STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DIONARIS CABRERA, d/b/a FLORIDA | ) | |||
SUNSET SHUTTLE, INC.; FLORIDA | ) | |||
SUNSET SHUTTLE, INC., A | ) | |||
DISSOLVED FLORIDA CORPORATION; | ) | |||
AND FLORIDA SUNSET SHUTTLES AND | ) | |||
CHARTERS, INC., A FLORIDA | ) | |||
CORPORATION, | ) ) | |||
Petitioners, | ) ) | |||
vs. | ) ) | Case | No. | 08-0689 |
DEPARTMENT OF FINANCIAL | ) | |||
SERVICES, DIVISION OF WORKERS' | ) | |||
COMPENSATION, | ) | |||
) | ||||
Respondent. | ) | |||
| ) |
RECOMMENDED ORDER
A formal administrative hearing in this case was held on July 25, 2008, by video teleconference in Tallahassee and Orlando, Florida, before Daniel M. Kilbride, a duly-designated Administrative Law Judge (ALJ) of the Division of Administrative Hearings (DOAH).
APPEARANCES
For Petitioners: Paul J. Morgan, Esquire
Morgan, Hires & Boynton, LLC 1099 West Morse Boulevard Winter Park, Florida 32789
For Respondent: Douglas D. Dolan, Esquire
Department of Financial Services Division of Legal Services
200 East Gaines Street Tallahassee, Florida 32399-4229
STATEMENT OF THE ISSUES
Whether Dionaris Cabrera, (hereinafter "Petitioner Cabrera") the sole stock holder of Florida Sunset Shuttle, Inc., a Dissolved Florida Corporation, was correctly assessed a penalty for violating the workers' compensation laws of Florida, during the period of 2006 through 2008.
Whether Petitioner, Florida Sunset Shuttle, Inc., (hereinafter "the old corporation") is responsible for providing workers' compensation coverage for its alleged employees, and whether the old corporation was properly noticed of the violation.
Whether Petitioners or either one of them, are in violation of the Workers' Compensation Act during the relevant time period due to the failure to secure workers' compensation coverage for its employees.
Whether Florida Sunset Shuttles and Charters, Inc., (hereinafter "the new corporation") is a successor entity of Florida Sunset Shuttle, Inc., or Dionaris Cabrera, d/b/a Florida Sunset Shuttle, Inc., pursuant to Chapter 440, Florida Statutes, and/or Florida Administrative Code Chapter 69L-6.
Whether the Stop-Work Orders and amended penalties issued to Petitioner Cabrera and the old corporation were properly applied to the new corporation.
Whether the Department of Financial Services, Division of Workers' Compensation (hereinafter "Respondent") is estopped from imposing a penalty on the new corporation due to a prior determination made by the investigator assigned to the file in 2006 and the detrimental reliance upon representations made to Ruben Cabrera and Jennifer Crain, who were representing the old corporation in the proceeding.
PRELIMINARY STATEMENT
On November 28, 2007, and again on December 10, 2007, Respondent issued and served a Stop-Work Order and Order of Penalty Assessment (hereinafter "Stop-Work Order"), on the old corporation, and attempted service on Petitioner Cabrera alleging that Petitioners were not in compliance with the coverage requirements of Chapter 440, Florida Statutes, and the Insurance Code. Petitioner Cabrera and the old corporation were ordered to cease all business operations. On January 3, 2008, Respondent issued and served an Amended Order of Penalty Assessment (hereinafter "Amended Order") on the old corporation, and attempted service on Petitioner Cabrera assessing against Petitioner Cabrera and the old corporation, a penalty in the amount of $364,349.58, pursuant to Subsection 440.107(7)(d), Florida Statutes (2007).1 On January 28, 2008, Jennifer Crain, assistant manager of the old corporation, was served a 2nd Amended Order of Penalty Assessment directed to Petitioner
Cabrera and the old corporation and an Order Applying Stop-Work Order and Amended Order of Penalty Assessment to Successor Corporation or Business Entity, directed to the new corporation. On February 8, 2008, Respondent received a petition from each Petitioner challenging the orders and requesting a formal hearing on the matter. The petition and charging documents were forwarded to the DOAH on February 8, 2008, where the matter was assigned to the undersigned ALJ. Following discovery, and the granting of the Motion to Amend Order of Penalty Assessment, the final hearing was held on July 25, 2008, by video teleconference in Tallahassee and Orlando, Florida.
