Retirement System

was consolidated with the administration of the Florida Retirement System in

1970. Section 121.011(2)(b), Florida Statutes.

19. The Division of Retirement, pursuant to Section 121.031(1), Florida

Statutes, is authorized to implement rules for the effective and efficient

administration of the system. An agency's interpretation of its own rule is

entitled to great weight. See Franklin Ambulance Service v. Department of

Health and Rehabilitative Services, 450 So.2d 580 (Fla. 1st DCA, 1984).

20. Rule 60S-1.002, Florida Administrative Code, states:

The Division shall deny membership to any

officer or employee who does not meet the

requirements for membership in the Florida

Retirement System as set forth in Chapter

121, Florida Statutes, and these rules.

21. Two methods of transfer from the TRS to the FRS have been available

under the law. The first method provided six statutory open enrollment periods

between 1970 and 1991. Section 121.051(2)(a), Florida Statutes, and Rule 60S-

1.004(2)(a), Florida Administrative Code. The second method requires employees

to terminate employment and be subsequently reemployed. See Section

121.051(1)(c), Florida Statutes, and Rule 60S-6.001(60), Florida Administrative

Code.

22. Petitioner chose not to transfer from the TRS to the FRS during the

six open enrollment periods provided by the Legislature between 1970 and 1991.

Petitioner is attempting to transfer now under the termination and reemployment

provisions because it is to his economic advantage to do so; if Petitioner were

to retire under the FRS, as opposed to retiring under the TRS, his monthly

benefit payment under Option 1 would increase by $483.27; his monthly benefit

payment under Option 3 would increase by $374.95.

23. In order to transfer under the reemployment provisions, the Petitioner

must show that his termination and subsequent reemployment comported with the

requirements of the law. In this regard, Section 121.051(1)(c)1., Florida

Statutes, provides:

After June 30, 1983, a member of an existing

system who is reemployed after terminating

his employment shall have at the time of

reemployment the option of selecting to

remain in the existing retirement system or

to transfer to the Florida Retirement System.

Failure to submit such selection in writing

to the Division of Retirement within 6 months

of reemployment shall result in compulsory

membership in the Florida Retirement System.

24. And, Section 121.051(1)(c)2., Florida Statutes, provides:

After June 30, 1988, the provisions of

subparagraph 1. shall not apply to a member

of an existing system who is reemployed

within 12 months after terminating his

employment. Such member shall continue to

have membership in the existing system upon

reemployment and shall not be permitted to

become a member of the Florida Retirement

System, except by transferring to that system

as provided in ss. 121.052 and 121.055.

25. The facts in this case establish that the Petitioner had a bona fide

termination from the Palm Beach County School Board and that he was not employed

by an FRS employer for one year following that termination. However, the facts

in this case surrounding Petitioner's subsequent employment with the OCSB also

establish that such employment was something less than genuine employment.

Rather, the Petitioner's purported employment with the OCSB was more in the

nature of a ruse or sham to achieve a goal other than genuine gainful

employment. The purported employment relationship between Petitioner and the

OCSB was, at best, feigned. It is clear from the greater weight of the evidence

that neither the Petitioner nor the OCSB intended to enter into a regular

employer/employee relationship; the sole purpose of their brief relationship

being to provide a conduit through which the Petitioner could obtain access to

the FRS.

26. An analogous issue was litigated in Frances Kauffman and Linda Meadows

v. Division of Retirement, DOAH Case Nos. 88-5048 and 88-5049, issued May 30,

1989, aff'd per curiam, 559 So.2d 585 (Fla. 2d DCA 1990). In that case, the

issue was whether Kauffman and Meadows, members of the TRS, could transfer from

the TRS to the FRS. Resolution of that issue depended upon whether the members

had had bona fide terminations for purposes of Chapter 121 of the Florida

Statutes. The appellate court affirmed per curiam DOR's denial of Petitioners'

applications to transfer to the FRS. The DOR's decision in Kauffman and Meadows

turned upon the fact that the alleged terminations were done exclusively for

Petitioners to transfer from one retirement system to another. Petitioners

worked closely with the school board administration to bring their terminations

within the literal language of the rules of the FRS, but the terminations were

not bona fide for retirement purposes.

