Administrative Law Judge (ALJ) Daniel Manry conducted the final hearing of this case for the Division of Administrative Hearings (DOAH) on June 2, 2009, in Tampa, Florida.
compensation insurance for two employees in violation of Chapter 440, Florida Statutes (2008).1
On April 10, 2009, Petitioner proposed a penalty assessment against Respondent in the amount of $44,794.51. Respondent requested an administrative hearing, and Petitioner referred the request to DOAH to conduct the hearing.
At the hearing, Petitioner presented the testimony of two witnesses and submitted seven exhibits for admission into evidence. Respondent presented the testimony of one live witness and submitted the deposition testimony of another witness, including attached exhibits. The identity of the witnesses and exhibits and the rulings regarding each are reported in the one-volume Transcript of the hearing, which was filed with DOAH on June 17, 2009.
Petitioner filed its Proposed Recommended Order (PRO) on June 24, 2009. Respondent filed its PRO on July 14, 2009.
Petitioner is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation insurance for the benefit of their employees in accordance with Section 440.107. Respondent is a Florida corporation engaged in the construction business.
Respondent utilizes a payroll service company, identified in the record as Frank Crum Leasing (Frank Crum). Frank Crum pays Respondent's employees and collects premiums for workers' compensation insurance based on payroll and employee hours that Respondent reports to Frank Crum each week. Frank Crum maintains a list of the reported employees that is updated weekly (the weekly Frank Crum list).
Respondent reports payroll and employee hours to Frank Crum in arrears. On Wednesday afternoon of each week, Respondent reports payroll and employee hours to Frank Crum for the preceding Wednesday through Tuesday. Frank Crum publishes a weekly Frank Crum list each Thursday.
New employees that begin work on Wednesday through Tuesday appear on the next weekly Frank Crum list. For example, new employees that began work anytime from Wednesday,
February 18, 2009, through Tuesday, February 24, 2009, are reported on February 25, 2009, and appear on the weekly Frank Crum list dated February 26, 2009. New employees that began work anytime from Wednesday, February 25, 2009, through Tuesday, March 3, 2009, are reported on March 4, 2009, and appear on the weekly Frank Crum list dated March 5, 2009.2
Frank Crum collects workers' compensation insurance premiums from Respondent in arrears based on the payroll and employee hours reported each Wednesday for the previous week.
The reporting of payroll and employee hours and the payment of insurance premiums in arrears has been Respondent's customary business practice for the past 13 years.
On February 26, 2009, one of Petitioner's investigators conducted a random construction site visit at 6417 Grand Island Road, Apollo Beach, Florida. Four workers, who are identified by name in exhibits of record, were laying a concrete sidewalk at the site.
The four workers laying the sidewalk were employees of Respondent. Two of the workers were on the weekly Frank Crum list dated February 26, 2006. The other two workers were not on the same list. The two workers who were not on the Frank Crum list dated February 26, 2006, are identified in the record as Mr. Ricardo Hurtado and Mr. Evelio Bueno.
On February 26, 2009, Petitioner issued a Stop-Work Order and Penalty Assessment and requested business records from Respondent. Petitioner reviewed the business records and, on April 10, 2009, issued an Amended Order of Penalty Assessment in the amount of $44,794.51 for failure to maintain workers' compensation insurance coverage for the two workers who were not listed on the weekly Frank Crum list dated February 26, 2009, and identified in record as Mr. Hurtado and Mr. Bueno.
Respondent does not dispute the accuracy of the penalty calculation. However, Respondent does dispute that Respondent
is liable for the penalty assessment. Respondent maintains that the two unlisted workers were covered by workers' compensation insurance on February 26, 2009.
The two unlisted workers began their employment with Respondent on February 25, 2009. On March 4, 2009, Respondent reported the new employees to Frank Crum. Respondent paid premiums to Frank Crum for workers' compensation insurance covering the two workers for the dates of employment on
February 25 and 26, 2009. The two unlisted workers were covered by workers' compensation insurance on February 25 and 26, 2009.
The weekly Frank Crum lists in Petitioner's exhibits are not clear and convincing evidence of the effective date of workers' compensation insurance coverage. The testimony of Respondent's witness at the hearing was clear and convincing that the two workers were covered by workers' compensation insurance in accordance with the customary business practice of Respondent and Frank Crum for the last 16 years.
The terms of the workers' compensation insurance policies would have assisted the fact-finder in resolving any evidential conflicts concerning the effective date of workers' compensation insurance coverage. However, Petitioner did not submit copies of the insurance policies and did not submit the testimony of a representative of the workers' compensation insurance company.
