STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case on May 29, 2008, in Panama City, Florida, before Susan B. Harrell, a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Russell R. Stewart, Esquire

Post Office Box 2542

Panama City, Florida 32402

For Respondent: Kristian E. Dunn, Esquire

Department of Financial Services Division of Workers’ Compensation

200 East Gaines Street Tallahassee, Florida 32399-4229

STATEMENT OF THE ISSUES

The issues in this case are whether Petitioner violated Subsection 440.107(7)(c), Florida Statutes (2007),1 and, if so, what penalty should be assessed.

PRELIMINARY STATEMENT

On August 28, 2007, Respondent, Department of Financial Services, Division of Workers’ Compensation (Department), issued an Order Assessing Penalty for Working in Violation of Reinstated Stop-Work Order, against Petitioner, Hector Martinez Construction, LLC (Martinez Construction), alleging that Martinez Construction violated Subsection 440.107(7)(c), Florida Statutes. Martinez Construction requested an administrative hearing, and the case was forwarded to the Division of Administrative Hearings on November 20, 2007, for assignment of an Administrative Law Judge to conduct the final hearing.

The case was originally assigned to Administrative Law Judge Diane Cleavinger. The final hearing was scheduled for January 25, 2008. The Department filed an unopposed motion to continue, and the final hearing was rescheduled for May 29, 2008. The case was transferred to Administrative Law Judge Susan B. Harrell to conduct the final hearing.

At the final hearing, Hector Martinez testified on behalf of Martinez Construction. Martinez Construction’s Exhibits 1 and 2 were admitted in evidence. The Department called Robert

Borden as its witness. The Department’s Exhibits 1 through 6 were admitted in evidence. Official recognition was taken of Section 48.081, Florida Statutes.

The one-volume Transcript was filed on June 13, 2008. The time for filing proposed recommended orders was ten days after the Transcript was filed. The Department filed its Proposed Recommended Order on June 23, 2008. As of the date of this Recommended Order, Martinez Construction had not filed a proposed recommended order.

FINDINGS OF FACT

1. The Department is the state agency responsible for enforcing the statutory requirement that employers secure workers’ compensation coverage for the benefit of their employees and corporate officers. § 440.107, Fla. Stat.

2. Martinez Construction is a construction business. On June 15, 2005, the Department issued Stop-Work Order No. 05-325- 1A. On June 20, 2005, an Amended Order of Penalty Assessment was issued against Martinez Construction assessing a penalty of

   $23,472.57.

   
   

3. On June 21, 2005, Martinez Construction and the Department entered into a Payment Agreement Schedule for Periodic Payment of Penalty in which Martinez Construction agreed to pay the Department a lump sum of $5,000.00 and to make

   24 monthly payments of $769.69. On June 21, 2005, the

   Department entered an Order of Conditional Release from Stop- Work Order (Conditional Release), which conditionally released the Stop-Work Order that was issued on June 15, 2005. The Conditional Release provided:

   Until such time as the employer has paid the total assessed penalty of $23,472.57 in full, if the employer fails to comply with the terms and conditions of the Payment Agreement Schedule for Periodic Payment of Penalty attached hereto as Exhibit “A,” the Stop-Work Order to which this order applies will be immediately reinstated, and the unpaid balance of the total penalty to be paid by the employer shall become immediately due.

   
   

4. The Conditional Release listed Martinez Construction’s address as 1905 Michigan Avenue, Panama City, Florida.

5. Martinez Construction made payments until July 2006, when it stopped making payments. The unpaid balance on the assessed penalty was $10,008.98.

6. By letter dated May 24, 2007, the Department wrote Martinez Construction advising that it was issuing an Order Reinstating Stop-Work Order because of the failure to make payments as required by the payment schedule to which the parties had agreed. A copy of the Order Reinstating Stop-Work Order was enclosed with the letter and ordered:

   1. The Stop-Work Order issued to Employer on June 15, 2005, is immediately reinstated, and pursuant to such immediate reinstatement, the provisions of said Stop- Work Order are in full force and effect.

   2. The unpaid balance of the penalty in the amount of $10,008.98 is due pursuant to such immediate reinstatement.

      
      

   3. Pursuant to such immediate reinstatement, Employer shall cease all business operations in the State of Florida until the DEPARTMENT issues an Order releasing the reinstated Stop-Work Order upon a finding by the DEPARTMENT that Employer has come into compliance with coverage requirements of Chapter 440, Florida Statutes, and has paid the entire unpaid balance of the penalty assessed as specified in (7) above [$10,008.98].

