STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION,

Petitioner,

vs.

TONY WILLIAMS DRYWALL AND PLASTERING, INC.,

Respondent.

/

Case No. 15-0662

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case on April 13, 2015, in Tallahassee, Florida, before Suzanne Van Wyk, a duly-designated Administrative Law Judge.

APPEARANCES

For Petitioner: Trevor Suter, Esquire

Department of Financial Services Division of Workers' Compensation

200 East Gaines Street Tallahassee, Florida 32399-4229

For Respondent: Tony Williams, pro se

Tony Williams Drywall and Plastering, Inc. 8513 Raquel Lane

Tallahassee, Florida 32312 STATEMENT OF THE ISSUES

Whether Respondent, Tony Williams Drywall and Plastering, Inc., failed to comply with the coverage requirements of the Workers' Compensation Law, chapter 440, Florida Statutes, by not

obtaining workers' compensation insurance for its employees and, if so, what penalty should be assessed against Respondent pursuant to section 440.107.

PRELIMINARY STATEMENT

Pursuant to the Workers' Compensation Law, chapter 440, the Department of Financial Services, Division of Workers' Compensation (Department), seeks to enforce the statutory requirement that employers secure the payment of workers' compensation for their employees.

On October 30, 2014, the Department issued a “Stop Work Order” alleging that Respondent, Tony Williams Drywall and Plastering, Inc., failed to comply with the coverage requirements of the workers' compensation law on that date. The order directed Respondent to cease business operations and pay a penalty equal to two times the amount Respondent would have paid in premium to secure workers' compensation during periods within the preceding two years when it failed to do so, or $1,000, whichever is greater, pursuant to section 440.107(7)(d). The Department also requested business records from Respondent in order to determine the exact amount of the penalty.

On December 12, 2014, the Department issued an Amended Order of Penalty Assessment finding Respondent failed to obtain coverage consistent with chapter 440, and assessing a total penalty of $2,105.50 against Respondent.

Respondent timely requested an administrative hearing to dispute the Department’s penalty calculation. On February 9, 2015, the Department forwarded Respondent’s request to the Division of Administrative Hearings (Division). The hearing was scheduled for April 13, 2015, and was convened and completed on that date.

At the hearing, the Department presented the testimony of Tony Williams and Andrew Moskowitz, a workers’ compensation penalty calculator for the Department. The Department's Exhibits 1 through 7 were admitted into evidence. Respondent presented the testimony of its president, Tony Williams, but offered no exhibits into evidence.

The one-volume Transcript of the final hearing was filed with the Division on April 27, 2015. On May 7, 2015, the Department filed an Unopposed Motion for Extension of Time to File Proposed Recommended Orders (Motion), requesting an extension until May 15, 2015, to submit proposed recommended orders. The undersigned granted the Motion, and the Department timely filed a Proposed Recommended Order on May 15, 2015.

Respondent did not make any post-hearing filing.

Unless otherwise stated, all statutory references are to the 2014 edition of the Florida Statutes.

FINDINGS OF FACT

1. The Department is the state agency responsible for enforcing the requirement of the workers' compensation law that employers secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat.

2. Tony Williams Drywall and Plastering, Inc., (Respondent or Williams Drywall) is a corporation based in Tallahassee, Florida, first incorporated on August 18, 1999. Williams Drywall is engaged in the construction industry, operating as a drywall installation and repair business with a principal office located at 8513 Raquel Lane in Tallahassee. Tony Williams is the sole owner, registered agent and president of Williams Drywall.

3. On or about October 30, 2014, Williams Drywall was hired by Bill Davis, a general contractor, to make drywall repairs at 2069 North Monroe Street in Tallahassee (the job site).

4. Williams Drywall hired Viper Enterprises, LLC, (Viper) for the job. Viper is a company owned and operated by Joseph Johnson, whom Mr. Williams described as a friend. Mr. Williams deemed the job as simple and expected to pay Viper about $200.

5. On October 30, 2014, Department Investigator Betty Fuentes arrived at the job site and encountered Mr. Johnson.

   
   

   Ms. Fuentes inquired regarding Mr. Johnson’s workers’ compensation compliance.1/

6. Although Mr. Johnson, as corporate officer of Viper, had been exempt from the requirement to obtain workers’ compensation insurance, pursuant to section 440.05(3), Florida Statutes, the exemption expired after September 10, 2014. As of October 30, 2014, Mr. Johnson had not effectively renewed his exemption.

7. Mr. Johnson called Mr. Williams from the job site on October 30, 2014, to inform Mr. Williams of the events that transpired at the job site. Through this telephone call, Mr. Williams learned that Ms. Fuentes had issued a stop-work order at the job site.

8. Mr. Williams also spoke with Ms. Fuentes by phone from the job site on October 30, 2014, and Ms. Fuentes asked

   Mr. Williams for his corporate records as part of her investigation.