Respondent presented the testimony of Lissette Sierra, Respondent's investigator, and Ruben Cabrera, as an adverse witness, and introduced two composite exhibits, which were admitted into evidence. On behalf of each Petitioner, the testimony of Jennifer Crain was presented but no exhibits were introduced.
A Transcript of the formal hearing was filed on
August 11, 2008. The parties timely filed Proposed Recommended Orders, which have been carefully considered in the preparation of this Recommended Order.
FINDINGS OF FACT
Respondent 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.
PARTIES INVOLVED AND RESPONDENT'S ACTIONS
Petitioner Cabrera is the sole owner and director of Petitioner Florida Sunset Shuttle, Inc., (the old corporation) a Florida Corporation. She founded the company in 2005. At the time of the hearing and at the time of the imposition of the Stop-Work Order, she was residing outside the United States, most likely in the Dominican Republic.
At the time of the issuance of the first Stop-Work Order, the old corporation was administratively dissolved for failure to file its annual report.
During the relevant time period, there is no evidence that Petitioner Cabrera was actively controlling day-to-day operations of either the old corporation or the new corporation. Ruben Cabrera and Jennifer Crain were employed by the old corporation, with Ruben Cabrera being the manager and Jennifer Crain being his assistant. Ruben Cabrera also held himself out as an officer of the old corporation. Ruben Cabrera and Jennifer Crain were not directors of the old corporation. Ruben Cabrera had managed the business operations of the old corporation since its creation in 2005.
On November 13, 2007, Respondent's investigator, Lisette Sierra (Sierra), conducted a compliance check at the old
corporation's worksite, located at 851 East Donegan Avenue, Kissimmee, Florida, to verify compliance with the workers' compensation statutes.
Upon arrival at the worksite, Sierra observed that it consisted of a fenced lot with a trailer and several parked buses. At the worksite, Sierra personally spoke with Jennifer Crain and Ruben Cabrera. Petitioner Cabrera was not present.
On and after November 13, 2007, Petitioner Florida Sunset Shuttle, Inc., did not carry workers' compensation for anyone associated with the corporation.
On November 13, 2007, Respondent issued a Division of Workers' Compensation Request for Business Records to the old corporation. Although two documents were tendered, the records requested were not produced within the 5 business day time period specified in the request.
On November 28, 2007, Respondent issued a second Request for Production of Business Records for Penalty Assessment Calculation (hereinafter "Request") directed to Petitioners, Cabrera and Florida Sunset Shuttle, Inc. The Request required Petitioners or either of them, to produce records related to bus drivers who performed services for the company during the specified period.
On the same date, Respondent issued a "Stop-Work Order" to Petitioner Cabrera and the old corporation for failure
to meet the requirements of Chapter 440, Florida Statutes, and the Insurance Code, ordering Petitioner Cabrera and the old corporation to cease all business operations and assessing a
$1,000.00 daily penalty against Petitioner Cabrera and the old corporation, pursuant to Subsection 440.107(7)(d), Florida Statutes, for failure to comply.
The Stop-Work Order and Request was posted on the work site on November 28, 2007.
On November 30, 2007, Sierra was unable to serve the Stop-Work Order on the old corporation, via its registered agent or an officer. She served the Stop-Work Order and the Request by hand delivery on Jennifer Crain, Assistant Manager, at the company offices.
On December 10, 2007, Respondent issued a subsequent Stop-Work Order and Order of Penalty Assessment. It was served on a representative of counsel for all of the Petitioners.
The parties named on the first and second Stop-Work Order were "Dionaris Cabrera, d/b/a Florida Sunset Shuttle, Inc., and Florida Sunset Shuttle, Inc., a Dissolved Florida Corporation." Florida Sunset Shuttle, Inc., was found to be an administratively dissolved corporation at the time the Stop-Work Orders were issued.