In support of Petitioner's assertion that Mr. Hurtado and Mr. Bueno were not covered by workers' compensation insurance, Petitioner cites, in paragraph number 13 of its PRO, the testimony of the general counsel of Frank Crum. Petitioner points to the deposition testimony of the general counsel which, in relevant part, states that she did not know whether the insurance company covered the two unlisted workers. The general counsel explained that such a determination would be up to the insurance company and not the general counsel for Frank Crum.
The general counsel is correct. Petitioner submitted no evidence to show that the general counsel of Frank Crum is competent to testify for the insurance company.
The evidence is clear that Respondent paid insurance premiums in arrears. The evidence is less than clear that insurance coverage was not in effect before the payment of the premium.3
The pretermitted insurance policy or competent testimony from an insurance representative may have clarified the issue. However, the only testimony concerning the effective date of workers' compensation coverage for the two unlisted workers comes from Respondent's live witness. The fact-finder finds her testimony to be credible and persuasive.
CONCLUSIONS OF LAW
DOAH has jurisdiction over the parties and subject matter of this proceeding. §§ 120.569 and 120.57(1). DOAH provided the parties with adequate notice of the final hearing.
An administrative fine deprives Respondent of substantial rights in property and is punitive in nature. Petitioner has the burden of proof. Petitioner must show by clear and convincing evidence that Respondent violated the Workers' Compensation Law and the reasonableness of the proposed penalty assessment. Department of Banking and Finance Division of Securities and Investor Protection v. Osborne Stern and Co., 670 So. 2d 932 (Fla. 1996); Dept. of Financial Services,
Division of Workers' Compensation v. U&M Contractors, Inc., Case No. 04-3041 (DOAH April 27, 2005); Triple M Enterprises, Inc. v. Department of Financial Services, Division of Workers' Compensation, Case No. 94-2524 (DOAH January 13, 2005).
The requirement for clear and convincing evidence imposes an intermediate level of proof on Petitioner. Petitioner must prove material factual allegations by more than a preponderance of the evidence, but the proof need not be beyond and to the exclusion of a reasonable doubt. Inquiry Concerning a Judge No. 93-62, 645 So. 2d 398, 404 (Fla. 1994); Lee County v. Sunbelt Equities, II, Limited Partnership, 619 So. 2d 996, 1006, n.13 (Fla. 2d DCA 1993).
The Florida Supreme Court has addressed the clear and convincing standard of proof with attention to detail. In relevant part, the court stated:
This intermediate level of proof entails both a qualitative and quantitative standard. The evidence must be credible; the memories of witnesses must be clear and without confusion; and the sum total of the evidence must be of sufficient weight to convince the trier of fact without hesitancy. . . . [T]he facts to which witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witness must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.
Inquiry Concerning a Judge, 645 So. 2d at 404 (quoting, in part from Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983)).
In order to satisfy the qualitative standard for clear and convincing evidence, incriminating evidence must be credible, precise, and explicit. This qualitative standard has been adopted by each District Court of Appeal in the state.
E.F. v. State, 889 So. 2d 135, 139 (Fla. 3d DCA 2004); K-Mart
Corporation v. Collins, 707 So. 2d 753, 757 n. 3 (Fla. 2d DCA
1998); McKesson Drug Co. v. Williams, 706 So. 2d 352, 353 (Fla.
1st DCA 1998); Kingsley v. Kingsley, 623 So. 2d 780, 786-787
(Fla. 5th DCA 1993); Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983).
Petitioner did not satisfy its burden of proof. For reasons stated in the Findings of Fact, the evidence is less than clear and convincing that workers' compensation insurance coverage was not in effect until the date that Respondent paid insurance premiums. The terms of the insurance policy are not in evidence. The testimony of Respondent's witness that workers' compensation coverage was in effect on February 26, 2009, is credible and persuasive.
Petitioner asserts that the requisite insurance coverage was not in effect until Respondent paid the insurance premium on March 4, 2009, and that retroactive insurance coverage does not satisfy the strict compliance requirements of Chapter 440. Petitioner cites three administrative cases in support of its assertion that retroactive coverage does not comply with the statutory requirement for workers' compensation insurance. Department of Financial Services v. Raylin Steel Erectors, Inc., Case No. 05-2289 (DOAH October 19, 2006); Triple M Enterprises, Inc. v. Department of Financial Services, Case No. 04-2524 (DOAH January 13, 2005); Department of Labor & Employment Security v. Eastern Personnel Services, Inc., Case No. 99-2048 (DOAH October 12, 1999).
In each of the cited cases, Petitioner proved that the employees at issue were not covered by workers' compensation insurance on the date at issue in each case. In each case, Petitioner either submitted the actual insurance policies or submitted testimony from a representative of the insurance company.