27. The issue in the present case is analogous and turns on whether

Petitioner's reemployment was bona fide for retirement purposes. The term "bona

fide" is defined in Black's Law Dictionary, Sixth Edition, 1990, at page 177, as

follows:

In or with good faith; honestly, openly, and

sincerely; without deceit or frauduly;

actually; without simulation or pretense.

Innocently; in the attitude of trust or

confidence; without notice of fraud, etc.

Real, actual, genuine, and not feigned.

28. The DOR has no rule which states a specific period of time a member

must work for an FRS employer in order to transfer to the FRS. However,

implicit in a common sense interpretation of the requirement for reemployment is

the notion that the reemployment must be bona fide. Just as the absence of bona

fide terminations were a bar to the relief sought in the Kauffman and Meadows

case, the absence of a bona fide reemployment is a bar to the relief the

Petitioner seeks here.

29. The Petitioner argues that this case is controlled by the decision in

Steinhardt v. State of Florida, Division of Retirement, 318 So.2d 562 (Fla. 2d

DCA 1975). Although the legal issues presented in that case are somewhat

similar to the ones presented here, the facts before the court in the Steinhardt

case are so different from the facts in this case as to render it inapposite.

RECOMMENDATION

On the basis of all of the foregoing, it is RECOMMENDED that the Division

of Retirement issue a final order concluding that the Petitioner is not eligible

for participation in the Florida Retirement System and denying Petitioner's

application for transfer from the Teachers' Retirement System to the Florida

Retirement System.

DONE AND ENTERED this 6th day of January 1994 in Tallahassee, Leon County,

Florida.

___________________________

MICHAEL M. PARRISH

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the

Division of Administrative Hearings

this 6th day of January 1994.

APPENDIX

The following are my specific rulings on all proposed findings of fact

submitted by all parties.

Findings submitted by Petitioner:

Paragraphs a and b: Accepted in substance.

Paragraph c: Accepted in part and rejected in part; accepted that the

Petitioner obtained the described employment, but rejected that the employment

was bona fide.

Paragraph d: Accepted in part and rejected in part. The conclusion that

the one day was sufficient to qualify the Petitioner for transfer to FRS is

rejected as incorrect and as not warranted by the evidence; the remainder of the

facts in this paragraph are accepted.

Paragraph e: Rejected as constituting a conclusion of law, rather than a

proposed finding of fact; a conclusion which is, in any event, not warranted by

the evidence in this case.

Paragraph f: Rejected as constituting a conclusion of law, rather than a

proposed finding of fact; a conclusion which is, in any event, not warranted by

the evidence in this case.

Findings submitted by Respondent:

All of the proposed findings of fact submitted by the Respondent have been

accepted in whole or in substance in the Findings of Fact made in this

Recommended Order.

COPIES FURNISHED:

Jodi B. Jennings, Esquire

Division of Retirement

Building C

Cedars Executive Center

2639 North Monroe Street

Tallahassee, Florida 32399-1560

Allan L. Hoffman, Esquire

1610 Southern Boulevard

West Palm Beach, Florida 3406

A. J. McMullian, III, Director

Division of Retirement

Cedars Executive Center, Building C

2639 North Monroe Street

Tallahassee, Florida 32399-1560

William H. Lindner, Secretary

Department of Management Services

Knight Building, Suite 307

Koger Executive Center

2737 Centerview Drive

Tallahassee, Florida 32399-0950

Sylvan Strickland, Acting General Counsel

Department of Management Services

Knight Building, Suite 309

Koger Executive Center

2737 Centerview Drive

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended

order. All agencies allow each party at least ten days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this recommended order. Any exceptions to this recommended order should be

filed with the agency that will issue the final order in this case.