The old corporation continued to operate its business in violation of both Stop-Work Orders issued by Respondent.
On December 17, 2007, Respondent issued an Amended Order of Penalty Assessment directed to Petitioner Cabrera and the old corporation, amending the penalty assessed to
$346,349.58, pursuant to the formula listed in Sections 440.107 and 440.10, Florida Statutes. Since no business records were received from either Petitioner in response to the Request, the penalty was calculated by imputing the old corporation's gross payroll.
After unsuccessful attempts to serve either Petitioner Cabrera or the old corporation, Respondent served the Amended Order, dated December 17, 2007, on an alleged employee of Petitioner Cabrera and/or the old corporation, name unknown, at the company offices on January 3, 2008.
Petitioner Cabrera is the mother of Ruben Cabrera, the company manager. She is the sole stockholder, corporate officer, and registered agent listed for Florida Sunset Shuttle, Inc., in the Florida Secretary of State's records. There has not been any contact with Petitioner Cabrera during the course of Respondent's investigation. It appears that Petitioner Cabrera does not live in or around Orlando, Florida. According to Ruben Cabrera, Petitioner Cabrera was living in Santo Domingo, Dominican Republic, during the entire course of their investigation and this proceeding.
Ruben Cabrera was the manager who operated the old corporation from its company offices in Kissimmee. He entered into arrangements to provide shuttle bus services for guests to tourist destinations with several hotels in the Kissimmee/Orlando area. While negotiating and signing these contracts with hotels, he held himself out to be an officer of the old corporation.
It was unclear from the evidence when the old corporation closed business operations, but it appears to have done so prior to January 1, 2008.
On November 30, 2007, Ruben Cabrera incorporated the new corporation. He was named the sole owner, corporate officer, and registered agent. The principal place of business was the same as the worksite of the old corporation, and the addresses of the registered agent and corporation's sole officer were the same as well.
On January 30, 2008, Respondent served a 2nd Amended Order of Penalty Assessment (hereinafter "2nd Amended Order") directed to Petitioner Cabrera and the old corporation, on Jennifer Crain, Assistant Manager, at the company office, assessing a $406,349.58 penalty on these two Petitioners. The increase in penalty was due to the allegation that the old corporation continued to operate in violation of the Stop-Work Order. In addition, none of the parties listed on the Penalty
Worksheet, attached to the 2nd Amended Order, had current, valid exemptions from workers' compensation coverage.
An exemption from workers' compensation allows the exemption holder to be exempt from having to secure the payment of workers' compensation on behalf of himself or herself. None of the persons used to calculate the penalty had workers' compensation exemptions.
The penalty period began on November 20, 2006, because a prior investigation by Respondent found the old corporation to be in compliance only up to that date.
Utilizing the Scopes Manual published by the National Council on Compensation Insurance and adopted by Florida Administrative Code Rule 69L-6.021, as guidance, Respondent determined that Petitioner Cabrera and/or the old corporation's activities involved clerical workers and bus drivers. Thus, she assigned the class codes 8810 and 7382, respectively, to the old corporation's activities.
On January 30, 2008, Respondent also served an Order Applying Stop-Work Order and Amended Order of Penalty Assessment to Successor Corporation or Business Entity (hereinafter "Order Applying") on the new corporation. The Order Applying transferred the effect of the Stop-Work Order and Amended Order issued to the old corporation to the new corporation, based on the allegation that the new corporation was a successor
corporation, pursuant to Subsection 440.107(7)(b), Florida Statutes.
Ruben Cabrera, the owner/operator, transferred ownership and control of the new corporation to Jennifer Crain on January 9, 2008. Jennifer Crain became the registered agent, sole owner, and officer of the new corporation. It hired some of the drivers who previously worked for the old corporation and put them on salary under the new corporation. The new corporation leased new vehicles and served some of the same routes as the old corporation from the same company location.
The new corporation properly carried workers' compensation insurance when served with the Order Applying. Therefore, the new corporation was in compliance with Subsection 440.10(1)(a), Florida Statutes, at the time Jennifer Crain took over ownership and control of the new corporation.