No such evidence exists in the record of this proceeding. Petitioner submitted neither the insurance policies, nor any testimony from a representative of the insurance company.
Petitioner infers from the weekly Frank Crum lists that the unlisted workers were not covered by workers' compensation insurance on February 26, 2009. Inference and surmise do not satisfy the requirement for clear and convincing evidence. Tenbroeck v. Castor, 640 So. 2d 164, 167-168 (Fla. 1st DCA 1994). In the absence of clear evidence that the two unlisted workers were not covered, an inference of coverage is as reasonable as an inference of no coverage.
Petitioner argues in paragraph number 13 of its PRO that clear and convincing evidence of non-coverage is provided by the testimony of the general counsel of Frank Crum. As the witness made clear, however, she is not a representative of the insurance company and cannot speak for the insurance company.
Petitioner admits in paragraph number 18 of its PRO that it is possible that the two unlisted workers were covered by workers' compensation insurance. However, it is Petitioner's burden to show by clear and convincing evidence that the two unlisted workers were not covered by workers' compensation insurance on February 26, 2009.
The testimony of Respondent's witness and the documentary evidence in the Frank Crum lists present evidential conflicts. The fact-finder must resolve conflicts in the evidence and decide the question one way or the other. Dunham v. Highlands County School Board, 652 So. 2d 894, 896 (Fla. 2d DCA 1995); Heifetz v. Department of Business Regulation,
Division of Alcoholic Beverages & Tobacco, 475 So. 2d 1277, 1281 (Fla. 1st DCA 1985); Department of Professional Regulation v.
Wagner, 405 So. 2d 471, 473 (Fla. 1st DCA 1981).
The trier of fact resolved the evidential conflict in favor of Respondent. The fact-finder is the sole arbiter of credibility. Bejarano v. State, Department of Education, Division of Vocational Rehabilitation, 901 So. 2d 891, 892 (Fla. 4th DCA 2005); Hoover v. Agency for Health Care Administration, 676 So. 2d 1380, 1384 (Fla. 3d DCA 1996); Goss v. District School Board of St. Johns County, 601 So. 2d 1232, 1234 (Fla. 5th DCA 1992).
Petitioner did not cite any legal authority to support its explication of agency policy as it emerged from the record evidence. Petitioner did not explain why the emerging policy is within the substantive expertise of the agency. Alternatively, Petitioner did not articulate any underlying technical reasons for deference to agency expertise. Johnston v. Department of Professional Regulation, Board of Medical Examiners, 456 So. 2d 939, 943-944 (Fla. 1st DCA 1984).
The testimony of Respondent's witness shows that the two unlisted workers were covered by workers' compensation insurance on February 26, 2009. The testimony of the witness was not available to Petitioner when Petitioner proposed a penalty assessment. Petitioner relied, in substantial part, on information contained in the Frank Crum lists that Petitioner submitted for admission into evidence. However, this is a
de novo, or new proceeding, conducted to formulate final agency action rather than to review final agency action previously taken. McDonald v. Department of Banking and Finance, 346
So. 2d 569, 584 (Fla. 1st DCA 1977).
In a de novo proceeding, the ALJ correctly considers evidence as it exists at the time of the final hearing. The ALJ is not limited to the evidence that was available to Petitioner when Petitioner proposed the assessment.
The [ALJ's] decision to permit evidence of circumstances as they existed at the time of hearing [rather than limiting evidence to that available to the agency when it proposed agency action] was correct. . . .
Section 120.57 proceedings are intended to formulate final agency action, not to review action taken earlier and preliminarily.
See McDonald, 346 So. 2d at 584.
RECOMMENDED that Petitioner issue a final order dismissing the Stop-Work Order and Amended Order of Penalty Assessment.
DONE AND ENTERED this 4th day of August, 2009, in Tallahassee, Leon County, Florida.
Filed with the Clerk of the Division of Administrative Hearings this 4th day of August, 2009.
1/ References to chapters, sections, and subsections, are to Florida Statutes (2008), unless otherwise stated.
2/ The weekly Frank Crum list in Petitioner's Exhibit 9 is dated March 12, 2009. The fact-finder did not observe a weekly Frank Crum list in Petitioner's Exhibit 9 that was dated March 5, 2009.
3/ By way of illustration, the contractual terms of a mortgage are in effect, even though mortgage payments are made in arrears. The absence of evidence concerning the terms of the insurance policy make it less than clear and convincing that coverage became effective on the same date that premium payments were made.
Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307
Paige Billings Shoemaker, Esquire Division of Legal Services Department of Financial Services
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.
