STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RECOMMENDED ORDER

Administrative Law Judge (ALJ) Daniel Manry conducted the administrative hearing in this proceeding for the Division of Administrative Hearings (DOAH), on April 24, 2008, in

Fort Myers, Florida. The parties, witnesses, and court reporter attended the hearing in person at the hearing site in Fort Myers. The undersigned participated by telephone.

APPEARANCES

For Petitioner: Martin Valka, pro se

Martin's Kitchen & Bath, Inc. 5128 Calusa Court

Cape Coral, Florida 33904

For Respondent: Douglas D. Dolan, Esquire

Department of Financial Services Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399

STATEMENT OF THE ISSUES

The issue is whether a delay of 706 days between the date Respondent entered a stop work order against Petitioner's former business and the date Respondent referred Petitioner's request for hearing to a hearing officer to conduct an informal proceeding pursuant to Subsection 120.57(2), Florida Statutes (2005)(an informal hearing),1 is harmless error within the meaning of Section 120.68.

PRELIMINARY STATEMENT

This proceeding has an extensive procedural history which is discussed in more detail in the Findings of Fact. Suffice it to say, that Petitioner requested an informal hearing to contest Respondent's proposed penalty for an alleged violation of the workers' compensation law. The hearing officer determined that he lacked jurisdiction and referred the matter to DOAH.

At the hearing conducted at DOAH, Petitioner testified and submitted one exhibit for admission into evidence. Respondent presented the testimony of two witnesses and submitted six exhibits for admission into evidence.

The identity of the witnesses and exhibits and the rulings regarding each are reported in the one-volume Transcript of the hearing filed with DOAH on May 2, 2008.

Respondent timely filed its proposed recommended order (PRO) on May 12, 2008. Petitioner did not file a PRO.

FINDINGS OF FACT

1. Respondent is the state agency responsible for enforcing the Florida Workers' Compensation Law enacted in Chapter 440. On May 7, 2004, Petitioner was a closely held Florida corporation wholly owned by Mr. Martin Valka.

2. Petitioner was engaged in the construction business as a tile setter. The principal place of business was 5327 Mayfair Court, Cape Coral, Florida.

3. On May 7, 2004, an investigator for Respondent determined that Petitioner was in violation of applicable law and issued a stop work order in accordance with the requirements of Subsection 440.107(1). The stop work order precluded Petitioner from conducting business until the matter was resolved.

4. The stop work order also imposed a penalty equal to 1.5 times the premium Petitioner would have paid for workers' compensation insurance coverage. On May 10, 2004, Respondent issued an Amended Order of Penalty Assessment

   Number 04-166-D7-1 (Amended Order). The Amended Order assessed Petitioner with a penalty of $4,039.76. Respondent more recently amended the penalty assessment to $3,779.89, which is the assessment at issue in this proceeding.

5. On May 27, 2004, Petitioner filed a written petition requesting an informal hearing. The next day, the

   investigator's supervisor reviewed the petition, determined it was procedurally deficient, and denied the petition.

6. The investigator informed Petitioner by telephone of the supervisor's determination. However, Respondent did not inform Petitioner that the denial of the petition was without prejudice to file an amended petition correcting the procedural inadequacies, which, of course, were unknown to Petitioner because the denial did not state with particularity the reasons for the denial and did not state a deadline for filing an amended petition.

7. Petitioner requested a written notice of Respondent's determination that the request for hearing was inadequate and the grounds for the determination. Respondent did not respond. Respondent took no further action for approximately 706 days. The stop work order remained in effect.

8. On June 30, 2004, the investigator recorded a note in the investigative file that Petitioner had not paid the fine. The investigator referred the matter to "collections."

9. On May 4, 2006, Respondent referred Petitioner's request for hearing to the director of the Division of Workers' Compensation for assignment of a hearing officer to conduct an informal hearing. Petitioner filed an amended petition in the informal hearing. Respondent moved to dismiss the amended petition, in relevant part, on the ground that the amended

   petition raised disputed issues of fact not raised in the original petition.

10. The hearing officer conducted an informal hearing based on written submissions. He concluded he had no jurisdiction because of the presence of disputed issues of fact and recommended referral to DOAH.

11. Respondent committed several procedural errors under Chapter 120 (the APA). Respondent failed to issue a written denial of the request for hearing, failed to issue a written denial within 15 days of the date of the request, failed to state with particularity the reasons for the denial, and failed to deny the request for hearing without prejudice, stating a deadline for filing an amended petition to correct any procedural deficiencies.2

12. The procedural violations were not harmless error.

    
    

    They prejudiced Petitioner and may have affected the fairness of the proceeding.

