STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RECOMMENDED ORDER

Pursuant to notice to all parties, a final hearing was conducted in this case via video teleconference on January 7, 2010, between sites in Tallahassee and Fort Myers, Florida, before Administrative Law Judge R. Bruce McKibben of the Division of Administrative Hearings. The parties were represented as set forth below.

APPEARANCES

For Petitioner: Paige Billings Shoemaker, Esquire

Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229

For Respondent: Tammy Yzaguirre, pro se

918 Marilyn Avenue, South Lehigh Acres, Florida 33974

STATEMENT OF THE ISSUE

The issue in this case is whether the Stop-Work Order and Order of Penalty Assessment previously imposed against Yzaguirre Enterprises, Inc., was properly applied to Respondent as a successor-in-interest to Yzaguirre Enterprises, Inc.

PRELIMINARY STATEMENT

On or about August 5, 2009, Petitioner, Department of Financial Services, Division of Workers' Compensation, entered an Order Applying Stop-Work Order and Amended Order of Penalty Assessment to Successor Corporation or Business Entity (the "Order"). The Order was served on Respondent, Tammy Yzaguirre, who timely filed a request for a formal administrative hearing to contest whether the Order was appropriately applied to her. The hearing request was forwarded to the Division of Administrative Hearings and assigned to the undersigned Administrative Law Judge. The hearing was held on the date set forth above, and both parties were in attendance.

At the final hearing, Petitioner called the following witness: Amy Thielen, investigator for DFS. Petitioner offered

13 exhibits into evidence, all of which were admitted.

Respondent represented herself and called two witnesses: Tammy Yzaguirre, and Esequiel Yzaguirre. Respondent did not offer any exhibits into evidence.

A transcript of the final hearing was ordered by the parties. The Transcript was filed at the Division of Administrative Hearings on January 19, 2010. By rule, parties were allowed ten days, i.e., up until January 29, 2010, to submit proposed recommended orders. Each party timely submitted a Proposed Recommended Order, and each was duly considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioner (also referred to herein as the "Department") is the state agency responsible for, inter alia, monitoring businesses within the state to ensure that such businesses are providing the requisite workers' compensation insurance coverage for all employees. The Department's headquarters are located in Tallahassee, Florida, but its investigators are spread throughout the state in order to more effectively monitor businesses. The Department is authorized to impose penalties against any businesses failing to maintain the proper insurance coverage for its employees.

2. Workers' compensation coverage is required if a business entity has one or more employees and is engaged in the construction industry in Florida. Workers' compensation coverage may be secured via three non-mutually exclusive methods: 1) the purchase of a workers' compensation insurance policy; 2) arranging for the payment of wages and workers'

   compensation coverage through an employee leasing company; or

   
   

   3) applying for and receiving a certificate of exemption from workers' compensation coverage, if certain statutorily-mandated criteria are met.

3. Respondent is a sole proprietorship and is a duly- certified general contractor (License No. CGC1505393) in the State of Florida. Respondent was engaged in the work of carpentry on August 4, 2009. Carpentry has a construction industry classification code of 5654.

4. Respondent's sole proprietorship is a successor-in- interest to a corporation known as Yzaguirre Enterprises, Inc. (YEI). Tammy Yzaguirre was the vice-president and a director of YEI. That corporation was administratively dissolved on September 25, 2009, for failure to file its annual report. YEI was primarily engaged in the business of carpentry.

5. On October 13, 2008, the Department conducted an investigation of a job site in Immokalee, Florida, where YEI was engaged in work. During its investigation, the Department ascertained that several employees of YEI were not covered by a valid workers' compensation insurance policy, nor were those workers exempt from coverage. A Stop-Work Order was issued by the Department against YEI and posted on the work site.

6. The Stop-Work Order, along with an Order of Penalty Assessment, was also given to Esequiel Yzaguirre (by hand-

   delivery) on November 12, 2008. Meanwhile, an Amended Order of Penalty Assessment was issued by the Department and sent to Respondent via certified mail. The Amended Order imposed a penalty in the amount of one hundred fifty-one thousand, seven hundred fifty-eight dollars and forty-six cents ($151,758.46).

7. Neither the Stop-Work Order, nor the Amended Order of Penalty Assessment, was timely challenged by YEI. While Respondent did engage in some discussions and exchange of documents with the Department concerning the Amended Order of Penalty Assessment, she did not avail herself of the appeal rights stated in the Order.

8. Respondent did not enter into a settlement agreement or payment plan with the Department, because she did not have any money to make payments. As of the date of the final hearing in this matter, the Stop-Work Order and Amended Order of Penalty Assessment had not been released.

9. Instead of paying the amount set forth in the Amended Order of Penalty Assessment, Respondent formed a sole proprietorship in her name, obtained the necessary licenses and certifications to operate, and began to engage in the work of general construction again. Prior to commencing this work, Respondent obtained a workers' compensation insurance policy in an effort to satisfy all state requirements. Respondent did not intentionally attempt to break or circumvent any laws by the

   commencement of her new business. Respondent did not know that starting a new business in her name would be deemed improper by the Department.