COMPANY OPERATIONS
Drivers for the old corporation submitted applications for employment to the company, prior to being hired. However, drivers signed contracts with the old corporation which stated that they were independent contractors and not employees, and no deductions were taken out their pay. 1099 Forms were issued at the end of the year.
Drivers for the old corporation did not pay insurance on the vehicles they used for business purposes.
Drivers for the old corporation were not responsible for the expenditures associated with repair or maintenance of the vehicles used by the drivers for business purposes. The corporation paid for the insurance.
Drivers for the old corporation did not pay any fees or charges to the company for use of the vehicles.
Drivers for the old corporation paid their own admission fees for entry into amusement parks, or other incidental expenses.
Drivers for the old corporation wore black pants and a white shirt as a standard uniform.
Drivers for the old corporation were paid according to the length of time for which they worked each day.
Drivers for the old corporation did not own the vehicles they used for business purposes. They did not pay the old corporation for use of the vehicles in carrying out the contracts of the old corporation. The vehicles were leased under contract by the old corporation.
Drivers for the old corporation did not individually contract with hotels for services, but carried out the contracts entered into by the old corporation.
The old corporation did not submit any invoices for services rendered by its drivers.
There is no evidence that the drivers maintained separate businesses.
Payments to drivers were made to individuals rather than to their "businesses."
Drivers for the old corporation were paid by the full day or half day, according to the span of time they worked.
Ruben Cabrera entered into contracts with clients of the old corporation. He signed the contracts as either manager or as president of the old corporation. Drivers for the old corporation regularly visited the old corporation's clients to pick-up or drop-off passengers in the course of their employment.
The old corporation's contract with at least one hotel refers to the old corporation's drivers as "employees."
On June 16, 2008, Respondent issued a 3rd Amended Order of Penalty Assessment directed to Petitioner Cabrera and the old corporation, reducing the fine assessed to them to
$131,504.60. The penalty was reduced after Respondent received the old corporation's business records and was able to use them to calculate a penalty. The old corporation received payment for its services from multiple businesses in the Kissimmee/Orlando area. The old corporation's records do not specify who, if any, of the drivers paid by the old corporation are independent contractors.
The 3rd Amended Order of Penalty Assessment was served at the DOAH on counsel for the parties. Following a hearing, the Motion to Amend Order of Penalty Assessment was granted by the undersigned ALJ, and this matter proceeded to final hearing. PRIOR INVESTIGATION BY RESPONDENT
On September 12, 2006, Respondent initiated an investigation into the alleged violation of the workers' compensation laws of Florida by Petitioner, Florida Sunset Shuttle, Inc. The investigating agent for Respondent, Ray Reynolds (Reynolds), issued a Stop-Work Order on
September 15, 2006, for failure to obtain coverage for its employees.
It is alleged that in a meeting with Ruben Cabrera, his attorney at the time, and Jennifer Crain, held on September 15, 2006, Reynolds reviewed the contracts with the
drivers, and, apparently based on those facts alone, agreed that the bus drivers who worked for Florida Sunset Shuttle, Inc., were independent contractors. He advised the parties of such findings.
However, on September 19, 2006, an Amended Order of Penalty Assessment was issued assessing the corporation a penalty of $2,084.09 for the violation.
Florida Sunset Shuttle, Inc. did not challenge the findings of Respondent that a violation had occurred, and
voluntarily paid the fine for failing to provide coverage for those employees named. It also produced proof of workers' compensation coverage for nine employees, which included Ruben Cabrera and Jennifer Crain.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and subject matter of this proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2008).
Respondent is the state agency responsible for enforcing the requirement of the Workers' Compensation Law that employers secure the payment of compensation for their employees.
Because an administrative fine deprives the person or corporation fined of substantial rights in property, such fines are penal in nature. Respondent has the burden to prove in this case, by clear and convincing evidence, that Petitioner violated the Workers' Compensation Law during the relevant period, by failing to be in compliance with the coverage requirements of the law, and that the penalty assessments are correct. Department of Banking and Finance, Division of Securities and
Investor Protection v. Osborne Stern and Co., 670 So. 2d 932 (Fla. 1996); Dept. of Financial Services, Division of Workers' Compensation v. U&M Contractors, Inc., Case No. 04-3041
(DOAH Recommended Order April 7, 2005) (Final Order April 27, 2005).
