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Cypen & Cypen
OCTOBER 20, 2011

Stephen H. Cypen, Esq., Editor

1.      THEY’RE BAAAACK: On October 13, 2011, Representative Costello introduced House Bill 365 into the Florida House. The bill

revises conditions under which certain special risk employees who suffer or have died from specified medical conditions are presumed to have been injured or killed accidentally & in line of duty; revises conditions under which presumption with respect to disability due to any of specified diseases is against occurrence in line of duty for purposes of workers' compensation claims; provides medical conditions or behaviors that are appropriate for consideration in denying or overcoming presumption of accidental disability or death suffered in line of duty for police officers & firefighters; changes evidentiary standard; revises definition of "compensation" or "salary" for purposes of firefighters' & police officers' pensions; authorizes municipality to change municipal representation of board of trustees pursuant to certain requirements; provides duties of board of trustees relating to reporting of expenses & operation under administrative expense budget; provides process for determining allocation of premium tax revenues to supplemental plan; revises requirements of board relating to employment of legal counsel, actuaries, & other advisers; provides for discontinuation of excise taxes under certain conditions; revises provisions relating to benefits paid from premium tax by municipality or special fire control district that has its own pension plan; revises provisions relating to termination of plans & distribution of funds; provides declaration of important state interest,

and would substantially revise Chapters 175 and 185, Florida Statutes, effective July 1, 2012. We will do a summary unless an official one becomes available in the near future. Meanwhile, readers can access the full bill text at

2.      WHY ARE WE NOT TALKING ABOUT INCREASING SOCIAL SECURITY BENEFITS?:  That question is asked by National Academy of Social Insurance. For a long time -- even before some of the current crop of presidential candidates began accusing America’s most successful public program of being nothing more than a “Ponzi scheme” -- national conversation about fixing Social Security has centered around cutting benefits or raising the retirement age. Since Social Security does not contribute to the deficit, and is actually running an impressive $2.6 Trillion surplus, there is no need to panic about the program’s projected long-term revenue shortfall.  A report released from the Commission to Modernize Social Security suggests that, instead of rushing headlong into hasty cuts, thoughtful policymaking can address Social Security’s long-term solvency while also modernizing the program to meet needs of more people who depend on Social Security for economic security. The report focuses on the demographic shifts that will affect Social Security’s proven track record of providing a critical source of income for beneficiaries. The report notes that people of color will become the majority of Americans within the next three decades, and explores why and how people of color depend on Social Security differently than white people.  For instance, three-quarters of white Social Security beneficiaries receive retirement benefits, while a bare majority of beneficiaries of “other” racial and ethnic groups receive disability or survivor benefits.  One of the report’s most compelling points is the case for increasing Social Security benefits. Social Security is a social insurance program, not a welfare program, which encompasses broad-based systems for insuring workers and their families against economic insecurity caused by loss of income from work and the cost of health care. Like other social insurance programs, Social Security is not a hand-out, but rather an insurance policy that workers pay for to protect themselves for when they can no longer work. Since 1935, this system has worked extremely well, sharply reducing poverty, especially among the elderly, despite the fact that benefits are modest by any measure.  (The average monthly benefit in 2011 is $1,177 for retired workers.) When Social Security was enacted, it was assumed that private pensions would supplement Social Security benefits.  With fewer and fewer employers providing pensions today, reliance on Social Security has increased:  nearly two-in-three people 65 and older get half or more of their income from Social Security.  For people of color, reliance on the program is even greater:  Social Security benefits are the only source of income for two out of every five Latino and African American retiree benefit households.  In 2009, NASI published a report, which provided specifics about the impact and cost of various proposals to improve benefit adequacy without breaking the bank and options to strengthen the systems finances.  The new Commission report builds on those analyses, providing a blueprint for policymakers to modernize Social Security to fulfill its role for the American people of the future.  The report shows that by: 

  • eliminating the cap on Social Security payroll contributions (currently at $106,800),  
  • including new state and local workers in Social Security,  
  • slowly raising Social Security’s payroll tax and
  • treating salary reduction plans like 401(k)s,

Social Security will be able to:

  • provide higher benefits to widowed spouses,
  • provide benefits to women who stay home to care for children or relatives,  
  • reinstate the student benefit up to age 22 and
  • increase benefits across the board.  

Poll after poll shows that Americans overwhelmingly support Social Security, and would rather pay more to strengthen the program than to see benefits cut.  In a show of bipartisan agreement, Social Security is popular across party lines:  85 percent of Independents and 81 percent of Republicans agree with 93 percent of Democrats that they do not mind paying Social Security taxes.  As for contributing more from wages to preserve and strengthen Social Security, 77 percent of Americans say it is critical to preserve Social Security, even if it means paying higher payroll taxes to do so. 