10. On August 4, 2009, the Department was engaged in a "sweep" in Immokalee, Florida. A sweep entails a large number of investigators working together in one place at one time for the purpose of determining whether employers in the area were complying with workers' compensation insurance requirements. During its sweep, a Department investigator noticed a YEI truck parked at a job site. The investigator took action to determine who was working out of the truck and obtained information about Respondent, i.e., that Respondent's new sole proprietorship may be engaged in on-going work at that site.

11. Respondent argues that the truck was not being used by the new sole proprietorship. Rather, the truck had been loaned to some individuals who were working on their own or with other employers. Thus, claims Respondent, the Department should not be allowed to take any action against the sole proprietorship. There is no valid basis for Respondent's position.

12. Upon further investigation, the Department ascertained that Respondent was operating under an entity that was deemed a successor-in-interest to YEI. That being the case, the Department issued its Order, which was served via hand-delivery to Respondent on August 5, 2009.

13. At final hearing, Respondent attempted to object to the Department's findings relating to the initial Stop-Work Order from 2008. However, inasmuch as that Stop-Work Order was never formally challenged and became final by operation of law, the time for objections to it has passed. Thus, Respondent's testimony concerning whether or not all the workers listed in the Amended Order of Penalty Assessment were actually YEI's employees was not accepted.

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding pursuant to Section 120.569 and Subsection 120.57(1), Florida Statutes (2009).1

15. The Department has the burden of proof in this case.

    
    

    Because the administrative fines being proposed are penal in nature, the standard of proof is clear and convincing evidence. See Department of Banking and Finance Division of Securities and Investor Protection v. Osborne Stern and Co., 670 So. 2d 932 (Fla. 1996).

16. Pursuant to Sections 440.10 and 440.38, Florida Statutes, every employer is required to secure the payment of workers’ compensation for the benefit of its employees, unless the employee is exempted or excluded under Chapter 440, Florida Statutes. Strict compliance with the Workers' Compensation Law

    is required by the employer. See C&L Trucking v. Corbitt, 546 So. 2d 1185, 1187 (Fla. 5th DCA 1989).

17. The Stop-Work Order and Amended Order of Penalty Assessment against YEI cannot be challenged at this time. The two orders contained the following statement, in bold print:

    FAILURE TO FILE A PETITION FOR HEARING WITHIN THE TWENTY-ONE (21) DAYS CONSTITUTES A WAIVER OF YOUR RIGHT TO ADMINISTRATIVE REVIEW OF THE AGENCY ACTION.

    
    

    Inasmuch as YEI did not timely file a petition, any request to do so at this time would not be allowed. See, e.g.,

    § 120.569(2)(c).

    
    

18. Respondent is a successor-in-interest to YEI as defined by Florida Administrative Code Rule 69L-6.031(1), which states:

    Under Section 440.107(7)(b), F.S., stop work orders or orders of penalty assessment issued against a corporation, partnership, or sole proprietorship shall be in effect against any successor corporation or business entity that has one or more of the same principals or officers as the predecessor corporation or business entity against which the stop work order was issued and are engaged in the same or equivalent trade or activity.

    
    

19. Respondent is a sole proprietorship engaged in the same business as YEI, in which Respondent was a corporate officer (along with her husband). As such, Respondent meets the definition of a successor-in-interest to YEI.

20. Petitioner has met its burden of proving, by clear and convincing evidence, that Respondent, as successor-in-interest to YEI, is properly subject to the Order Applying Stop-Work Order and Amended Order of Penalty Assessment to Successor Corporation or Business Entity. Respondent is, therefore, bound by the terms of the original Stop-Work Order and Amended Order of Penalty Assessment issued to the predecessor's business entity.

21. Even though Respondent did not intend to violate the law by commencing operation under a new business entity, there is no provision in law making such lack of intent relevant to the instant matter.

RECOMMENDATION

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

RECOMMENDED that a final order be entered by Petitioner, Department of Financial Services, Division of Workers' Compensation, affirming the Order Applying Stop-Work Order and Amended Order of Penalty Assessment to Successor Corporation or Business Entity.

DONE AND ENTERED this 4th day of February, 2010, in Tallahassee, Leon County, Florida.

R. BRUCE MCKIBBEN Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

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

Filed with the Clerk of the Division of Administrative Hearings this 4th day of February, 2010.

ENDNOTE

1/ Unless otherwise indicated, all references to the Florida Statutes are to the 2009 version.

COPIES FURNISHED:

Honorable Alex Sink Chief Financial Officer

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

Julie Jones, Agency Clerk Division of Legal Services Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-0390

Tammy Yzaguirre

918 Marilyn Avenue, South Lehigh Acres, Florida 33974

Paige Billings Shoemaker, Esquire Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229

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: 09-004681

Orders for Case No: 09-004681