STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RECOMMENDED ORDER

Pursuant to notice, a final hearing was conducted in this case on January 19, 2010, via video teleconference between sites in Tallahassee and Fort Myers, Florida, before Administrative Law Judge R. Bruce McKibben of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Paige Billings Shoemaker, Esquire

Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229

For Respondent: Jeffery G. Helms, pro se

2413 Ted Avenue South Lehigh, Florida 33973

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent failed to properly maintain workers' compensation insurance coverage for his employees, and, if so, what penalty should be assessed.

PRELIMINARY STATEMENT

On August 8, 2009, Petitioner, Department of Financial Services, Division of Workers' Compensation (hereinafter the "Department"), issued a Stop Work Order ("SWO") and Order of Penalty Assessment ("OPA") against Respondent, Jeffery G. Helms. Respondent requested an administrative hearing to contest the SWO and OPA. Petitioner's request was forwarded to the Division of Administrative Hearings ("DOAH") so that a formal administrative hearing could be conducted. The hearing was held on the date set forth above, and both parties were in attendance.

At the final hearing, Petitioner called two witnesses: Salma Qureshi, financial analyst for the Department; and Lynn Muria, compliance specialist for the Department. Petitioner offered 15 exhibits into evidence, all of which were admitted without objection. Respondent represented himself and testified on his own behalf. No exhibits were offered by Respondent during the final hearing.

A transcript of the final hearing was ordered by the Department. The Transcript was filed at DOAH on February 8,

2010. By rule, the parties were allowed ten days, i.e., up until February 18, 2010, to submit proposed recommended orders. Petitioner timely submitted a Proposed Recommended Order, which was duly considered in the preparation of this Recommended Order. As of the date of this Recommended Order, Respondent had not filed any post-hearing submission.

FINDINGS OF FACT

1. The Department is the state agency responsible for ensuring that all employers maintain workers' compensation insurance for themselves and their employees. It is the duty of the Department to make random inspections of job sites and to answer complaints concerning potential violations of workers' compensation rules.

2. Respondent is an individual doing business as a roofer in the construction industry. At all times relevant hereto, Respondent was operating an unincorporated business. (Respondent had previously operated a business known as Helms

   Roofing, Inc., but that corporation had been dissolved in 1990.) Roofing work is assigned a Class Code of 5551 for purposes of calculating workers' compensation insurance coverage.

3. On August 25, 2009, the Department sent an investigator to 4205 Glascow Court in Fort Myers, Florida, in response to a complaint that had been made. The complaint alleged that certain workers were operating without proper insurance

   coverage. Upon arrival at the job site (at approximately

   
   

   11:00 a.m.), inspector Qureshi observed two men engaged in work on the roof of the house. (Respondent maintains that Qureshi could see him on the roof, but that she could not see the other worker, Troy Wilhite, because Wilhite was on the back side of the roof.)

4. When the men came down from the roof at around

   
   

   11:15 a.m., Qureshi identified herself to Respondent and asked whether the two men had workers' compensation insurance in place. Respondent advised that he was covered and that he had Wilhite's application for coverage in his truck. He was planning to fax the application, in accordance with his normal procedure, when the men broke for lunch. Wilhite had come to work that day to take the place of an employee of Respondent's who failed to show up for work. Wilhite had arrived only shortly before 11:00 a.m., that morning. Wilhite filled out the application for insurance at the job site, and it was ready to be faxed to AMC Staff Leasing ("AMC"). According to Respondent's unrefuted testimony, he and Wilhite had not started putting the shingles on the roof when Qureshi arrived. Rather, the men were doing chalk lines on the tar-paper covering as a prerequisite to laying the shingles. Respondent said that Wilhite was not yet working; they were only "chalking some lines." There was no competent, substantial evidence as to

   whether chalking lines constituted roofing work. Respondent presumed that after faxing Wilhite's application to AMC at lunch time, the men would be covered and ready to work after lunch.

   It was Respondent's experience that coverage could be obtained from AMC in "about 5 minutes."

5. Qureshi checked the Department's database and ascertained from it that neither Respondent, nor Wilhite, had current workers' compensation insurance coverage. A review of the records from AMC revealed that Wilhite was not a named employee covered by its insurance at that time. Wilhite had been covered previously, and there was no reason to expect that his current application would be denied, but obviously it had not been sent in at the time Qureshi conducted her investigation.

6. Respondent was listed as an employee, but his last period of employment ended on July 12, 2009. AMC required a contracted employer to submit payrolls every week in order to maintain their coverage. Respondent said his coverage with AMC had been cancelled during a period of time in which he had no work to do, but that he had paid a penalty and sent in his payment for coverage before starting work on August 25, 2009. Respondent had been out of work for a few weeks, so his coverage had lapsed, and he had to pay the penalty to get reinstated.

7. Qureshi's review of the Department's database and AMC's records failed to verify the existence of coverage, so Qureshi prepared and hand delivered an SWO to Respondent immediately upon determining the absence of proper coverage. The SWO had an OPA at the bottom, but the OPA was silent as to an exact amount of penalty.

