STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

L and W PLASTERING AND, DRYWALL SERVICES, INC.

Petitioner,

vs.

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION,

Respondent.

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) Case No. 06-3261

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RECOMMENDED ORDER

A hearing was held pursuant to notice, before Barbara J. Staros, Administrative Law Judge with the Division of Administrative Hearings, on December 12, 2006, via video- teleconference in Jacksonville and Tallahassee, Florida.

APPEARANCES

For Petitioner: Douglas D. Dolan, Esquire

Department of Financial Services Division of Workers' Compensation

200 East Gaines Street Tallahassee, Florida 32399

For Respondent: James J. Egan, Esquire

Law Office of James J. Eagan, P.A., 4950 Beach Boulevard

Jacksonville, Florida 32207 STATEMENT OF THE ISSUE

The issue is whether The Department of Financial Services properly imposed a Stop-Work Order and Amended Order of Penalty

Assessment pursuant to the requirements of Chapter 440, Florida Statutes.

PRELIMINARY STATEMENT

On June 6, 2006, the Department of Financial Services, Division of Workers' Compensation (Division) issued a Stop-Work Order and Order of Penalty Assessment to Petitioner, L and W Plastering and Drywall Services. On June 27, 2006, the Division issued an Amended Order of Penalty Assessment in the amount of

$553,628.37. Respondent contested the Stop-Work Order and Amended Penalty Assessment, and requested an administrative hearing. The matter was forwarded to the Division of Administrative Hearings on or about August 29, 2006.

A Notice of Hearing was issued scheduling the hearing for November 7, 2006. On November 6, 2006, the Division filed an unopposed Emergency Motion to Continue Administrative Hearing, and on November 7, 2006, the Division filed an unopposed Motion to Amend Order of Penalty Assessment. The Motion to Amend Order of Penalty Assessment sought to reduce the Order of Penalty Assessment to $46,259.07. The hearing commenced as scheduled on November 7, 2006. At the commencement of the hearing, the Motion to Amend Order of Penalty Assessment and the Emergency Motion to Continue Emergency Hearing were granted. The hearing was re-scheduled for December 12, 2006.

At the commencement of the December 12, 2007, hearing, counsel for Petitioner made an ore tenus motion to withdraw as counsel. No one from Petitioner's business was present. After hearing argument of counsel and giving the motion due consideration, the motion was denied.

At hearing, Petitioner presented no witnesses and did not offer any exhibits. Respondent presented the testimony of Allen DiMaria. Respondent offered Exhibits numbered 1 through 5, 8,

12 and 13, which were admitted into evidence. Official Recognition was taken of Chapter 440, Florida Statutes, and Chapter 69L, Florida Administrative Code. A one-volume Transcript was filed on January 4 2007. Respondent timely filed a Proposed Recommended Order which has been considered in the preparation of this Recommended Order. Petitioner did not file any post-hearing submission.

References to statutes are to Florida Statutes (2006) unless otherwise noted.

FINDINGS OF FACT

1. The Division is charged with the regulation of workers' compensation insurance in the State of Florida.

2. Petitioner L and W Plastering and Drywall Services, Inc., (L and W Plastering) is a corporation located in Jacksonville, Florida, and is engaged in the business of providing drywall installation.

3. Allen DiMaria is an investigator employed by the Division. His duties include making site visits at locations where work is being conducted and determining whether the employers in the state are in compliance with the requirements of the workers' compensation law and related rules.

4. On June 5, 2006, Mr. DiMaria visited a commercial job site at 9150 Baymeadows Road, Jacksonville, Florida, and observed 15 individuals at the site.

5. Mr. DiMaria interviewed the individuals and completed a Field Interview Worksheet, recording the names of the individuals who identified themselves as employees of L and W.

6. Mr. DiMaria spoke to the foreman of the crew requesting proof of insurance. He did not receive any such proof on that date. He also checked the database in the Coverage and Compliance Automated System, "C-CAS", and found no proof of coverage nor an exemption for L and W Plastering.

7. After conferring with his supervisor, Mr. DiMaria issued a Stop-Work Order on June 6, 2006.

8. On June 7, 2006, Mr. DiMaria received a certificate of insurance from Petitioner, naming First Financial Employee Leasing Company (First Financial) as the insured.

9. First Financial is a professional employee organization which provides workers' compensation coverage, human resource identification, and other assistance to their clients.

10. L and W was a client company of First Financial. The certificate of insurance received by Mr. DiMaria states that coverage is extended to the employees leased to L and W.

11. William Yocum is the compliance manager of First Financial. Mr. Yocum confirmed that L and W entered into a standard leasing agreement contract with First Financial and that only employees of First Financial leased to L and W Plastering were covered by the workers' compensation insurance provided by First Financial.

12. Mr. DiMaria then contacted First Financial, which sent him a list of employees leased from First Financial to Petitioner as of June 5, 2006. He then compared the names on the list received from First Financial with the names from the field worksheet he completed at the jobsite. His review revealed that 10 of the employees listed on his worksheet did not appear on the list of employees leased by L and W Plastering from First Financial.

13. On June 7, 2006, Mr. DiMaria also sent Petitioner a request for business records for the purpose of calculating a penalty for lack of coverage.

