STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION,

Petitioner,

vs.

PRO QUALITY ENTERPRISES, LLC,

Respondent.

/

Case No. 16-2036

RECOMMENDED ORDER

Pursuant to notice to all parties, a final administrative hearing was held in this matter before R. Bruce McKibben, Administrative Law Judge for the Division of Administrative Hearings (“DOAH”), via video teleconference with sites in Tallahassee and Daytona Beach, Florida, on June 29, 2016.

APPEARANCES

For Petitioner: Tabitha G. Harnage, Esquire

Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229

For Respondent: Gabor Albok, pro se

Pro Quality Enterprise, LLC Apartment 503

732 North Halifax Avenue Daytona Beach, Florida 32118

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent, Pro Quality Enterprises, LLC (“Pro Quality”), should have a penalty assessed against it by Petitioner, Department of Financial Services, Division of Workers’ Compensation (the “Department”), for failure to have workers’ compensation insurance in place, and, if so, the amount of such penalty or assessment.

PRELIMINARY STATEMENT

On or about January 14, 2014, the Department issued a Stop- Work Order (“SWO”) and Order of Penalty Assessment, requiring Pro Quality to immediately cease all business activities based upon the Department’s finding that Pro Quality was operating without valid workers’ compensation insurance coverage. Pro Quality timely filed a request for a formal administrative hearing. At the final hearing conducted in this matter, the Department called two witnesses: Jose Bird, compliance investigator; and Phillip Sley, penalty auditor. The Department’s Exhibits 1 through 12 were admitted into evidence. Gabor Albok, owner of Pro Quality, testified on behalf of the company but did not offer any other evidence.1/

The parties were allowed, by rule, to submit proposed recommended orders to the undersigned Administrative Law Judge within 10 days of the filing of the transcript at DOAH. The Transcript was filed on July 20, 2016,2/ making the proposed

recommended orders due on July 30 (a Saturday, and thus on August 1, the first business day following). The Department’s proposed recommended order was filed on August 1; Pro Quality did not timely file a proposed recommended order.

At final hearing, the Department made an ore tenus motion for the Administrative Law Judge to deem admitted all of the Requests for Admissions propounded on Pro Quality during discovery. Mr. Albok acknowledged that he had received discovery requests from the Department, but was not aware of what they meant. Based on his explanation, the Administrative Law Judge (during the final hearing) ruled that no findings of fact would be based on those alleged admissions.3/

FINDINGS OF FACT

1. The Department is the State agency responsible for, inter alia, insuring that all businesses operating in this State have workers’ compensation insurance coverage.

2. Pro Quality is a duly-formed and validly-existing limited liability company in the State of Florida. The company was formed on April 23, 2012, for the purpose of conducting any and all lawful business. At the time of its formation, Gabor Albok and Jaco Kotze were the named managers of the company. Mr. Albok was also the registered agent.

3. Mr. Albok created the company when he first came to the United States from his native Hungary. He envisioned using the

   
   

   entity for some business purpose, i.e., perhaps shipping automobiles back to Europe. When that venture did not pan out, Mr. Albok came up with the idea of being a referral source for businesses engaged in the construction industry, e.g., painters, carpenters, lawn services, roofers, etc.

4. On January 14, 2014, Jose Bird, a compliance investigator with the Department, conducted an investigation

   at 47 Lake Walk, Palm Coast, Florida. Upon arrival at the site at around 11:30 a.m., Mr. Bird saw a person (later identified as Mr. Albok) “doing touch-up work” with a paint brush and then cleaning the brush. Mr. Bird approached Mr. Albok, identified himself as an investigator for the Department, and asked

   Mr. Albok to identify himself. Mr. Albok complied with the request, including the name of his company, Pro Quality.

   Mr. Albok did not attempt to hide from the investigator or avoid his questions; he was fully cooperative at all times.

5. Mr. Bird then asked Mr. Albok to provide proof of identity, so Mr. Albok went to his car to retrieve his wallet. At that time he realized he had left his wallet somewhere, so he hurriedly left in his car to return to the 7-11 store he had visited that morning to see if they had his wallet.

