STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION,

Petitioner,

vs.

ESCOBAR MARBOL AND TILE, INC.,

Respondent.

/

Case No. 15-4086

RECOMMENDED ORDER

Pursuant to notice, a hearing was conducted in this case on September 4, 2015, by video teleconference at sites in Miami and Tallahassee, Florida, before Administrative Law Judge June C. McKinney of the Division of Administrative Hearings, pursuant to the authority set forth in sections 120.569 and 120.57(1),

Florida Statutes.

APPEARANCES

For Petitioner: Alexander Brick, Esquire

Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399

For Respondent: Laureano Cancio, Esquire

Law Offices of Laureano Cancio

815 Ponce de Leon Boulevard, Suite 317 Coral Gables, Florida 33134

STATEMENT OF THE ISSUE

The issue is whether Petitioner properly issued a Stop-Work Order and 2nd Amended Order of Penalty Assessment against Respondent for failing to obtain workers’ compensation insurance that meets the requirements of chapter 440, Florida Statutes.

PRELIMINARY STATEMENT

On March 3, 2015, and June 10, 2015, respectively, the Division of Workers’ Compensation (“the Division” or

“Petitioner”) issued and served a Stop-Work Order and 2nd Amended Order of Penalty Assessment on Escobar Marbol and Tile, Inc. (“Escobar Marbol” or “Respondent”), alleging that Respondent was not in compliance with the coverage requirements of chapter 440.

On June 30, 2015, Respondent challenged the Stop-Work Order and 2nd Amended Order of Penalty Assessment and requested a formal hearing on the matter by Petition. The Petition was transferred to the Division of Administrative Hearings on

July 17, 2015, for assignment of an Administrative Law Judge to conduct the hearing.

At hearing, Respondent presented the testimony of its owner, Daniel Escobar (“Escobar”). Respondent’s Exhibits 1 through 6 were received into evidence. The Division presented the testimony of three witnesses: Daniel Escobar; Kevin Sterling, exemption unit supervisor; and Nathaniel Hatten, penalty auditor. Department’s Exhibits 1 through 9 were received into evidence.

The proceedings were transcribed, and the parties availed themselves of the right to submit proposed recommended orders. The one-volume Transcript of the final hearing was filed with the Division of Administrative Hearings on September 22, 2015. After two extensions, Petitioner and Respondent timely filed proposed recommended orders, which have been considered in the preparation of this Recommended Order.

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

FINDINGS OF FACT

1. The Division is a component of the Department of Financial Services. It is responsible for enforcing the workers’ compensation coverage requirements pursuant to

   section 440.107.

   
   

2. Escobar Marbol is a Florida company specializing in the installation of marble and tile, founded approximately 15 years ago. Escobar Marbol’s office is located at 20792 Southwest 129th Place, Miami, Florida 33177. Respondent was actively engaged in performing tile installation during the two-year audit period from March 4, 2013, through March 3, 2015.

3. On March 3, 2015, while Escobar Marbol was working on a construction jobsite, the Division issued Respondent a Stop-Work Order for Respondent’s failure to secure the required workers’ compensation insurance coverage.

   
   

4. Petitioner also served Respondent a Request of Business Records for Penalty Assessment Calculation (“Request”) asking for documentation to enable the Division to determine the appropriate penalty owed by Escobar Marbol.

5. Escobar Marbol responded to the Request for records and provided the Division with SunTrust bank statements and check images.

6. Nathaniel Hatten (“Hatten”), penalty auditor for the Division, was assigned to Escobar Marbol’s investigation. Hatten reviewed the business records provided and properly determined that Respondent paid Edgar Betanco, Odir Garcia, Raynaldo Remero, Daniel Escobar, Edwin Castro, and Luis Oswaldo Rodriquez for assisting with or installing tile for Escobar Marbol during the penalty period of March 4, 2013, through March 3, 2015. Hatten also concluded that Respondent failed to pay the workers’ compensation premium during the penalty period, two years prior to the Stop-Work Order.

7. Hatten properly calculated the workers' compensation amount Escobar Marbol owed in workers’ compensation insurance for the audit period using the Class Code 5348 for tile installation work. Hatten applied the approved manual rates and methodology specified in section 440.107(7)(d) and concluded Escobar Marbol owed a penalty amount of $18,439.68.