      
      

7. The letter and Order Reinstating Stop-Work Order were sent to Martinez Construction by certified mail to its Michigan Avenue address. The letter and order were returned to the Department as undeliverable.

8. In early January 2006, Hector Martinez (Mr. Martinez) and his family moved from 1905 Michigan Avenue, Panama City, Florida, to 1304 Delaware Avenue, Lynn Haven, Florida. They remained at that address until January 2008. Mr. Martinez was the manager and registered agent for Martinez Construction. The records of the Florida Department of State, Division of Corporations, show that on February 2, 2006, the principal address and mailing address for Martinez Construction was changed to 1304 Delaware Avenue, Lynn Haven, Florida, and that the address for the registered agent was also changed to the 1304 Delaware Avenue address.

9. The Department resent the May 24, 2007, letter and Order Reinstating Stop-Work Order by certified mail to Martinez Construction. The return receipt from the United States Postal Service shows that the documents were delivered to the

   1304 Delaware Avenue address on June 1, 2007. The receipt bore a signature stating Luisa Martinez.

10. On June 1, 2007, Mr. Martinez was married to Luisa Alvarez Diaz. Mr. Martinez claims that his wife did not sign the receipt for the certified mail and that he did not receive the documents. According to Mr. Martinez, his wife does not use his surname, but goes by the name of Luisa Alvarez.

    Mr. Martinez’s testimony is not credible. The letter and Order Reinstating Stop-Work Order were delivered to the 1304 Delaware Avenue address on June 1, 2007.

11. On August 24, 2007, Robert Borden (Mr. Borden), an investigator for the Department, was conducting a random compliance investigation and found a crew working on a jobsite. When Mr. Borden questioned the crew concerning the name of their employer, they replied that they worked for Martinez Construction.

12. Mr. Borden checked the Department’s Coverage Compliance Automated Systems database and discovered that an Order Reinstating Stop-Work Order had been issued to Martinez Construction. Mr. Borden checked with the employee leasing

    company which Martinez Construction used and found that Martinez Construction had been employing crews for 70 days since the issuance of the Order Reinstating Stop-Work Order.

13. On August 28, 2007, Martinez Construction was issued and personally served an Order Assessing Penalty for Working in Violation of Reinstated Stop-Work Order, assessing a $70,000.00 penalty which represented a penalty of $1,000.00 per day for the

    70 days of violation.

    
    

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. §§ 120.569 and 120.57, Fla. Stat.

15. The Department has the obligation to establish the allegations of the Order Assessing Penalty for Working in Violation of Reinstated Stop-Work Order by clear and convincing evidence. Department of Banking and Finance v. Osborne Stern and Co., 670 So. 2d 932 (Fla. 1996).

16. The Department has alleged that Martinez Construction violated Subsection 440.107(7)(c), Florida Statutes, which provides that the Department may assess a penalty of $1,000.00 per day for each day that an employer conducts business in violation of a stop-work order. Subsection 440.107(7)(a), Florida Statutes, provides that the Department may issue an order of conditional release if the employer agrees to provide

    coverage as required by Chapter 440, Florida Statutes, and enters into an agreement to make periodic payments of the assessed penalty. The statute further provides that the failure to meet the terms and conditions of the penalty payment agreement “shall result in the immediate reinstatement of the stop-work order and the entire unpaid balance of the penalty shall become immediately due.”

17. The Department has established by clear and convincing evidence that Martinez Construction conducted business operations for 70 days after the Order Reinstating Stop-Work Order had been issued in violation of Subsection 440.107(7)(c), Florida Statutes, and that the Order Reinstating Stop-Work Order was delivered to the business address of Martinez Construction and its registered agent.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order finding that Petitioner violated Subsection 440.107(7)(c), Florida Statutes, and assessing a penalty of $70,000.00.

DONE AND ENTERED this 30th day of June, 2008, in Tallahassee, Leon County, Florida.

S

SUSAN B. HARRELL

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 30th day of June, 2008.

ENDNOTE

1/ Unless otherwise indicated, all references to the Florida Statutes are to the 2007 codification.

COPIES FURNISHED:

Kristian E. Dunn, Esquire Department of Financial Services Division of Workers' Compensation

200 East Gaines Street Tallahassee, Florida 32399-4229

Russell R. Stewart, Esquire Post Office Box 2542

Panama City, Florida 32402

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: 07-005353

Orders for Case No: 07-005353