96-005509 Edward Hernandez vs. Division Of State Employees Insurance Status: Closed Recommended Order on Tuesday, February 25, 1997.

Summary: Former state employee was not entitled to continuation of health care insurance coverage at contribution cost for full-time employees.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

EDWARD HERNANDEZ, )

)

Petitioner, )

)

vs. )

) CASE NO. 96-5509

DIVISION OF STATE EMPLOYEES )

INSURANCE, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

On January 21, 1997, a formal administrative hearing was

held by video in this case in Tallahassee, Florida, before

Richard Hixson, Administrative Law Judge, Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Edward Hernandez (representing himself)

Post Office Box 173265

Tampa, Florida 32672-1265

For Respondent: Cindy Horne, Assistant General Counsel

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

STATEMENT OF THE ISSUES

The issues for determination in this case are: 1) whether

Respondent failed to provide Petitioner proper notice of

continuation health care coverage under the Florida Employees

Group Insurance Program; and, 2) whether Petitioner is entitled

to reimbursement for medical expenses incurred subsequent to

termination of his employment.

PRELIMINARY STATEMENT

On September 5, 1996, Petitioner, EDWARD HERNANDEZ, filed a

Petition for Declaratory Statement with the Florida Department

of Management Services contesting a July 10, 1996 letter from

Respondent, DIVISION OF STATE EMPLOYEES INSURANCE, in which

Respondent declined to accept Petitioner's tender of a premium

payment for continuation of health care insurance. The Petition

was forwarded to the Division of Administrative Hearings on

November 15, 1996. Although styled a Petition for Declaratory

Statement, the Petition alleged disputed issues of material

fact, and sought relief pursuant to Section 120.57(1), Florida

Statutes . Accordingly, by order entered November 26, 1996, it

was determined, without objection, that the case should proceed

to formal administrative hearing pursuant to Section 120.57(1),

Florida Statutes . Formal hearing was held by video on January

21, 1997.

At hearing Petitioner testified in his own behalf, and also

presented the testimony of one witness, Angelita Osorio.

Respondent presented the testimony of one witness, Charles A.

Salerno, Chief of Customer Services for Respondent.

The parties agreed to the introduction of Joint Exhibit 1,

a composite of documents comprising the Petitioner's file in

this matter. Additionally, Respondent presented two additional

exhibits which were received in evidence. The transcript of the

hearing was filed on February 7, 1997. Respondent filed a

Proposed Recommended Order on February 13, 1997. Petitioner

filed his Proposed Recommended Order on February 20, 1997.

FINDINGS OF FACT

1. Petitioner, EDWARD HERNANDEZ, is a former employee of

the University of South Florida (USF) in Tampa, Florida.

2. Respondent, DIVISION OF STATE EMPLOYEES INSURANCE, is

the agency of the State of Florida responsible for the

administration of the Florida Employees Group Insurance Program.

3. On July 7, 1994, Petitioner was terminated from his

employment as a library technical assistant with the University

of South Florida in Tampa, Florida. Petitioner's employment

termination resulted from a poor performance appraisal, and did

not result from gross misconduct.

4. While employed with the University of South Florida,

Petitioner participated in the Florida Employees Group Insurance

Program, which participation included individual health care

coverage provided by a Health Maintenance Organization (HMO).

As an employee, Petitioner's contribution to the cost of such

individual health care coverage was $26.02 per month which was

automatically deducted from his compensation by his employer.

As an employment benefit, Petitioner's employer, the University

of South Florida, was responsible for, and paid the remaining

cost associated with Petitioner’s health care coverage.

5. On July 27, 1994, Respondent DIVISION OF STATE

EMPLOYEES INSURANCE, received notification of Petitioner's

termination of employment from USF.

6. On August 10, 1994, Respondent initially mailed a

notice to Petitioner informing him of his eligibility for

continuation coverage. The initial notice of continuing

coverage was mailed to Petitioner at PO Box 17803, Tampa,

Florida, 33682, which at that time was the address listed for

Petitioner in the Employees Group Insurance Program system. In

April of 1994, however, Petitioner had relocated, and

Petitioner's mailing address in August of 1994 was 12741 North

17th Street. Petitioner had informed the University of South

Florida as to his change of address; however, for reasons

unknown, Petitioner's change of address was not entered into the

Employees Group Insurance Program system. Petitioner,

accordingly, did not receive the initial notice of continuation

coverage mailed by Respondent on August 10, 1994, nor was the

initial notice returned to Respondent.

7. Almost eighteen months later, on March 11, 1996,

Respondent received a letter of inquiry from Petitioner dated

March 8, 1996, stating that Petitioner had significant medical

needs and was awaiting notification from Respondent of his

eligibility for continuing coverage.

8. Respondent's staff reviewed Petitioner's letter dated

March 8, 1996 to determine whether receipt of the initial notice

of continuation coverage could be verified. Because

Respondent's 1994 records had already been archived, there was a

question at that time regarding verification that the initial

notice of continuation coverage had been properly mailed to

Petitioner. Accordingly, on June 6, 1996, Respondent in good

faith mailed a second notice of continuation coverage to

Petitioner which provided for retroactivity back to the date of

Petitioner's termination of employment.

9. Petitioner received the second notice of continuation

coverage.