9. Mr. Williams met directly with Ms. Fuentes in the late afternoon of October 30, 2014. During the meeting, Ms. Fuentes hand-delivered to Mr. Williams a Stop Work Order for Specific Worksite Only (Stop Work Order).

10. The Stop Work Order required Williams Drywall to cease all business operations at the job site for failure to secure workers’ compensation insurance coverage for its employees. The

    
    

    Stop Work Order included an Order of Penalty Assessment in the amount of two times the amount Williams Drywall would have paid in premium when applying the approval manual wage rates to Williams Drywall’s employee payroll during periods for which it failed to secure payment of workers’ compensation insurance within the preceding two-year period.

11. During the meeting, Mr. Williams provided to Ms. Fuentes corporate records and workers’ compensation

    information for Williams Drywall. Ms. Fuentes also requested from Mr. Williams payroll records for the preceding two-year period.

12. Mr. Williams disputed that his payroll records for the preceding two-year period were relevant. Mr. Williams testified that he offered to provide his payroll records for the two-week time period during which Mr. Johnson’s exemption had lapsed.

    Mr. Williams insisted that the October 30, 2014, drywall job was the only job for which he hired Mr. Johnson between

    September 11, 2014, and October 30, 2014.

    
    

13. Mr. Williams did not provide any payroll records for Williams Drywall to Ms. Fuentes or any other representative of the Department.

14. Andrew Moskowitz was assigned to calculate the appropriate penalty to be assessed against Williams Drywall by the Department. Penalties for workers’ compensation insurance

    
    

    violations are based on doubling the amount of evaded insurance premiums for periods during which the employer failed to secure workers’ compensation coverage within the two-year period preceding the Stop Work Order. § 440.107(7)(d), Fla. Stat.

15. The applicable period of noncompliance for Williams Drywall was September 11, 2014, the date Mr. Johnson’s exemption lapsed, through October 30, 2014, the date the Stop Work Order was issued.

16. Section 440.107(7)(e) provides that where an employer fails to provide business records sufficient to enable the Department to determine the employer’s actual payroll for the penalty period, the Department will impute the weekly payroll at the statewide average weekly wage as defined in section 440.12(2), multiplied by two.2/

17. In the penalty assessment calculation, Mr. Moskowitz consulted the classification codes and definitions set forth in the SCOPES of Basic Manual Classifications (Scopes Manual) published by the National Council on Compensation Insurance (NCCI). The Scopes Manual has been adopted by reference in Florida Administrative Code Rule 69L-6.021. Classification codes are four-digit codes assigned to occupations by the NCCI to assist in the calculation of workers’ compensation insurance premiums. Rule 69L-6.028(3)(d) provides that “[t]he imputed weekly payroll for each employee . . . shall be assigned to the

    
    

    highest rated workers’ compensation classification code for an employee based upon records or the investigator’s physical observation of that employee’s activities.”

18. Mr. Moskowitz applied NCCI Class Code 5480, titled “Plastering NOC [Not Otherwise Classified] and Drivers,” which applies to specialty contractors engaged in interior plastering. Mr. Moskowitz used the approved manual rates corresponding to Class Code 5840 for the period of non-compliance to calculate the penalty.

19. On December 14, 2014, the Department issued an Amended Order of Penalty Assessment in the amount of $2,105.50, based upon an imputation of wages to Mr. Johnson, the only employee of Williams Drywall known to the Department for the period of noncompliance.

20. The evidence produced at the hearing established that Mr. Moskowitz utilized the correct class codes, average weekly wages, and manual rates in his calculation of the Amended Order of Penalty Assessment.

21. The Department has demonstrated by clear and convincing evidence that Williams Drywall was in violation of the workers' compensation coverage requirements of chapter 440. Joseph Johnson was an employee of Williams Drywall performing services in the construction industry without valid workers’ compensation insurance coverage.

    
    

22. The Department has also demonstrated by clear and convincing evidence that the penalty was correctly calculated by Mr. Moskowitz, through the use of the approved manual rates and the penalty calculation worksheet adopted by the Department in Florida Administrative Code Rule 69L-6.027.

    CONCLUSIONS OF LAW

    
    

23. The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties to this proceeding. §§ 120.569 and 120.57(1), Fla. Stat.

24. Employers are required to secure payment of compensation for their employees. §§ 440.10(1)(a) and 440.38(1), Fla. Stat.

25. “Employer” is defined, in part, as “every person carrying on any employment.” § 440.02(16), Fla. Stat. “Employment . . . means any service performed by an employee for the person employing him or her” and includes “with respect to the construction industry, all private employment in which one or more employees are employed by the same employer.”

    §§ 440.02(17)(a) and (b)(2), Fla. Stat.

    
    

26. “Employee” is defined, in part, as “any person who receives remuneration from an employer for the performance of any work or service while engaged in any employment under any appointment or contract for hire or apprenticeship, express or implied, oral or written.” § 440.02(15)(a), Fla. Stat.