Pursuant to Subsection 440.107(3)(g), Florida Statutes (2008), "The department shall enforce workers' compensation coverage requirements . . . the department shall have the power to: Issue stop-work orders, penalty assessment orders, and any other orders necessary for the administration of this section."
Pursuant to Sections 440.10 and 440.38, Florida Statutes, every "employer" is required to secure the payment of workers' compensation for the benefit of its employees, unless exempted or excluded under Chapter 440, Florida Statutes. Strict compliance with the Workers' Compensation Law is, therefore, required of the employer.
The law defines "employer" in pertinent part as ". . . every person carrying on any employment. "
§ 440.02(16)(a), Fla. Stat.
"Employment" is defined, in pertinent part as, "any service performed by an employee for the person employing him or her." § 440.02(17), Fla. Stat.
Pursuant to Subsection 440.02(17)(b)2., Florida Statutes, "employment" includes "all private employments in which four or more employees are employed by the same employer. "
The law defines "employee," in part, 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)(a), Fla. Stat.
The old corporation was an employer, as defined in Subsection 440.02(16)(a), Florida Statutes, as it carried on employment by hiring various parties as bus drivers and for clerical work. According to the old corporation's business records, the corporation employed 14 persons during the penalty period.
If the old corporation's drivers were independent contractors as alleged, the old corporation was required to maintain invoices for services rendered by each bus driver and submitted for compensation.
The old corporation contends that its bus drivers were independent contractors and has produced contracts with each of the drivers in an attempt to show this status.
Neither party produced any of the drivers at the hearing to testify as to their status. Respondent attempted to offer written statements (in Spanish) with a written translation prepared by Investigator Sierra. These items were not admitted as they were hearsay. In addition, Respondent's investigator prepared the translation herself, and, although the undersigned ALJ is certain the investigator is a professional, these
statements cannot be considered reliable as they are not subject to cross-examination.
Subsection 120.569(2)(g), Florida Statutes, relating to the Florida Administrative Procedures Act, provides:
Irrelevant, immaterial or unduly repetitious evidence shall be excluded, but all other evidence of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs shall be admissible, whether or not such evidence would be admissible in a trial in the courts of Florida.
Subsection 120.57(1)(c), Florida Statutes, provides:
Hearsay evidence may be used for the purpose of supplementing or explaining other evidence, but it shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil action.
Pursuant to Subsection 440.02(15)(d)1.c., Florida Statutes, "an individual claiming to be an independent contractor has the burden of proving that he or she is an independent contractor for purposes of this chapter." In order to be considered an independent contractor, that person must meet at least four criteria set forth in Subsection 440.02(15)(d)1.a. or b., Florida Statutes.
Pursuant to Subsection 440.02(15)(d)1.a., Florida Statutes, four out of six criteria must be met to meet the definition of independent contractor:
The independent contractor maintains a separate business with his or her own work
facility, truck, equipment, materials, or similar accommodations;
The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal regulations;
The independent contractor receives compensation for services rendered or work performed and such compensation is paid to a business rather than to an individual;
The independent contractor holds one or more bank accounts in the name of the business entity for purposes of paying business expenses or other expenses related to services rendered or work performed for compensation;
The independent contractor performs work or is able to perform work for any entity in addition to or besides the employer at his or her own election without the necessity of completing an employment application or process; or
The independent contractor receives compensation for work or services rendered on a competitive-bid basis or completion of a task or a set of tasks as defined by a contractual agreement, unless such contractual agreement expressly states that an employment relationship exists.
The old corporation has not provided evidence to show that four of these criteria exist in relation to each driver. Although none of the drivers actually testified, the stipulated undisputed facts show that the vehicles used in carrying out the business of the old corporation were not owned by the drivers;
there is no evidence that the drivers maintained separate businesses; and payments from the old corporation to drivers were made to individuals rather than businesses. In addition, there is no evidence that any of the drivers held bank accounts in the name of any other business entity for the purpose of payment of business expenses or other expenses related to the work being performed.
