STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION,

Petitioner,

vs.

SHRIJI KRUPA, INC.,

Respondent.

/

Case No. 14-3093

RECOMMENDED ORDER

This case came before Administrative Law Judge Todd P. Resavage for final hearing by video teleconference on

September 3, 2014, at sites in Tallahassee and Port Saint Lucie,

Florida.

APPEARANCES

For Petitioner: Trevor Suter, Esquire

Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399

For Respondent: Zersis Minocher, Qualified Representative 12217 Northwest 35th Street

Coral Springs, Florida 33065

Shrikant Parikh Shriji Krupa, Inc.

1297 Southwest Gatlin Boulevard Port St. Lucie, Florida 34953

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent violated the provisions of chapter 440, Florida Statutes, by failing to secure the payment of workers' compensation, as alleged in the Stop-Work Order and 3rd Amended Order of Penalty Assessment, and, if so, what penalty is appropriate.

PRELIMINARY STATEMENT

On November 28, 2012, Petitioner hand-delivered a Stop-Work Order and Order of Penalty Assessment to Respondent. On

January 28, 2013, an Amended Order of Penalty Assessment was served upon Respondent. On March 28, 2013, Petitioner served another Amended Stop-Work Order and Order of Penalty Assessment to Respondent. On February 18, 2014, Petitioner served its 3rd Amended Order of Penalty Assessment upon Respondent. On

April 23, 2014, Respondent requested an administrative hearing. The matter was referred to the Division of Administrative Hearings ("DOAH") for assignment of an administrative law judge on July 2, 2014.

On August 27, 2014, Petitioner issued a second "3rd Amended Order of Penalty Assessment," assessing a total penalty of

$21,205.36. Pursuant to notice, the final hearing was conducted on September 3, 2014. At hearing, Petitioner made a motion to modify the charging document to reflect the 3rd Amended Order of Penalty Assessment, dated August 27, 2014. Said motion was

granted, without objection. Petitioner presented the testimony of one witness, Ms. Lynne Murcia, and offered seven exhibits, which were admitted without objection. Respondent presented the testimony of Mr. Shrikant Parikh and Mr. Hemant Parikh, and offered one exhibit, which was admitted without objection.1/

The Transcript of the final hearing was filed on

September 17, 2014. On September 24, 2014, Petitioner filed an Unopposed Motion for Extension of Time to File Proposed Recommended Orders. Said motion was granted, and the parties were ordered to file any proposed recommended orders on or before October 10, 2014. Both parties timely filed proposed recommended orders and the same were considered by the undersigned in the preparation of this Recommended Order.

All references to statutes and rules, unless otherwise indicated, are to the versions in effect during the pertinent time period.

FINDINGS OF FACT

1. Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation for their employees and corporate officers.

   
   

2. Respondent, Shriji Krupa, Inc., is a Florida corporation engaged in business operations as a gas station (self-service and convenience-retail) in the State of Florida.

3. Mr. Hemant Parikh, one of Respondent's corporate officers, testified that, on November 20, 2012, Respondent was inspected by Petitioner's Compliance Investigator, Mike Fuller. Mr. Fuller advised Mr. Parikh that Respondent needed to close the store. According to Mr. Hemant Parikh, at the time of inspection, Respondent had two corporate officers and four additional employees. Mr. Parikh explained that, at the time of inspection, Respondent had two store locations with three employees working at each locale.

4. Mr. Shrikant Parikh, another corporate officer, testified that, at the time of inspection, Respondent was operating under the mistaken belief that its corporate officers were exempt from workers' compensation coverage.

5. Pursuant to the record evidence, on November 28, 2012, Mr. Fuller served a Stop-Work Order and Order of Penalty Assessment on Respondent. Pursuant to the Stop-Work Order, Respondent was ordered to cease all business operations for all worksites in the state based on the following:

   Failure to secure the payment of workers' compensation in violation of sections 440.10(1), 440.38(1), and 440.107(2) F.S.,

   by:

   
   

   failing to obtain coverage that meets the requirements of Chapter 440, F.S., and the Insurance Code.

   
   

6. After receiving the Stop-Work Order, on that same date, Respondent obtained workers' compensation coverage with an effective date of November 29, 2012. Respondent has maintained appropriate coverage to date.

7. Following the Stop-Work Order, Respondent submitted various records for Petitioner's review.2/

8. Petitioner's sole witness was Ms. Lynne Murcia.

   
   

   Ms. Murcia works in Petitioner's Bureau of Compliance wherein she calculates penalties for those employers found in violation of the workers' compensation laws. Ms. Murcia performs approximately 200 penalty calculations per year. Ms. Murcia first became involved with Respondent in January 2013, when she received an assignment to perform a penalty calculation.

9. Ms. Murcia reviewed all records previously submitted by Respondent. From the records received, Ms. Murcia was able to determine that Respondent employed four or more employees on a regular basis. Ms. Murcia explained that "employees" include corporate officers that have not elected to be exempt from workers' compensation.

10. After conducting a search within the Florida Division of Corporations, Ms. Murcia was able to determine that no exemptions existed for Respondent's corporate officers.