6. Meanwhile, Mr. Bird used the information he had received from Mr. Albok to begin his investigation as to whether Pro Quality had workers’ compensation insurance coverage

   
   

   required by someone in the painting business. He found that it did not have such coverage after checking the Department’s compliance and coverage automated system.

7. Mr. Bird, operating under the assumption that Mr. Albok was a painter, provided his findings to his supervisor and was directed to issue an SWO and request for business records. He prepared the documents and they were sent via certified mail to Mr. Albok at his address of record.

8. Mr. Albok responded by providing such business records as he could locate, but maintained that he did not have workers’ compensation insurance coverage because he was not engaged in an activity that required such insurance. Specifically, Mr. Albok explained that he was not a painter, had never been a painter, had never employed a painter in his business, and could not understand why the Department thought otherwise.

9. Mr. Albok was not engaged in any construction-related business. Pro Quality was a company that attempted to help persons building a new home to find professionals who might assist in the development and maintenance of the new home. Pro Quality would then get a referral fee from the companies if they were hired. He was not an employee of any of the companies and performed no services for them nor were the professionals he referred employees of Pro Quality.

   
   

10. At the time Mr. Bird arrived at the work site in Palm Coast, Mr. Albok was talking to a painter at the house who he had referred to the homeowner. He touched up a spot on a windowsill and was helping the painter clean his brushes as they talked. He had wiped a brush on the windowsill and was bending down to spray it off as he talked. He had not been painting and the painter was not under his employ, nor was he under the painter’s employ. Mr. Albok’s testimony was credible and is accepted as true. The Department did not provide any evidence to refute Mr. Albok’s assertions in this matter. Mr. Bird’s short observation and minimal inquiry to Mr. Albok was insufficient to establish that Mr. Albok was a painter working at the job site.

11. The Department nonetheless found that Pro Quality was engaged in the business of painting, issued a penalty assessment based on that presumption, and calculated a penalty of

    $20,727.38, later reduced to $15,215.68.

    
    

12. Based upon the determination that Mr. Albok and Pro Quality were not engaged in the business of painting (or other work requiring workers’ compensation insurance), there is no basis for calculating a penalty assessment or imposing a penalty against the company.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over this matter pursuant to sections 120.569 and 120.57(1), Florida Statutes (2016).

14. The burden of proof in matters such as this is on the Department because it is asserting the affirmative of the issue, i.e., that Pro Quality did not have workers’ compensation insurance in place for its employees or have a valid exemption in place. See 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

    and Fin., Div. of Sec. and Investor Prot. v. Osborne Stern and 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 and administrative 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 did not meet its burden in this matter.

    
    

    Its conclusion that Mr. Albok and/or Pro Quality was engaged in the painting business was not substantiated by clear and convincing evidence. The Department therefore had no basis to assess a penalty against Pro Quality.

18. The penalty in this case is unjustified and improper.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered rescinding the Stop-Work Order entered against Pro Quality Enterprises, LLC, and all penalties assessed therefrom.

DONE AND ENTERED this 4th day of August, 2016, 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 4th day of August, 2016.

ENDNOTES

1/ During the final hearing, Mr. Albok asked for a break to submit two exhibits via fax. The exhibits were never received at DOAH and were not further referenced by Mr. Albok in his testimony.

2/ Due to the extremely poor connection between the video sites during the final hearing, there are numerous “inaudible” references in this Transcript. No substantive testimony appears to be missing.

3/ Counsel for the Department rightly moved for consideration of the admissions and is not to be condemned for doing so.

However, the facts of the case did not support a hyper-technical legal or procedural resolution.

COPIES FURNISHED:

Gabor Albok

Pro Quality Enterprise, LLC Apartment 503

732 North Halifax Avenue Daytona Beach, Florida 32118

Tabitha G. Harnage, 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: 16-002036

Orders for Case No: 16-002036