As at least four out of six of these criteria must be met, the old corporation has not shown that the drivers met the statutory definition of independent contractors, pursuant to Subsection 440.02(15)(d)1.a., Florida Statutes.
Further, pursuant to Subsection 440.02(15)(d)1.b., Florida Statutes, "If four of the criteria listed in sub- subparagraph a. do not exist, an individual may still be presumed to be an independent contractor and not an employee based on full consideration of the nature of the individual situation with regard to satisfying any of the following conditions":
The independent contractor performs or agrees to perform specific services or work for a specific amount of money and controls the means of performing the services or work.
The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform.
The independent contractor is responsible for the satisfactory completion of the work or services that he or she performs or agrees to perform.
The independent contractor receives compensation for work or services performed for a commission or on a per-job basis and not on any other basis.
The independent contractor may realize a profit or suffer a loss in connection with performing work or services.
The independent contractor has continuing or recurring business liabilities or obligations.
The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures.
The drivers did not control the means of performing the services or the work, as the vehicles were either owned or leased by the old corporation and were not the property of the drivers.
The drivers did not incur the principal expenses related to driving the buses, such as insurance, fuel, ownership or maintenance of the buses, but were only responsible for minor expenses such as entry into amusement parks.
The drivers were not responsible for the satisfactory completion of the jobs to be performed. No privity existed between the client hotels and the drivers because all contracts were between the hotels and the old corporation.
The drivers were paid on a time structure rather than a per-job basis. Drivers were paid for a full or a half day of work, not by how many trips they made between destinations.
Drivers were not able to realize a profit or suffer a loss in connection with performing duties for the old corporation, as they were paid by the span of time they worked.
The drivers did not have continuing liabilities based on their employment with the old corporation, as expenses associated with running the old corporation's business and maintenance expenses for the vehicles were incurred only by the company.
The success or failure of the drivers' "business" did not depend on the relationship between business receipts to expenditures. They were paid the same amount for a span of time regardless of how many trips they made between destinations or how many passengers they carried.
Applying the statutory definition of "independent contractor" to the facts of this case, the evidence is clear and convincing that the old corporation's drivers were employees of the company and not independent contractors.
Regardless of the attempt to circumvent the statutory definition by requiring the drivers to sign contracts stating that they were independent contractors, the old corporation was an employer, carrying on employment, during the penalty period.
The Worker's Compensation Law requires employers to secure the payment of workers' compensation for the benefit their employees. §§ 440.10(1)(a) and 440.38(1), Fla. Stat.
Pursuant to Subsection 440.107(2), Florida Statutes, "'securing the payment of workers' compensation' means obtaining coverage that meets the requirements of this chapter and the Florida Insurance Code." Petitioner corporation did not secure the payment of workers' compensation for the period for which the penalty was assessed.
Petitioner Cabrera and the old corporation have raised estoppel as a defense against imposition of a penalty against the old corporation. Petitioners must prove three elements to estop Respondent from its proposed action in this proceeding.
Respondent has objected to the raising of estoppel as an affirmative defense as not being timely raised. Respondent's assertion of surprise or prejudice by the two Petitioners raising, for the first time at the hearing, the defense of estoppel is rejected. First of all, the exhibit that documented the investigator's statements were not provided to Petitioner's counsel until immediately before the hearing. Second, the Third Amended Order assessing penalty was not entered or approved by this tribunal until June 16, 2008. Therefore, Petitioner corporation may raise the defense. See Fla. Admin. Code R.
28-106.203 and 28-106.211. See, e.g., Abilities, Inc. v.
Department of Education, Division of Vocational Rehabilitation, Case No. 04-2053 (DOAH Recommended Order, paragraph 135,
May 9, 2005)(Final Order July 12, 2005).