8. Qureshi asked for and received from Respondent his business records. Using those records, Qureshi ascertained that Respondent worked without appropriate insurance coverage during the period of April 22, 2009, through August 25, 2009. The gross payroll to Respondent for that period was $2,605.05. Applying its formula for calculation of a penalty for non- compliance, the Department assessed a penalty of $813.69 for Respondent's period of non-coverage. An additional penalty of

   $49.22 was assessed for Wilhite's period of non-compliance, i.e., August 25, 2009.

9. Respondent testified that he never worked without insurance coverage and explained his actions to obtain coverage. Respondent's testimony was very credible. He obviously believed that both he and Wilhite were properly covered by workers' compensation insurance at the time they worked on the job site. Respondent had taken measures to reinstate his own coverage with AMC and had Wilhite's application ready to file. Although the Department's database does not identify Respondent as having

   coverage, Respondent's testimony is believable. Neither Respondent, nor the Department, offered any explanation as to this discrepancy. Comparing the (hearsay) print-out of the computer screen from the Department's database to Respondent's (credible, but self-serving) testimony, makes it difficult to make a determination as to whether coverage did or did not exist for Respondent.

10. Wilhite was obviously not covered by insurance during the morning of August 25, 2009. The Department's penalty worksheet indicates a salary of $163.96 for Wilhite on that day. Wilhite was being paid ten or twelve dollars per hour and was on the roof for only a short time on that day. It is impossible to reconcile the $163.96 salary assigned to Wilhite by the Department in its penalty calculation. Respondent had paid Wilhite money over a period of time, but not for working as a roofer. Rather, Wilhite and Respondent were long-time friends, and Respondent often paid Wilhite to help with various kinds of projects and endeavors (e.g., helping around his house, helping him deliver materials, etc.).

11. There is no credible evidence that Wilhite worked as a roofer at the job site on the morning of August 25, 2009. It is clear that Wilhite was at the site, and by filling out an application for workers' compensation coverage, it is obvious he intended to work. But whether Wilhite did any roofing work on

    the morning of the investigation has not been established in the record.

12. The most credible competent, substantial evidence presented at final hearing would suggest that Respondent had the appropriate workers' compensation insurance coverage for himself.

    CONCLUSIONS OF LAW

    
    

13. 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).

14. The burden of proof in this matter is on the Department, because it is asserting the affirmative of the issue. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

15. The administrative fines being proposed by the Department are penal in nature. The standard of proof for such cases 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. Clear and convincing evidence is an intermediate standard of proof which is more than the "preponderance of the evidence" standard used in most civil cases, but less than the "beyond a reasonable doubt" standard used in criminal cases. See State v. Graham, 240 So. 2d 486 (Fla. 2nd DCA 1970).

    Further, clear and convincing evidence has been defined as evidence which:

    [R]equires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses 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.

    
    

    Slomowitz v. Walker, 429 So. 2nd 797, 800 (Fla. 1st DCA 1983). (Citations omitted.)

17. The clearest and most convincing evidence presented at final hearing established only that Respondent and Wilhite were physically present at the job site on August 25, 2009. The evidence addressing the issue of proper and current workers' compensation insurance coverage was less than clear and convincing. The Department did not meet its burden of proof in that regard.

18. Pursuant to Sections 440.10 and 440.38, Florida Statutes (2009), 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 (2009). 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). The evidence in this case is that Respondent had workers' compensation insurance in place for himself. The Department's reliance strictly on its computer-generated data is insufficient for the purpose of establishing facts upon which a finding can be made herein. See § 120.57(1)(c), Fla. Stat. (2009). Further, it is clear that Respondent took all necessary steps to acquire coverage for his employee (Wilhite) so that Wilhite would be covered when work commenced on the roof after lunch.

19. Subsection 440.107(7)(a), Florida Statutes (2009), states, in relevant part:

    Whenever the department determines that an employer who is required to secure the payment to his or her employees of the compensation provided for by this chapter has failed to secure the payment of workers' compensation required by this chapter . . . such failure shall be deemed an immediate serious danger to public health, safety, or welfare sufficient to justify service by the department of a stop-work order on the employer, requiring the cessation of all business operations. If the department makes such a determination, the department shall issue a stop-work order within 72 hours.

    
    

20. The Department properly issued a SWO upon finding that Respondent did not have the appropriate coverage. Although the evidence at final hearing indicates the Department's finding was ultimately in error, the Department was still within its rights

    to have issued the SWO based on its bona fide belief that no coverage existed.

21. As to penalties, Subsection 440.107(7)(d)1., Florida Statutes (2009), states:

    In addition to any penalty, stop-work order, or injunction, the department shall assess against any employer who has failed to secure the payment of compensation as required by the chapter a penalty equal to

    1.5 times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during periods for which it failed to secure payment of worker's compensation required by this chapter within the preceding 3-year period or $1,000, whichever is greater.

    
    

22. No penalty is warranted in this matter due to the Department's failure to meet its burden of proof as stated above.

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, rescinding the Amended Stop-Work Order and Amended Penalty Assessment against Respondent, Jeffery G. Helms.

DONE AND ENTERED this 5th day of March, 2010, in Tallahassee, Leon County, Florida.

COPIES FURNISHED:

Honorable Alex Sink Chief Financial Officer

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 5th day of March, 2010.

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

Jeffery G. Helms

2413 Ted Avenue South Lehigh, Florida 33973

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: 09-005284

Orders for Case No: 09-005284