10. The second notice of continuation coverage stated that

Petitioner was eligible for individual continued coverage for

the eighteen consecutive months after termination of his

employment with USF. The notice stated that the group coverage

in effect for Petitioner at the time of his termination was a

Health Maintenance Organization (HMO). The notice specifically

stated in bold print that the cost of the premium for individual

continuation coverage was $162.61 per month. This amount

represents the cost of the premium of $158 plus a two percent

(2%) administrative fee. This amount does not exceed 102% of

the applicable premium cost for such period. The notice further

stated that the application and premium must be postmarked no

later than August 6, 1996. Under the terms of the notice of

continuation coverage, if implemented, Petitioner's continuation

coverage would begin on September 1, 1994, and would be

reinstated for the eligibility period of eighteen consecutive

months from that date.

11. On June 16, 1996, Petitioner executed the application

for continuation coverage, and enclosed a premium payment in the

amount of $26.02, which represented Petitioner's cost for

coverage while employed with the University of South Florida.

Petitioner also enclosed a letter dated June 22, 1996, stating

his position to Respondent regarding the retroactivity of

coverage and the basis for his contention that he should not be

required to pay a premium in excess of his cost prior to

termination of employment. Petitioner further requested

reimbursement from Respondent in the amount of $272.27 for

medical expenses incurred by Petitioner during the period

between termination and receipt of the second notice of

continuation coverage.

12. Respondent received Petitioner's application, payment

and letter on June 25, 1996.

13. On July 10, 1996, Respondent sent Petitioner a notice

stating that Petitioner's premium payment would not be accepted,

and further stating that " your letter has been forwarded to

the Director's Office for further review, they will be

corresponding with you on this matter shortly."

14. On September 5, 1996, Petitioner filed a Petition for

Declaratory Statement with Respondent which as indicated above,

instituted these proceedings.

CONCLUSIONS OF LAW

15. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding. Section 120.57, Florida Statutes .

16. Petitioner has the burden of proving the allegatio ns

of his petition by a preponderance of the evidence. Florida

Department of Transportation v. J.W.C. Co., Inc. , 396 So.2 nd 778

(Fla. 1 st DCA 1984)

17. The evidence establishes that Petitioner was eligible

for, and entitled to continuation coverage for health insurance

under 42 U.S.C., subsections 300bb et . seq . Petitioner’s

eligibility for continued coverage is further governed by 29

U.S.C., subsections 1161, 1162, 1166.

18. Title 29 U.S.C., Section 1162(3)(A) and 42 U.S.C.,

Section 300bb-2(3) state in pertinent part:

Premium Requirements. The plan may require a

premium for any period of continuation

coverage except that such premium-

(A) shall not exceed 102% of the applicable

premium for such period.

19. In accordance with the above-re ferenced federal

statutes, an eligible employee is required to pay up to 102% of

the premium. The notification sent to Petitioner by Respondent

accordingly met the requirements of federal law.

20. In this regard, the Department of Management Services

(DMS) promulgated Rules 60P-2.013 and 2.015, Florida

Administrative Code , regarding continuation coverage for

dismissed employees. (The 1994 rules are the rules in effect at

the time of Petitioner’s termination, and govern this case.)

21. Rule 60P-2.013(1) provided:

If an insured employee is dismissed, he or

she is no longer eligible for coverage under

the Health Plan, but may convert to a direct

pay plan offered by the administrator within

thirty-one (31) calendar days after

termination of coverage. The administrator

shall issue such standard contract as is

issued to direct payment subscribers and at

its stipulated rates then in effect.

22. In compliance with federal law and departmental rules,

DMS properly mailed a notice to Petitioner at his address of

record within thirty (30) days of termination. Petitioner, for

reasons unknown, did not receive the notice at his forwarding

address. Eighteen months later Petitioner sent Respondent an

inquiry letter. In good faith, Respondent sent Petitioner a

second notice offering continuation coverage, mailed in June of

1996. The second notice specifically set out the terms of

continuation coverage, including the specification that the

premium due for continuation coverage was $162.61, which is the

appropriate cost of the continuation coverage premium under

state and federal law.

23. In support of his position Petitioner cites 42 U.S.C.,

Section 300bb-4(1), which provides:

(1) In general

The term “applicable premium” means, with

respect to any period of continuation

coverage of qualified beneficiaries, the

cost to the plan for such period of the

coverage for similarly situated

beneficiaries with respect to whom a

qualifying event has not occurred (without

regard to whether such cost is paid by the

employer or employee).

This section, however, specifically requires Respondent to

calculate the “applicable premium” at “the cost to the plan,”

not the cost to Petitioner. The evidence reflects that “the

cost to the plan” for Petitioner’s applicable premium was

$162.61 per month. Accordingly, Petitioner is not entitled to

continuation coverage at his cost of $26.06 per month.

24. The evidence fails to establish that Respondent acted

in violation of federal or state law. The evidence fails to

establish that Petitioner is entitled to continued coverage at

the premium contribution cost of a full-time employee, or that

Petitioner is entitled to $272.27 in medical costs incurred

subsequent to his termination of employment.

25. Should Petitioner pay the amount required for

continuation coverage, Respondent has the authorization to then

allow Petitioner to re-institute continuation coverage for the

eighteen-month period following his termination of employment.

RECOMMENDATION

Based on the foregoing Findings of Fact and C onclusions of

Law, it is recommended that the Respondent enter a Final Order

denying the petition.

DONE and ORDERED this 25th day of February, 1997, in

Tallahassee, Florida.

___________________________________

RICHARD HIXSON

Administrative Law Judge

Division of Administrative Hearings

DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 25th day of February, 1997.

COPIES FURNISHED:

Edward Hernandez, Esquire

Post Office Box 173265

Tampa, Florida 32672-1265

Cindy Horne, Assistant General Counsel

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399-0950

A. J. McMullian, III, Director

Division of Retirement

Cedars Executive Center, Building C

2639 North Monroe Street

Tallahassee, Florida 32399-1560

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

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

in this case.