In order to succeed in its estoppel defense, Petitioner must show: (1) a representation by an agent of the state as to a material fact that is contrary to a later asserted position; (2) reasonable reliance on the representation; and
(3) a change in position detrimental to the party claiming estoppel caused by the representation and reliance thereon. State Department of Revenue v. Anderson, 403 So. 2d 397, 400 (Fla. 1981); Warren v. Department of Administration, 554 So. 2d 568, 570 (Fla. 5th DCA 1989) (record supported finding of estoppel).
Each of the elements of estoppel has not been met.
Assuming, arguendo, that Respondent's investigator made the representations asserted by Petitioners, Petitioner Cabrera and/or the old corporation could not reasonably rely on a verbal representation of an agent for Respondent that the company's bus drivers were independent contractors. Only three days after the meeting between the parties, Respondent issued an Amended Order of Penalty Assessment, and the old corporation paid the penalty without protest. In addition, it produced proof of workers' compensation coverage which covered nine employees and the
Stop-Work Order was released. However, the policy was cancelled
in November 2006. A penalty could properly be assessed against the old corporation for the time period that Respondent attempted to impose.
A penalty could properly be assessed against the old corporation for failure to secure coverage for its employee bus drivers, during the time period October 18, 2006, through January 28, 2008.
There is no basis for an Order of Penalty Assessment to be assessed directly against Petitioner Cabrera. Respondent has failed to demonstrate by clear and convincing evidence that Petitioner Cabrera operated a business as a sole proprietorship and should be personally subjected to either the Stop-Work Order or any of the other Orders of Penalty Assessment. On
November 28, 2007, Respondent served a person who appeared to be an employee of the old corporation with a copy of a Stop-Work Order naming Petitioner Cabrera as an employer doing business as the old corporation, who was in violation of the Workers' Compensation Law. This is insufficient to give Petitioner Cabrera notice and a clear point of entry into the administrative process. §§ 120.569(1) and 120.57(1)(b), Fla.
Stat.; Fla. Admin. Code R. 28-106.109; see Varney v. Florida Real Estate Commission, 515 So. 2d 383 (Fla. 5th DCA 1987); see also Henry v. State, Department of Administration, Division of Retirement, 431 So. 2d 677, 679-680 (Fla. 1st DCA 1983). There
is no evidence that Petitioner Cabrera was in any way connected with Florida Sunset Shuttles and Charters, Inc.(the new corporation). As such, Subsection 440.107(7)(b), Florida Statutes, is inapplicable to Petitioner Cabrera.
However, pursuant to Subsection 440.107(7)(b), Florida Statutes, "Stop-work orders and penalty assessment orders issued under this section against a corporation, partnership, or sole proprietorship shall be in effect against any successor corporation or business entity that has one or more of the same principals or officers as the corporation or partnership against which the stop-work order was issued and are engaged in the same or equivalent trade or activity."
As stated in Subsection 440.05(15), Florida Statutes, "[a] stop-work order and penalty assessment shall be in effect against any such affiliated person. As used in this subsection, the term "affiliated person" means: . . . Any officer, director, trustee, partner, owner, manager, joint venturer, or employee of such other person or a person performing duties similar to persons in such positions."
A Stop-Work Order and Order of Penalty Assessment was issued against the old corporation for noncompliance with the Workers' Compensation Law of Florida. Ruben Cabrera was the general manager and fulfilled the duties of, and held himself
out to be, president of the old corporation although he was not a director or stockholder.
On November 30, 2007, Ruben Cabrera incorporated Petitioner Florida Sunset Shuttles and Charters, Inc. Ruben Cabrera was the sole owner, officer, and registered agent for the new corporation as listed with the Florida Secretary of State.
The old corporation and the new corporation are engaged in the same or equivalent trade or activity of transporting persons between hotels and tourist attractions.
Respondent alleges that because Ruben Cabrera performed the duties of a manager and held himself out to be president of the old corporation, and then was owner/director of the new corporation, that the two corporations shared Ruben Cabrera as an "affiliated person." Under the statute cited above and the facts of this case, that is correct. The new corporation is therefore a successor entity of the old corporation, pursuant to Chapter 440, Florida Statutes, and Florida Administrative Code Chapter 69L-6. The fact that Ruben Cabrera later sold the company to Jennifer Crain is irrelevant.