13. The procedural violations prejudiced Petitioner in several ways. The resulting delays prevented Petitioner from conducting its business for approximately 706 days. Petitioner ceased to exist. The delays denied Petitioner the financial ability to pay the fine at issue in this proceeding. The 706- day stop work order deprived Petitioner of the financial means to retain counsel to represent Petitioner. Mr. Valka obtained

    employment in a different occupation, but that was inadequate and did not last. Mr. Valka became a "stay-home dad."

14. The delays caused by procedural errors may have impaired the fairness of the proceeding. The delays operated to enforce a stop work order for 706 days with no recourse to Petitioner that complied with relevant due process requirements in the APA.

15. Petitioner's request for hearing, unlike the normal penal proceeding under the APA, did not toll the imposition of an administrative penalty in the form of a stop work order. The request for hearing tolled only that part of the penalty proposed as an assessment of money.

16. The procedural errors resulted in delays that may have impaired Petitioner's ability to cross examine witnesses for Respondent and Respondent's exhibits. The delays may have resulted in the unavailability of witnesses, or at least their ability to recall facts, as well as the unavailability of exhibits Petitioner needed to support a defense. The delay may have impaired discovery.

    CONCLUSIONS OF LAW

    
    

17. DOAH has jurisdiction over the parties and subject matter of this proceeding. §§ 120.57(1) and 120.569, Fla. Stat. (2007). DOAH provided the parties with adequate notice of the final hearing.

18. Respondent stipulates that Respondent has the burden of proving by a preponderance of the evidence that Petitioner violated the Workers' Compensation Law during the audit period and that the amount of the penalty assessment is correct. However, Petitioner has the burden of showing by a preponderance of evidence that the procedural errors committed by Respondent were not harmless error. Petitioner must show the delay caused by procedural errors:

    [M]ay have impaired the fairness of the proceedings or the correctness of the action and may have prejudiced the licensee.

    
    

    Carter v. Department of Professional Regulation, 633 So. 2d 3, 5 (Fla. 1994)(citing Department of Business Regulation v. Hyman, 417 So. 2d 671 (Fla. 1982)).

19. Petitioner satisfied its burden of proof. Petitioner showed that the procedural errors committed by Respondent "may" have impaired the fairness of the proceeding and "may" have prejudiced Petitioner.

20. Procedural requirements applicable to an agency under the APA are subject to the harmless error rule when no sanction is imposed by statute. Carter v. Department of Professional

    Regulation, Board of Optometry, 633 So. 2d 3 (Fla. 1984); Department of Transportation v. Courtelis Company, 436 So. 2d 92 (Fla. 1983); Department of Business Regulation, Division of

    Pari-Mutuel Wagering v. Hyman, 417 So. 2d 671 (Fla. 1982);

    Injured Workers Association of Florida v. Department of Labor and Employment Security, 630 So. 2d 1189 (Fla. 1st DCA 1994); Courtelis Company v. Department of Transportation, 464 So. 2d

    174 (Fla. 3rd DCA 1985). However, most of the cited cases involve procedural violations when no penalty is imposed on a licensee until after a hearing is conducted in accordance with the due process requirements of the APA. In this case, Petitioner suffered prejudice in the form of a stop work order for 706 days before Petitioner was afforded the due process right to a hearing.

21. It is reasonable to construe the relevant statutory time limits as imposing greater exigency on an agency when a substantially affected party suffers prejudice in the form of a stop work order before the party enjoys the due process right to a hearing. The stop work order functions in a manner similar to that of an emergency order authorized in some licensing statutes.

22. Most of the previously cited cases addressing the harmless error rule involved delays in entering a final order within 90 days after an administrative hearing. Such delays, unlike delays in this case, "may" not have impaired the right to cross examine witnesses or the availability of evidence. The delays at issue in this proceeding may have affected the fairness of the hearing for reasons previously stated.

RECOMMENDATION

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

RECOMMENDED that Respondent enter a final order dismissing the stop work order and proposed assessment against Petitioner.

DONE AND ENTERED this 23rd day of May, 2008, in Tallahassee, Leon County, Florida.

S

DANIEL MANRY

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 23rd day of May, 2008.

ENDNOTES

1/ References to chapters, sections, and subsections are to Florida Statutes (2005), unless otherwise stated.

2/ §§ 120.569(2)(a) and (c) and 120.57(2).

COPIES FURNISHED:

Douglas D. Dolan, Esquire Department of Financial Services Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399

Martin Valka

Martin's Kitchen & Bath, Inc. 5128 Calusa Court

Cape Coral, Florida 33904

Honorable Alex Sink Chief Financial Officer

Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307

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 to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 08-000674

Orders for Case No: 08-000674