14. Petitioner did not produce business records as requested.

15. On June 27, 2006, Mr. DiMaria issued an Amended Order of Penalty Assessment to Petitioner for $553,628.37.

16. On November 6, 2006, Mr. DiMaria issued a second Amended Order of Penalty Assessment in the amount of $46,259.07.

17. The amount of the penalty was imputed using the statewide weekly average wage that was in effect at the time of the issuance of the Stop-Work Order. Through imputation of payroll for the ten employees, he calculated a penalty for the time period beginning March 1, 2006, the date Petitioner incorporated. Using rates from an approved manual, Mr. DiMaria assigned a class code to the type of work performed by Petitioner and multiplied the approved manual rate with the imputed payroll per one hundred dollars, then multiplied all by

    1.5. Penalties are calculated by determining the premium amount the employer would have paid based on his or her Florida payroll and multiplying by a factor of 1.5.

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2006).

19. Administrative fines are penal in nature. Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern, Inc., 670 So. 2d 932 (Fla. 1996). Therefore, the Division bears the burden of proof herein by clear and convincing evidence.

20. Section 440.10(1), Florida Statutes, requires every employer coming within the provisions of Chapter 440 to secure coverage under that chapter.

21. An "employer" is defined as "every person carrying on employment. . . ." An "employee" is defined as "any person who receives remuneration from an employer for the performance of any work or service while engaged in any employment."

    § 440.02(15) and (16), Fla. Stat.

    
    

22. Section 440.107, Florida Statutes, authorizes the Division to issue stop-work orders and penalty assessment orders in its enforcement of workers' compensation coverage requirements, and reads in pertinent part:

    (2) For purposes of this section, 'securing the payment of workers' compensation' means obtaining coverage that meets the requirements of this chapter and the Florida Insurance Code. . . .

    
    

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    (7)(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 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 the payment of workers' compensation required by this chapter within the preceding 3-year period or $1,000, whichever is greater.

    
    

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    (e) When an employer fails to provide business records sufficient to enable the department to determine the employer's payroll for the period requested for the calculation of the penalty provided in paragraph (d), for penalty calculation purposes, the imputed weekly payroll for each employee, corporate officer, sole proprietor, or partner shall be the statewide average weekly wage as defined in

    s. 440.12(2) multiplied by 1.5.

    
    

23. Florida Administrative Code Rule 69L-6.028 reads in pertinent part:

    1. In the event an employer fails to provide business records sufficient for the department to determine the employer's payroll for the period requested for the calculation of the penalty pursuant to Section 440.107(7)(e), F.S., the department shall impute payroll at any time after the expiration of fifteen business days after receipt by the employer of a written request to produce such business records.

       
       

    2. When an employer fails to provide business records sufficient to enable the department to determine the employer's payroll for the period requested for purposes of calculating the penalty provided for in Section 440.107(7)(d), F.S., the imputed weekly payroll for each employee, corporate officer, sole proprietor or partner for the portion of the period of the employer's non-compliance occurring on or after October 1, 2003, shall be calculated as follows:

       
       

       1. . . . [F]or . . . each employee identified by the department as an employee of such employer at any time during the period of the employer's non-compliance, the imputed weekly payroll for each week of the employer's non-compliance for each such employee shall be the statewide average

          weekly wage . . . that is in effect at the time the stop work order was issued to the employer, multiplied by 1.5. Employees include sole proprietors and partners in a partnership.

          
          

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          (c) If a portion of the period of non- compliance includes a partial week of non- compliance, the imputed weekly payroll for such partial week of non-compliance shall be prorated from the imputed weekly payroll for a full week.

          
          

24. Section 468.520, Florida Statutes, reads in pertinent part as follows:

    468.520. Definitions.--

    
    

    1. 'Employee leasing' means an arrangement whereby a leasing company assigns its employees to a client and allocates the direction of and control over the leased employees between the leasing company and the client. . . .

       
       

    2. 'Employee leasing company' means a sole proprietorship, partnership, corporation, or other form of business entity engaged in employee leasing.

       
       

    3. 'Client company' means a person or entity which contracts with an employee leasing company and is provided employees pursuant to that contract.

    
    

25. Petitioner was an employer engaged in the construction industry which was not in compliance with the requirements of Chapter 440, Florida Statutes, of securing workers' compensation insurance for all of its employees. Petitioner was a client company of an employee leasing company, First Financial. Only

the employees leased from First Financial were covered under First Financial's workers' compensation coverage. Since several of Petitioner's workers were not covered under First Financial's workers' compensation coverage, Respondent properly applied the statutorily required penalty.

RECOMMENDATION

is,

Based upon the Findings of Fact and Conclusions of Law, it

RECOMMENDED:

That the Division of Workers' Compensation enter a Final

Order upholding the Amended Order of Penalty Assessment issued November 6, 2006, assigning a penalty of $46,259.07, and the Stop-Work Order issued to Petitioner on June 6, 2006.

DONE AND ENTERED this 16th day of March, 2007, in Tallahassee, Leon County, Florida.

S

BARBARA J. STAROS

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 2007.

COPIES FURNISHED:

Douglas D. Dolan, Esquire Department of Financial Services Division of Workers' Compensation

200 East Gaines Street Tallahassee, Florida 32399

James J. Egan, Esquire

Law Office of James J. Egan, P.A. 4950 Beach Boulevard,

Jacksonville, Florida 32207

Honorable Alex Sink Chief Financial Officer

Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

Daniel Y. Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

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: 06-003261

Orders for Case No: 06-003261