When Ruben Cabrera incorporated the new corporation, the old corporation was a dissolved Florida corporation. When Respondent drafted and served the "Order Applying Stop-Work Order and Order of Penalty Assessment to Successor Corporation
or Business Entity," on January 28, 2008, Jennifer Crain was the sole owner/director of the company. At that time, all of the bus drivers were covered under workers' compensation insurance, and the buses were leased by her as president/owner and not through the prior company; nevertheless, the status of the new corporation did not change, it was the successor entity of the old corporation. Therefore, under Subsection 440.107(7)(b), Florida Statutes, the stop-work orders and orders of penalty assessment issued against the old corporation were proper and were properly applied against the successor corporation.
Based on the Findings of Fact above, Respondent has met its burden of proving by clear and convincing evidence that Petitioner, Florida Sunset Shuttles and Charters, Inc., is subject to an enforceable stop-work order and penalty assessment.
Respondent has adopted industry classification codes contained in the Basic Manual (Scopes Manual) published by the National Council on Compensation Insurance. Fla. Admin.
Code R. 69L-6.021. Florida Administrative Code Rule 69L-6.021 references Subsection 440.02(8), Florida Statutes, as specific authority and implementation.
The classification codes of 7382 and 8810 for bus drivers and clerical staff, respectively, were correctly
assigned to the old corporation's employees duties while employed by the old corporation.
Respondent "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." § 440.107(7)(d)1., Fla. Stat. (2008).
Applying the appropriate approved manual rates to the periods for which penalty was assessed, the third amended penalty was correctly assessed by Respondent at $131,604.60.
Petitioner has raised the constitutionality of the statutes under which Petitioner has been assessed a penalty. It is well-settled law that the administrative process cannot resolve a constitutional challenge to a statute, rule or regulation. See Florida Hospital v. Agency for Health Care Administration, 823 So. 2d 844, 849 (Fla. 1st DCA 2002); Carrollwood State Bank v. Lewis, 362 So. 2d 110, 113-12 (Fla. 1st DCA 1978). However, such issue is preserved in the event of an appeal under Section 120.68, Florida Statutes.
Based on 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 dismissing the "Stop- Work Order and Order of Penalty Assessment" directed to Dionaris Cabrera, d/b/a Florida Sunset Shuttle, Inc.;
The Department of Financial Services, Division of Workers' Compensation, enter a final order upholding the "Stop- Work Order and Order of Penalty Assessment" and its successor orders directed against Petitioner Florida Sunset Shuttle, Inc., a dissolved Florida corporation; and that
The Department of Financial Services, Division of Workers' Compensation, enter a final order upholding the "Order Applying Stop-Work Order and Amended Order of Penalty Assessment to Successor Corporation or Business Entity" against Florida Sunset Shuttles and Charters, Inc., and imposing a penalty of
$131,604.60.
DONE AND ENTERED this 8th day of December in Tallahassee, Leon County, Florida.
S
DANIEL M. KILBRIDE
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 8th day of December, 2008.
ENDNOTE
1/ All references to Florida Statutes are to Florida Statutes (2007), unless otherwise indicated.
COPIES FURNISHED:
Douglas D. Dolan, Esquire Department of Financial Services
Division of Legal Services
200 East Gaines Street Tallahassee, Florida 32399
Paul J. Morgan, Esquire Morgan, Hires & Boynton, LLC 1099 West Morse Boulevard Winter Park, Florida 32789
Honorable Alex Sink Chief Financial Officer
Florida Department of Financial Services The Capitol, Plaza Level 11
Tallahassee, Florida 32399-0300
Daniel Y. Sumner, General Counsel Florida 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.
| Issue Date | Document | Summary |
|---|---|---|
| Jan. 23, 2009 | Agency Final Order | |
| Dec. 08, 2008 | Recommended Order | Florida Sunset Shuttles and Charters, Inc., is a successor entity to other named corporation; is subject to workers` compensation laws; no estoppel; and no personal liability; Recommend a penalty of $131.604. |
