STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION,

Petitioner,

vs. DOAH Case No. 15-4331

OCALA EXTERIOR SOLUTIONS, INC.,

Respondent.

/

RECOMMENDED ORDER

Pursuant to notice to all parties, a final hearing was conducted in this case on October 5, 2015, by way of video teleconference with sites in Tallahassee and Gainesville, 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: Tabitha G. Harnage, Esquire

Alexander Brick, Esquire Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229

For Respondent: Johnny Busciglio, pro se1/

Ocala Exterior Solutions, Inc.

140 Southwest 74th Lane Ocala, Florida 34476

STATEMENT OF THE ISSUE

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

PRELIMINARY STATEMENT

On May 26, 2015, Petitioner, Department of Financial Services, Division of Workers’ Compensation (the “Department”), issued a Stop-Work Order (SWO) against Respondent. Respondent requested an administrative hearing to contest the SWO and the Amended Order of Penalty Assessment (OPA) issued pursuant thereto. Respondent's request was forwarded to the Division of Administrative Hearings so that a formal administrative hearing could be conducted. The hearing was scheduled on the date set forth above. Prior to the final hearing, the Department filed a motion for leave to amend the OPA; the motion was granted and a second amended OPA was accepted.

At the final hearing, the Department called two witnesses: William Pangrass, workers’ compensation investigator for the Department; and Christopher Richardson, penalty auditor for the Department. The Department’s Exhibits 1 through 3 and 6 through

13 were admitted into evidence. Respondent called two witnesses: Johnny Busciglio and Frank Dorneden. Respondent’s Exhibits 1 through 4 were admitted into evidence.

A transcript of the final hearing was ordered by the Department. The Transcript was filed at the Division of Administrative Hearings on November 2, 2015. By rule, parties were allowed 10 days, i.e., until November 12, to submit proposed recommended orders. Petitioner and Respondent each timely submitted a proposed recommended order (PRO) and each was duly considered in the preparation of this Recommended Order.2/

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. This case arose as a result of a random inspection.

2. Respondent is a business created by Johnny Busciglio on or about October 16, 2012. At all times relevant hereto, Respondent was duly licensed to do business in the State of Florida. Its business address is 140 Southwest 74th Lane, Ocala, Florida 34476.

3. On May 22, 2015, the Department’s investigator, William Pangrass, made a random site visit to a construction site located at a residence at 9189 Southwest 60th Terrace Road, Ocala, Florida. He saw two men installing soffit as part of the

   
   

   construction which was going on. Pangrass remembers the men identifying themselves as Derek McVey and Frank Deil. When Pangrass inquired as to their employer, the two men were initially not certain for whom they were working. One of the men made a telephone call and then told Pangrass they were employees of Sauer & Sons. Interestingly, Respondent said the two men on-site that day were McVey and a man named James Van Brunt.

4. Pangrass contacted Sauer & Sons and were told that neither McVey nor Deil (or Van Brunt) were employees of that company. He was told by a representative of Sauer & Sons that the men were in fact employees of Respondent.

5. Pangrass then verified that Respondent was a current, viable company and checked whether the company had workers’ compensation insurance coverage for its employees. He found that Respondent had a workers’ compensation insurance policy for a short time in 2014. Two of Respondent’s employees, however, did have exemptions from coverage. Those two were Johnny Busciglio and Anthony Wayne.

6. Based on his findings, Pangrass issued a SWO which he posted at the work site he had visited. He posted the SWO on the permit board in front of the job site on May 26, 2015. On May 29, he served a Request for Production of Business Records on Respondent, seeking information concerning Respondent’s

   
   

   business for purposes of calculating a penalty for failure to have workers’ compensation insurance in place. Respondent emailed the requested business records to Pangrass. The Department requested additional records and clarification concerning some of the records which had been provided.

   Busciglio made a good faith effort to respond to each of the Department’s requests.

7. After review of Respondent’s business records, the Department calculated a penalty and issued an amended OPA. That amended OPA was issued on September 8 and served on Busciglio (as agent for Respondent) on October 1, 2015. The amount of the penalty in the amended OPA was $9,896.32.