3.      HOW PREPARED ARE STATE AND LOCAL WORKERS FOR RETIREMENT?:   A new Issue in Brief from Center for Retirement Research at Boston College recognizes a widespread perception that state/local government workers receive high pension benefits which, combined with Social Security, provide more than adequate retirement income. The perception is consistent with multiplying the 2-percent benefit factor in most plan formulae by a 35- to 40-year career, and adding a Social Security benefit.  But this calculation assumes that individuals spend enough of their career in the public sector to produce such a retirement outcome. The brief summarized results of an HRS paper to test the hypothesis that state/local workers have more than enough money for retirement. The brief first explores how much income people need in retirement, and raises some conceptual issues involved in constructing replacement rates.  Next, the brief presents replacement rates derived from Social Security and from employer-sponsored plans for individual workers in the private and state/local sectors.  The analysis is then replicated for households.  Finally, the brief reports how non-pension financial assets affect the replacement rate picture.  Some key findings are 

  • Most state/local pension plans are designed to provide adequate retirement income for full-career workers. 
  • However, the vast majority of state/local workers spend only a portion of their career in the public sector. 
  • As a result, most households in state/local employment retire with total replacement rates that fall well short of the 80-percent target. 

SLP #22 (October 2011)

4.      IN WORKERS’ COMP CASES, DECISION IN FAVOR OF PARTY WITHOUT BURDEN OF PROOF NEED NOT BE SUPPORTED BY COMPETENT SUBSTANTIAL EVIDENCE: Fortner, a firefighter/paramedic employed by Town of Longboat Key, sought workers’ compensation benefits after injuring his left ankle in January 2010 while exercising on an elliptical machine during his shift.  He claimed the injury occurred because of trauma to his left ankle from work-related accidents in May 2002, September 2005 and September 2009.  A Judge of Compensation Claims denied Fortner’s claim, finding no medical evidence that any of the asserted work-related accidents, including the elliptical machine incident in January 2010, resulted in injury to his ankle.  On appeal, Fortner challenged denial of his claim, arguing that the decision was unsupported by competent, substantial evidence.  After reviewing the evidence Fortner presented in support of his claim, the district court of appeal concurred with the JCC’s conclusion, affirmed denial of benefits and restated a very important rule of law, of which we were not aware: in workers’ compensation cases, a decision in favor of the party without the burden of proof need not be supported by competent substantial evidence. Fortner v. Town of Longboat Key, 36 Fla. L. Weekly D2282 (Fla. 1st DCA, October 17, 2011). 

5.      A LETTER FROM GOLDMAN SACHS: From the warped mind of comedian Andy Borowitz comes the following fictitious letter attributed to Lloyd Blankfein, Chairman of banking giant Goldman Sachs: 

Dear Investor:

Up until now, Goldman Sachs has been silent on the subject of the protest movement known as “Occupy Wall Street.”  That silence does not mean, however, that it has not been very much on our minds.  As thousands have gathered in Lower Manhattan, passionately expressing their deep discontent with the status quo, we have taken note of these protests.  And we have asked ourselves the following question: How can we make money off them? 

And the answer is the newly launched Goldman Sachs Global Rage Fund, whose investment objective is to monetize the Occupy Wall Street protests as they spread around the world.  At Goldman, we recognize that capitalist system as we know it is circling the drain -- but there is plenty of money to be made on the way down. 

The Rage Fund will seek out opportunities to invest in products that are poised to benefit from spreading protests, from police batons and barricades to stun guns and forehead bandages.  Furthermore, as clashes between police and protesters turn ever more violent, we are making significant bets on companies that manufacture replacements for broken windows and overturned cars, as well as raw materials necessary for construction and incineration of effigies. 

It would be tempting, at a time like this, to say “Let them eat cake.”  But at Goldman, we are actively seeking to corner the market in cake futures.  We project that through our aggressive market manipulation, the price of a piece of cake will quadruple by the end of 2011. 

Please contact your Goldman representative for a full prospectus.  As the world descends into a Darwinian free-for-all, the Goldman Sachs Rage Fund is a great way to tell the protesters, “Occupy this.”  

6.      BANKRUPTCY FILING DIVIDES HARRISBURG, PA: Harrisburg, Pa., filed for bankruptcy protection at 10:30 P.M. on October 11, 2011.  Since then, says there have been some developments suggesting the process may get very complicated. Here are some insights: 

  • The state legislature will continue to move forward with its city takeover plans when it reconvenes next week.  
  • Dauphin County, of which Harrisburg is the seat, will likely try to persuade the bankruptcy judge to dismiss the city’s bankruptcy petition.  The county is one of the guarantors of Harrisburg’s debt.  
  • The city council may face a tough time convincing a judge that it has negotiated in good faith with its creditors, and failure to do so may jeopardize its ability to secure bankruptcy protection. (Interestingly, the petition lists only 19 creditors.) 
  • State and county leaders, as well as Harrisburg’s mayor, maintain the bankruptcy filing was prohibited by state law. 

The city council’s bankruptcy attorney, on the other hand, says he may challenge constitutionally of an amendment to the state fiscal code that critics are using to make the last argument.  

Read the entire petition at

7.      GOLF WISDOMS: It's as easy to lower your handicap as it is to reduce your hat size. 

8.      PARAPROSDOKIAN: (A paraprosdokian is a figure of speech in which the latter part of a sentence or phrase is surprising or unexpected in a way that causes the reader or listener to reframe or reinterpret the first part. It is frequently used for humorous or dramatic effect.):    A bus is a vehicle that runs twice as fast when you are after it as when you are in it. 

9.      QUOTE OF THE WEEK: “Lead me not into temptation; I can find the way myself .”  Rita Mae Brown

10.    ON THIS DAY IN HISTORY: In 1820, Spain sells part of Florida to U.S. for $5 Million. 

11.    KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources. 

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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