STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION,

Petitioner,

vs.

USA PROFESSIONAL PLASTERING, LLC,

Case No. 15-7351

Respondent.

/

RECOMMENDED ORDER

Pursuant to notice, a hearing was conducted in this case on March 28 and May 27, 2016, 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: Trevor S. Suter, Esquire

Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399

For Respondent: Kimel Grau Garcia, pro se

USA Professional Plastering, Inc. 16278 Southwest 91 Terrace

Miami, Florida 33196

STATEMENT OF THE ISSUE

The issue is whether Petitioner properly issued a Stop-Work Order and 3rd 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 August 26, 2015, and March 28, 2016, respectively, the Division of Workers' Compensation ("Division" or

"Petitioner") issued and served a Stop-Work Order and 3rd Amended Order of Penalty Assessment on USA Professional Plastering, LLC ("USA" or "Respondent"), alleging that Respondent was not in compliance with the coverage requirements of chapter 440.

On or about November 23, 2015, Respondent challenged the Stop-Work Order and first penalty assessment and requested a formal hearing on the matter by Petition. The Petition was transferred to the Division of Administrative Hearings on December 30, 2015, for assignment of an Administrative Law Judge to conduct the hearing.

At hearing, Respondent presented the testimony of its owner, Kimel Grau Garcia ("Garcia"). Respondent did not offer any exhibits into evidence. The Division presented the testimony of two witnesses: Julio Cabrera, compliance investigator, and Chris Richardson, penalty auditor. Department's Exhibits 1 through 4 and 6 through 10 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 June 9, 2016. 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 2015 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. At all times relevant to this proceeding, USA was a corporation registered to do business in Florida.

3. Respondent is a company engaged in the construction industry and was active during the two-year audit period from August 27, 2013, through August 26, 2015.

4. On August 26, 2015, Julio Cabrera ("investigator" or Cabrera"), compliance investigator for the Division, conducted a random construction compliance check at the residential job site, 741 Harbor Drive in Key Biscayne ("residential home"). Cabrera observed two men on Respondent's scaffold plastering the exterior wall of the residential home.

   
   

5. Cabrera interviewed the two men working on the scaffold.

   
   

   The workers told the investigator that they were employed by Respondent. They also identified Garcia as the Respondent's owner and provided Garcia's contact information to Cabrera.

6. After interviewing the two workers, Cabrera checked the Department's Coverage and Compliance Automated System for proof of workers' compensation coverage and for exemptions associated with USA. Cabrera's search revealed Garcia had an active exemption, but Respondent did not have a workers' compensation insurance policy or an employee leasing policy for its employees.

7. Cabrera also confirmed that Respondent did not have any type of workers' compensation coverage for its employees by examining the National Council on Compensation Insurance database.

8. Next, Cabrera placed a telephone call to Garcia and interviewed him. Garcia informed Cabrera that the two workers were USA's employees and that Respondent did not have workers' compensation insurance coverage for the workers.1/

9. After interviewing Garcia, the investigator returned to the two USA employees and requested their identification.

   Silvano Antonio Delgado Reyes provided his identification and the other USA male employee fled from the job site.

   
   

10. That same day Cabrera issued Respondent a Stop-Work Order on behalf of the Division for Respondent's failure to secure the required workers' compensation insurance coverage.

11. Petitioner also served Respondent a Request of Business Records for Penalty Assessment Calculation ("Request") asking for documentation to enable the Division to determine payroll for the audit period of August 27, 2013, through August 26, 2015.

12. USA responded to the Request for records and provided the Division with verification of its business records on several different occasions. Ultimately, Respondent provided bank statements and corresponding check images for most of the two- year audit period.

13. Christopher Richardson ("auditor" or "Richardson"), penalty auditor for the Division, was assigned to USA's investigation. Richardson reviewed the business records produced by Respondent and determined those persons employed by USA during the audit period without workers' compensation insurance. Richardson properly recalculated the penalty amount each time new records were provided by Respondent.

14. USA did not provide sufficient records to determine payroll for February 1, 2014, through December 31, 2014, and August 1, 2015, through 25, 2015, and Richardson properly utilized the computation formula to determine the payroll for the aforementioned audit period without adequate records.

    
    

15. Richardson concluded his audit by properly calculating the workers' compensation amount USA owed in workers' compensation insurance for the audit period using the Class

    Code 5022 for masonry work. Richardson applied the approved manual rates and methodology specified in section 440.107(7)(d) and concluded USA owed a penalty amount of $52,489.24.

16. On March 28, 2016, the Division served Respondent the 3rd Amended Order of Penalty Assessment in the amount of

    $52,489.24 naming those persons employed by USA during the audit period.

17. On June 30, 2015, Respondent challenged the Stop-Work Order and penalty assessment and requested a formal hearing.

    CONCLUSIONS OF LAW

    
    

18. 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).

19. Chapter 440 is known as the Workers' Compensation Law.

    
    

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

20. "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.

21. "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.

22. 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).

23. Petitioner met its burden in this matter. The greater weight of the evidence demonstrates that Respondent employed the employees named on the 3rd Amended Order of Penalty Assessment and that Respondent was engaged in the construction industry in Florida during the audit period of August 27, 2013, through August 26, 2015. Additionally, the record shows Respondent failed to carry workers' compensation insurance for its employees as required by Florida's Workers' Compensation Law for the audit

period. Therefore, the record is clear that Respondent owes a total penalty amount of $52,489.24 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 3rd Amended Order of Penalty Assessment in the amount of $52,489.24.

DONE AND ENTERED this 15th day of July, 2016, 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 15th day of July, 2016.

ENDNOTE

1/ Based on the candor and demeanor as well as the interview Cabrera had with the two USA workers, the undersigned finds Cabrera more credible regarding Garcia's admission that the two workers were employed by USA.

COPIES FURNISHED:

Trevor S. Suter, Esquire Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399 (eServed)

Kimel Grau

USA Professional Plastering, Inc. 16278 Southwest 91 Terrace

Miami, Florida 33196

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: 15-007351

Orders for Case No: 15-007351