   
   

8. On June 10, 2015, the Division served Respondent the 2nd Amended Order of Penalty Assessment in the amount of $18,439.68.

9. At the hearing, Escobar testified he thought an exemption was in place to cover Escobar Marbol because on March 18, 2013, Escobar had submitted an electronic Notice of Election to Be Exempt application with the Division’s online

   system requesting an exemption from chapter 440. Respondent paid

   
   

   $51.00 by credit card and received a receipt bearing the transaction confirmation number 145485197 upon applying.

10. Respondent’s March 18, 2013, electronic application incorrectly listed the scope of business as a licensed building contractor. The incorrect scope caused the Division to deem the application incomplete, and it was not approved.

11. According to the Division’s online application event summary, the Division generated an incomplete exemption application letter on March 20, 2013, to mail to and inform Respondent that his exemption application was not complete and therefore not approved.

12. On September 3, 2013, Respondent submitted a completed application that corrected and changed the scope from licensed building contractor to marble, tile and flooring, which matched Escobar Marbol’s old exemption scope. The Division determined that the application was complete in its entirety and met the requirements of being issued an exemption.

    
    

13. On September 4, 2013, the Division processed and issued Escobar an exemption. Respondent was without an exemption from April 13, 2013, to September 3, 2013.

14. On June 30, 2015, Respondent challenged the Stop-Work Order and 2nd Amended Order of Penalty Assessment and requested a

    formal hearing.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto pursuant to section 120.569 and 120.57(1), Florida Statutes (2015).

16. Chapter 440 is known as the Workers’ Compensation Law.

    
    

    Section 440.38(1) mandates that employers secure payment of workers' compensation for their employees.

17. "Employer" is defined, in part, as "every person carrying on any employment." § 440.02(16)(a), Fla. Stat. "If the employer is a corporation, parties in actual control of the corporation, including, but not limited to the president, officers who exercise broad corporate powers who . . . directly or indirectly own a controlling interest in the corporation, are considered the employer for the purposes of ss. 440.105, 440.106, and 440.107." § 440.02(16)(a), Fla. Stat.

18. "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.

19. Because an administrative fine deprives the person fined of substantial rights in property, such fines are punitive in nature. Petitioner has the burden of proof and must establish through clear and convincing evidence that Respondent violated the workers' compensation law. Dep't of Banking & Fin., Div. of

    Sec. and Investor Prot. v. Osborne Stern, Inc., 670 So. 2d 932 (Fla. 1996).

20. Respondent stipulated in its Proposed Recommended Order that Petitioner properly calculated the 2nd Amended Order of Penalty Assessment, but contests the portion of the penalty amount, $3,505.10, assessed for Escobar during the period of April 13, 2013, to September 3, 2013, because Respondent maintains that there is no gap in Escobar’s exemption status.

21. The greater weight of the evidence demonstrates that Respondent was not exempt from April 13, 2013, to September 3, 2013, and Petitioner met its burden in this matter. First, Respondent failed to provide a legal basis for the undersigned to make the exemption start date retroactive to March 18, 2013, when Respondent submitted the first incomplete application. Additionally, the undersigned rejects Respondent’s contention that Escobar Marbol did not know the March 18, 2013, exemption

application was not approved. The record shows that Respondent submitted a second corrected exemption application on September 3, 2013, listing the appropriate scope of work. A

corrected application would not have been submitted if Respondent had not been notified that the first one was not approved.

Therefore, the record is clear that there is a lapse in between Escobar’s exemption periods, and Respondent owes $3,505.10 as part of the total penalty amount of $18,439.68 for failing to secure the payment of workers’ compensation insurance for its employees in violation of chapter 440.

RECOMMENDATION

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

RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, issue a final order affirming the Stop-Work Order and 2nd Amended Order of Penalty Assessment in the amount of $18,439.68.

DONE AND ENTERED this 24th day of November, 2015, in Tallahassee, Leon County, Florida.

S

JUNE C. MCKINNEY

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 24th day of November, 2015.

COPIES FURNISHED:

Laureano Cancio, Esquire

Law Office of Laureano Cancio

815 Ponce de Leon Boulevard, Suite 317 Coral Gables, Florida 33134 (eServed)

Alexander Brick, Esquire Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399 (eServed)

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: 15-004086

Orders for Case No: 15-004086