    
    

11. Ms. Murcia further conducted a proof of coverage search via Petitioner's Coverage and Compliance Automated System ("CCAS"), which is a database that contains all insurance coverage and exemptions for each employer throughout the State of Florida. The search revealed that Respondent possessed appropriate coverage from November 29, 2012, to the present; however, no prior coverage was indicated.

12. Ms. Murcia conducted a penalty assessment for the non- compliance period of November 29, 2009, through November 28, 2012. From the records submitted by Respondent, Ms. Murcia correctly identified Respondent's employees and gross wages paid during the penalty period. All of the individuals listed on the Penalty Worksheet of the 3rd Amended Order of Penalty Assessment, dated August 27, 2014, were "employees" (as that term is defined in section 440.02(15)(a), Florida Statutes) of Respondent during the period of noncompliance listed on the penalty worksheet.

13. From a description of the Respondent's business operations, Ms. Murcia determined Respondent's classification code. She explained that classification codes are established by the National Council of Compensation Insurance ("NCCI"). A classification code is a four-digit code number that is assigned to a specific group of tasks, duties, and responsibilities for a specific grouping of business. Ms. Murcia further testified that the classification codes are associated with a manual rate which

    
    

    is the actual dollar amount of risk associated with a particular code.3/ The manual rates are also established by NCCI.

14. Class Code 8061, used on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment, and as defined by the NCCI Scopes Manual, is the correct occupational classification for Respondent.

15. From the assigned classification code number, 8061,

    
    

    Ms. Murcia calculated the appropriate manual rate for the penalty period. The manual rates used on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment are the correct manual rates.

16. The total penalty of $21,205.19 is the correct penalty for the employees listed on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment.

    CONCLUSIONS OF LAW

    
    

17. The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this proceeding pursuant to sections 120.569 and 120.57(1), Florida Statutes.

18. Petitioner has the responsibility to enforce the requirement that employers secure the payment of workers' compensation for the benefit of employees as required by chapter 440, Florida Statutes.

    
    

19. Petitioner seeks to penalize Respondent for failure to secure the payment of workers' compensation pursuant to section 440.107(7).

20. Petitioner has the burden of proof to show, by clear and convincing evidence, that Respondent committed the violation alleged in the administrative complaint, here the Stop-Work Order. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

21. The clear and convincing standard of proof has been described by the Florida Supreme Court as follows:

    Clear and convincing evidence requires 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.

    
    

    In re Davey, 645 So. 2d 398, 404 (Fla. 1994)(quoting Slomowitz v.

    
    

    Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983)).

    
    

22. Section 440.10(1)(a) provides, in pertinent part:

    
    

    Every employer coming within the provisions of this chapter shall be liable for, and shall secure, the payment to his or her employees, . . . of the compensation payable under ss. 440.13, 440.15, and 440.16.

    
    

23. Under section 440.02(16)(a), an "employer" includes every person carrying on any employment, and under section (17), employment includes all private employments in which four or more

    
    

    employees are employed by the same employer. As noted above, Respondent employed more than four non-exempt employees during the period of non-compliance. Respondent is an employer for purposes of workers' compensation law.

24. Petitioner proved by clear and convincing evidence that Respondent had no workers' compensation coverage from

    November 29, 2009, through the time the Stop-Work Order was served on November 28, 2012.

25. Section 440.107(7)1. provides:

    
    

    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 this 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 the payment of workers' compensation required by this chapter within the preceding 3-year period or

    $1,000, whichever is greater.

    
    

26. Florida Administrative Code Rule 69L-6.031(6), effective October 29, 2006, incorporates by reference the SCOPES Manual Classifications (October 2005) published by NCCI. Rule 69L-6.031(6)(d)51. references classification code number 8061 (Gasoline Station: Self-Service and Convenience-Retail or Store). Petitioner assigned the appropriate classification code and manual rates.

    
    

27. Petitioner's 3rd Amended Order of Penalty Assessment calculated the premiums that Respondent would have paid for its payroll during the periods it failed to secure the payment of workers' compensation in the three-year period to be a total of

$14,136.79. Under section 440.107(7)(d)1., Petitioner shall assess a penalty equal to 1.5 times the workers' compensation premium that would have been paid, or $1,000, whichever is greater. The appropriate penalty, therefore, is $21,205.19.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order determining that Respondent Shriji Krupa, Inc., violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage, and imposing a total penalty assessment of

$21,205.19.

DONE AND ENTERED this 30th day of October, 2014, in Tallahassee, Leon County, Florida.

S

TODD P. RESAVAGE

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 30th day of October, 2014.

ENDNOTES

1/ Petitioner stipulated to Zersis Minocher, Respondent's accountant, acting as Respondent's qualified representative.

2/ Presumably, Respondent submitted the records pursuant to a Request for Production of Business Records for Penalty Assessment; however, the record is void of any such request by Petitioner.

3/ The classification codes are published in the SCOPES Manual Classifications, which is published by NCCI, and have been adopted by Florida Administrative Code Rule 69L-6.021.

COPIES FURNISHED:

Shrikant Parikh Shriji Krupa, Inc.

1297 Southwest Gatlin Boulevard Port St. Lucie, Florida 34953

Trevor S. Suter, Esquire Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed)

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

200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed)

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: 14-003093

Orders for Case No: 14-003093