8. Within a few days after receiving the amended Order, Busciglio obtained workers’ compensation insurance for his employees, paid a down payment of $1,000 to the Department, and Respondent was released to resume its work.

9. The penalty in the amended OPA was based upon information obtained from Busciglio concerning Respondent. Using the bank records supplied by Busciglio, the Department determined that Respondent had the following employees: Eric McVey, Frank Dorneden, Jeff Burns, Jordan Anchondo, Anthony Wayne, Nikki Smith, Johnny Busciglio, and Jason Bridge. Their wages were used by the Department to calculate the penalty.

   
   

10. The penalty was calculated by the Department as follows:

    1. The business was assigned class code 5645, construction on residential dwellings;

    2. The period of non-compliance was set at two years;

       
       

    3. The gross payroll amount for that two-year period was established at $30,905.14;

    4. The gross payroll amount was divided by 100, resulting in the sum of $309.05;

    5. The approved manual rate, i.e., the amount the employer would have paid if insurance was in place, was assigned for each employee;

    6. The gross payroll was multiplied by the manual rate;

       
       

    7. And the penalty amount was established, taking the figure in (f), above, and multiplying by two.

11. Busciglio established by credible testimony, unrefuted by the Department, that Nikki Smith was a person from whom he bought tools; she was never an employee of Respondent. The same was true for the person listed as Jason Bridge (although his real name may have been Jason Woolridge). As for Eric McVey, he worked for Frank Dorneden, who paid McVey directly. There were no payroll records or checks from Respondent provided to the Department which were attributable to McVey. Dorneden had begun working for Respondent on December 22, 2014. On May 22, 2015,

    
    

    he was asked by Busciglio to visit the work site; he found McVey working there and Deil/Van Brunt was also on the site. Neither the Department nor Respondent offered any further explanation about Deil/Van Brunt, nor did the Department attribute any penalty to Van Brunt as a putative employee. His status in this matter is a mystery.

12. When the penalties associated with McVey, Smith, and Bride are subtracted from the calculation, the amount of the penalty would be $9,454.22.

    CONCLUSIONS OF LAW

    
    

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

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 Dep’t of Banking & Fin., Div. of Sec. & Inv. Prot. v. Osborne Stern & 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. 2d 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. 2d 797, 800 (Fla. 1st DCA 1983).

    
    

    (Citations omitted).

    
    

17. The Department made assumptions based upon its review of Respondent’s business records. However, Respondent established by direct testimony, which is deemed credible by the undersigned, that at least three of the employees assumed by the Department to work for Respondent did not in fact do so. The Department thus failed to prove by clear and convincing evidence that the penalties associated with those individuals were correct.

18. Pursuant to sections 440.10 and 440.38, Florida Statutes (2015), 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. 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 did not have workers’ compensation coverage except for a very short period of time. There was no coverage on the date of the site visit.

19. Section 440.107(7)(a) 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 made some errors in its final calculations, 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, section 440.107(7)(d)1. 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. The penalty in this matter should be $9,454.22.

Respondent established his good faith effort to comply with the Department’s requests. Respondent should, therefore, be allowed to pay the penalty over a period of time, rather than as a lump sum.

RECOMMENDATION

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

RECOMMENDED that a final order be entered by the Department of Financial Services requiring Respondent, Ocala Exterior Solutions, Inc., to pay the sum of $9,454.22.

DONE AND ORDERED this 20th day of November, 2015, in Tallahassee, Leon County, Florida.

S

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 20th day of November, 2015.

ENDNOTES

1/ At final hearing, Respondent asked that Rebecca Rosin be allowed to act as the company’s pro se representative. The Department had no objection to the request and Ms. Rosin was allowed to act in that capacity for Ocala Exterior Solutions, Inc.

2/ Respondent’s PRO was actually filed after 5:00 p.m., on November 12, but it is accepted as timely. The portions of Respondent’s PRO which are not supported by the evidence were not considered in the preparation of this Recommended Order.

COPIES FURNISHED:

Johnny Busciglio

Ocala Exterior Solutions, Inc.

140 Southwest 74th Lane Ocala, Florida 34476 (eServed)

Tabitha G. Harnage, Esquire Alexander Brick, 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 32399-0390 (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: 15-004331

Orders for Case No: 15-004331