STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

D. GRISWOLD, INC., )

)

Petitioner, )

)

vs. )

)

DEPARTMENT OF FINANCIAL ) SERVICES, DIVISION OF WORKERS' ) COMPENSATION, )

)

Respondent. )

Case No. 07-1451

)

RECOMMENDED ORDER

A hearing was held pursuant to notice before Administrative Law Judge Carolyn S. Holifield of the Division of Administrative Hearings, on May 31, 2007, by video-teleconference between Tampa and Tallahassee.

APPEARANCES

For Petitioner: David Griswold, pro se

D. Griswold, Inc. 1198 Ricardo Place

St. Petersburg, Florida 33702

For Respondent: Thomas Duffy, Esquire

Department of Financial Services Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399-4229

STATEMENT OF THE ISSUES

The issues are whether Petitioner was in violation of the workers' compensation requirements of Chapter 440, Florida Statutes (2006),1/ and, if so, what penalty should be assessed.

PRELIMINARY STATEMENT

On February 8, 2007, Respondent, the Department of Financial Services, Division of Workers' Compensation (hereinafter referred to as "Department"), issued a Stop Work Order No. 07-034-D3. On February 21, 2007, the Department issued an Amended Order of Penalty Assessment related to the above-referenced Stop Work Order, alleging that Petitioner,

D. Griswold, Inc. (hereinafter referred to as "Petitioner" or "Griswold, Inc."), failed to comply with the requirements of the workers' compensation law. The Stop Work Order required Griswold, Inc., to cease business operations and the Amended Order of Penalty Assessment assessed a penalty of $52,685.67 against Petitioner. Petitioner challenged the penalty assessment and requested an administrative hearing.

At the hearing, the Department presented the testimony of Lloyd R. Hillis, investigator for the Division of Workers' Compensation, Bureau of Compliance. Petitioner did not call any witnesses but cross-examined the Department's witness. The Department's Exhibits 1 through 3 were admitted into evidence.

Petitioner did not offer any exhibits.

A Transcript of the hearing was filed on August 8, 2007.

The Department timely filed a Proposed Recommended Order. Petitioner did not file a proposed recommended order.

FINDINGS OF FACT

1. The Department is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees. § 440.107, Fla. Stat.

2. Respondent is a corporation, incorporated in the State of Florida, which conducted business operations in Florida during the period of February 8, 2004, through February 8, 2007.

3. At all times relevant to this proceeding,

   
   

   David Griswold was the president, secretary, and registered agent of Griswold, Inc., as well as its sole employee.

4. Lloyd Hillis is an investigator for the Department's Division of Workers' Compensation, Bureau for Compliance. As part of his job responsibilities, Mr. Hillis visits work sites of construction and non-construction businesses to determine if they are complying with applicable workers' compensation laws.

5. On February 8, 2007, Mr. Hillis, on behalf of the Department, conducted a routine compliance check of all contractors in the Sunset Point Subdivision in Clearwater, Florida. During this compliance check, Mr. Hillis observed that

   Mr. Griswold was about to install kitchen cabinets at a house under construction at 2523 Colony Reed Lane.

6. Cabinet installation is considered carpentry and is defined as construction work. As such, employees performing this work are required to have workers' compensation coverage unless they are exempted from such coverage.

7. The type of work being performed by Mr. Griswold, cabinet installation or carpentry, has been designated by the SCOPES Manual as Class Code 5437. The Department has adopted the SCOPES Manual by reference in Florida Administrative Code Rule 69L-6.021. If and when there have been violations of the workers' compensation laws, the class codes are used in calculating the appropriate penalty.

8. On the day of the inspection, Mr. Griswold told

   
   

   Mr. Hillis that he was employed by Griswold, Inc., that he was the sole employee of the corporation, and that he had an exemption from having workers' compensation coverage.

9. Upon checking the computer database maintained by the Department, Mr. Hillis determined that Mr. Griswold did not have an exemption and had not had an exemption since 2002. Moreover, the same computer database showed that Griswold, Inc., did not have workers' compensation coverage.

10. On February 8, 2007, Mr. Hillis issued a Stop Work Order against Griswold, Inc., after he determined that

    Mr. Griswold did not have workers' compensation insurance. That same day, Mr. Hillis issued to Mr. Griswold a Request for Production of Business Records for Penalty Assessment Calculation (hereinafter referred to as "Request for Production of Business Records") to determine the amount of the penalty assessment.

11. In response to the Request for Production of Business Records, Mr. Griswold provided the Department with payroll documents for the period from 2004 to 2007 and an unsigned 2006 Federal Income Tax Return.

12. The payroll documents submitted by Petitioner consisted of pay stubs, which reflected that Texwood Industries, a company in Texas, had issued payroll checks to Mr. Griswold as an employee of Petitioner. According to the records, during the time period from 2004 through 2007, the only employee who worked for Petitioner was Mr. Griswold.

13. During this proceeding, Petitioner did not dispute that from February 8, 2004, through February 8, 2007,

    Mr. Griswold was not covered by workers' compensation coverage and did not have an exemption from such coverage.