    
    

    “Employee” also includes “any person who is an officer of a corporation and who performs services for remuneration for such corporation within this state.” § 440.02(15)(b), Fla. Stat.

27. The Department has the burden of proof in this case and must show by clear and convincing evidence that the employer violated the Workers' Compensation Law and that the penalty assessments were correct under the law. See Dep’t of Banking

    and Fin., Div. of Sec. and Investor Prot. v. Osborne Stern and

    
    

    Co., 670 So. 2d 932 (Fla. 1996); and Ferris v. Turlington, 510

    
    

    So. 2d 292 (Fla. 1987).

    
    

28. In Evans Packing Co. v. Department of Agriculture and Consumer Services, 550 So. 2d 112, 116, n.5 (Fla. 1st DCA 1989),

    the Court defined clear and convincing evidence as follows:

    
    

    [C]lear 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 evidence 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 the firm belief of conviction, without hesitancy, as to the truth of the allegations sought to be established. Slomowitz v. Walker, 429

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

    
    

29. Section 440.02(8) defines “construction industry” as “for-profit activities involving any building, clearing, filling, excavation, or substantial improvement in the size or use of any structure or the appearance of any land.” Section 440.02(8)

    
    

    further provides “[t]he division may, by rule, establish standard industrial classification codes and definitions thereof which meet the criteria of the term ‘construction industry’ as set forth in this section.” Williams Drywall’s activities in making drywall repairs at the job site for payment constituted construction under the Department’s statutorily-authorized rules. Fla. Admin. Code R. 69L-6.021(2)(dd).

30. The Department established by clear and convincing evidence that Williams Drywall was an “employer” for workers’ compensation purposes because it was engaged in the construction industry during the period of October 31, 2012, through

    October 30, 2014, and employed one or more employees during that period. §§ 440.02(16)(a) and (17)(b)2., Fla. Stat.

31. Section 440.107(7)(a) provides 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.

    
    

    Thus, the Department's Stop Work Order was mandated by statute.

    
    

32. As to the computation and assessment of penalties,

    
    

    section 440.107(7) provides, in relevant part:

    
    

    (d)1. 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

    2 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 2-year period or $1,000, whichever is greater.

    
    

33. Mr. Moskowitz properly utilized the penalty worksheet mandated by rule 69L-6.027 and the procedure set forth in section 440.107(7)(d)1., to calculate the penalty owed by Williams Drywall as a result of its failure to comply with the coverage requirements of chapter 440.

34. The Department has proven by clear and convincing evidence that it correctly calculated and issued the penalty of

    $2,105.50 in the Amended Order of Penalty Assessment.

    
    

35. Notwithstanding Mr. Williams’ testimony that he hired Mr. Johnson only for the drywall repair job on October 30, 2014, and no other job during the non-compliance period, Mr. Williams’ failure to produce requested records to verify his payroll during the period of noncompliance dictates that an earlier date be used when computing the penalty. When an employer refuses to provide required business records, the Department must impute the missing payroll for the period requested in order to assess

the penalty. Twin City Roofing Constr. v. Dep’t of Fin. Servs.,

969 So. 2d 563, 566 (Fla. 1st DCA 2007); Dep’t of Fin. Servs. v. Custom Granite Kitchens and Baths, LLC, Case No. 13-0799 (DOAH

July 23, 2013; DFS Oct. 17, 2013); Olender v. Dep’t of Fin. Servs., Case No. 86845-06-WC (Fla. DFS Sept. 16, 2008)(rejecting

the Administrative Law Judge’s finding of the duration of the non-compliance period based upon oral testimony at the final hearing which differed from the period imputed per the statute).

RECOMMENDATION

Having considered the foregoing Findings of Fact and Conclusions of Law, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, assessing a penalty of

$2,105.50 against Tony Williams Drywall and Plastering, Inc.

DONE AND ENTERED this 3rd day of June, 2015, in Tallahassee, Leon County, Florida.

S

SUZANNE VAN WYK

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 3rd day of June, 2015.

ENDNOTES

1/ Ms. Fuentes did not testify at the final hearing, and the Department did not introduce the investigator’s report into evidence. Hearsay evidence identifying Joseph Johnson at the job site on the date in question was corroborated by the testimony of Tony Williams.

2/ Section 440.12(2) defines “statewide average weekly wage” as “the average weekly wage paid by employers subject to the Florida Reemployment Assistance Program Law as reported to the Department of Economic Opportunity for the four calendar quarters ending each June 30, which average weekly wage shall be determined by the Department of Economic Opportunity on or before November 30 of each year and shall be used in determining the maximum weekly compensation rate with respect to injuries occurring in the calendar year immediately following.”

COPIES FURNISHED:

Trevor S. Suter, Esquire Department of Financial Services

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

Tony Williams

Tony Williams Drywall and Plastering, Inc. 8513 Raquel Lane

Tallahassee, Florida 32312

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

200 East Gaines Street Tallahassee, Florida 32399-0390 (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: 15-000662

Orders for Case No: 15-000662