14. Mr. Hillis used the payroll documents provided to him by Mr. Griswold as the basis for calculating the penalty assessment for the period from February 8, 2004, through February 8, 2007. However, Mr. Hillis was unable to consider

    the 2006 Federal Income Tax Return because it was not signed.2/ Even if the 2006 Federal Income Tax Return had been signed, the 2004 and 2005 tax records were also needed. The tax records for all three years, if provided to the Department, would have been considered and may have affected or altered the amount of the penalty assessment.

15. The Department correctly calculated the penalty assessment using the statutory guidelines in Subsection 440.107(7)(d), Florida Statutes. The calculation was based on the money paid to Petitioner's sole employee, Mr. Griswold; the class code assigned to the job being performed by Mr. Griswold, utilizing the SCOPES Manual; and the applicable approved manual rate. Based on that calculation, the correct penalty assessment in this case is $52,685.67.

    CONCLUSIONS OF LAW

    
    

16. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2007).

17. In this case, the Department seeks to impose a penalty assessment under the provisions of Subsection 440.107(7)(d), Florida Statutes. This assessment is penal in nature. Therefore, the Department has the burden of proving by clear and convincing evidence that Griswold, Inc., violated the workers' compensation law during the relevant time period and that the

    penalty assessment was correct under the law. Department of Banking and Finance, Division of Securities and Investor

    Protection v. Osborne Stern, Inc., 670 So. 2d 932, 935 (Fla. 1996); and L and W Plastering and Drywall Services, Inc. v. Department of Financial Services, Division of Workers' Compensation, Case No. 06-3261 (DOAH March 16, 2007)(Final Order adopting Recommended Order April 24, 2007).

18. Sections 440.10 and 440.38, Florida Statutes, states that every "employer" is required to secure the payment of workers' compensation for the benefit of its workers unless exempted or excluded under Chapter 400, Florida Statutes.

19. An "employer" is defined, in part, as "every person carrying on any employment . . . ." § 440.02(16), Fla. Stat. "Employment" is "any service performed by an employee for the purpose of employing him or her" and "with respect to the construction industry, [includes] all private employment in which one or more employees are employed by the same employer."

    § 440.02(17)(a) and (b)2., Fla. Stat.

    
    

20. An "employee" means "any person who is an officer of a corporation and who performs services for remuneration for such corporation within this state, whether or not such services are continuous." § 440.02(15)(b), Fla. Stat.

21. The evidence established that Petitioner was an employer within the meaning of Subsection 440.02(16), Florida

    Statutes, during the period specified in the Amended Order Penalty Assessment.

22. The evidence established that Mr. Griswold was an "employee," as that term is defined in Subsection 440.02(15)(b), Florida Statutes. The undisputed evidence established that

    Mr. Griswold was an officer of the corporation and that he performed services for remuneration for the corporation within Florida during the relevant periods for which Petitioner was penalized.

23. As an employer, Petitioner was required to provide workers' compensation coverage pursuant to Sections 440.10 and 440.38, Florida Statutes. Here, the undisputed evidence established that Petitioner failed to secure the payment of workers' compensation for its employee, Mr. Griswold. Moreover, Petitioner offered no evidence to establish a valid workers' compensation exemption or proof of workers' compensation coverage for the employee as required by law. § 440.02(15)(b), Fla. Stat.

24. Pursuant to Subsection 440.107(7)(d), Florida Statutes, an employer who fails to secure the payment of workers' compensation is subject to:

    1. 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.

       
       

25. The Department proved by clear and convincing evidence that Petitioner violated Section 440.10, Florida Statutes, by failing to secure the payment of workers' compensation coverage for its employee listed on the penalty worksheet.

26. The evidence established that the Department correctly calculated and assessed the penalty as prescribed in Subsection 440.107(7)(d), Florida Statutes. Based on that calculation, the correct assessed penalty and the amount for which Petitioner is

liable is $52,685.67.

RECOMMENDATION

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

RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order that affirms the Stop Work Order issued February 8, 2007, and the Amended Order of Penalty Assessment issued February 21, 2007, which assigns a penalty of $52,685.67.

DONE AND ENTERED this 7th day of November, 2007, in Tallahassee, Leon County, Florida.

S

CAROLYN S. HOLIFIELD

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 7th day of November, 2007.

ENDNOTES

1/ Unless otherwise indicated, all citations are to the 2006 Florida Statutes.

2/ Mr. Griswold did not testify at the hearing, but acknowledged during the proceeding that he had not yet filed the 2006 Federal Income Tax return that he provided to the Department.

COPIES FURNISHED:

Thomas Duffy, Esquire Department of Financial Services Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399

David Griswold

D. Griswold, Inc.

8401 Ninth Street North, No. 670 St. Petersburg, Florida 33702

David Griswold

D. Griswold, Inc. 1198 Ricardo Place

St. Petersburg, Florida 33702

Honorable Alex Sink Chief Financial Officer

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

Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307

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: 07-001451

Orders for Case No: 07-001451