STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly-designated Administrative Law Judge, Jeff B. Clark, held an administrative hearing in this case on October 14, 2008, in Bartow, Florida.

APPEARANCES

For Petitioner: Kristian E. Dunn, Esquire

Justin H. Faulkner, Esquire Department of Financial Services Division of Workers' Compensation

200 East Gaines Street, Sixth Floor Tallahassee, Florida 32399-4229

For Respondent: Harold Whitfield, pro se

Harold's Plumbing, Inc. 1125 5th Street Southwest

Winter Haven, Florida 33880 STATEMENT OF THE ISSUES

The issues are whether Respondent failed to provide workers' compensation insurance for its employees, whether the

"Stop-Work" Order was warranted, and, whether Petitioner correctly calculated the assessed penalty.

PRELIMINARY STATEMENT

On January 22, 2008, Petitioner, Department of Financial Services, Division of Workers' Compensation, issued a Stop-Work Order to Respondent, Harold's Plumbing, Inc., alleging that Respondent had failed to obtain workers' compensation insurance coverage for its employees and ordering Respondent to immediately stop work and cease all business operations. On the following day, January 23, 2008, Petitioner delivered a Request for Production of Business Records for Penalty Assessment Calculation, and based on records obtained during the investigation, Petitioner issued an Amended Order of Penalty Assessment of $29,688.72. On July 29, 2007, Respondent requested an administrative hearing.

On August 11, 2008, Petitioner forwarded the case to the Division of Administrative Hearings. On August 12, 2008, an Initial Order was sent to both parties requesting mutually convenient dates for a final hearing. Based on the response of the parties, on August 28, 2008, the case was scheduled for final hearing on October 14, 2008, in Bartow, Florida.

The final hearing took place as scheduled. Petitioner presented the testimony of Robert Abrego, an investigator for Petitioner, and Shirley Clements, a penalty calculator for

Petitioner, and offered Exhibits numbered 1 through 6, which were admitted into evidence. Respondent presented the testimony of Harold Whitfield, its president, and offered no exhibits. At Petitioner's request, official notice was taken of Chapter 440, Florida Statutes (2007), and Florida Administrative Code Rule Chapter 69L-6.

A Transcript was filed on November 19, 2008. Both parties filed Proposed Recommended Orders

Unless otherwise noted all references are to Florida Statutes (2007).

FINDINGS OF FACT

Based upon the testimony and evidence received at the hearing, the following facts were established by clear and convincing evidence:

1. Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees.

2. Respondent, Harold's Plumbing, Inc., a Florida corporation, was engaged in business operations from January 23, 2005, through January 19, 2008.

3. A Stop-Work Order was issued to Respondent on January 22, 2008, after Harold Whitfield advised Petitioner's

   investigator that Respondent did not have workers' compensation insurance coverage. Petitioner's Coverage and Compliance Automated System database confirmed the lack of coverage.

4. The initial Order of Penalty Assessment was issued on January 22, 2008, and served on Respondent the next day. Based on additional documentation provided by Whitfield and a human resources out-sourcing organization, Gevity HR, which had provided some insurance coverage until it severed its business relationship with Respondent, the Order of Penalty Assessment was amended; the last amendment is dated October 13, 2008.

5. The total penalty, $29,688.72, is accurate and reflects the result of a detailed assessment of Respondent's employee payroll records and application of the classification codes, published by the National Council on Compensation Insurance, Inc., and incorporated into Florida law in Florida Administrative Code Rule 69L-6.021.

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2008).

7. Because administrative fines are penal in nature, Petitioner is required to prove by clear and convincing evidence that Respondent failed to provide its employees with workers' compensation coverage from January 23, 2005, through January 19,

   2008. Department of Banking and Finance Division of Securities and Investor Protection v. Osborne Stern Inc., 670 So. 2d 932, 935 (Fla. 1996).

8. Subsection 440.10(1)(a), Florida Statutes, states, in

   
   

   part:

   
   

   (1)(a) Every employer coming within the provisions of this chapter shall be liable for, and shall secure, the payment to his or her employees, . . . the compensation payable under ss. 440.13, 440.15, and

   440.16.

   
   

9. Compliance with the coverage requirements of the workers' compensation law is enforced pursuant to Subsection 440.107(2), Florida Statutes, which reads, in relevant part:

   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.

   
   

10. All persons receiving remuneration are considered employees. Subsection 440.02(15)(a), Florida Statutes, states:

    "Employee" means any person who receives remuneration from an employer for the performance of any work or service while engaged in any employment under any appointment or contract for hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed, and includes, but is not limited to, aliens and minors.

    
    

11. Section 440.107, Florida Statutes, outlines Petitioner's duties and powers to enforce compliance with the

    requirement to provide for the payment of workers' compensation and authorizes Petitioner to issue Stop-Work Orders and Penalty Assessment Orders in its enforcement of workers' compensation coverage requirements. Subsection 440.107(7)(a), Florida Statutes, states, in relevant part:

    Whenever the department determines that an employer who is required to secure the payment to his or her employees of the compensation provided for by this chapter has failed to secure the payment of workers' compensation required by this chapter . . . such failure shall be deemed an immediate serious danger to public health, safety, or welfare sufficient to justify service by the department of a stop-work order on the employer, requiring the cessation of all business operations. If the department makes such a determination, the department shall issue a stop-work order within 72 hours.

    
    

12. On the date the Stop-Work Order was issued, Respondent had no workers' compensation insurance; the Stop-Work Order was not only justified, it was mandated.

13. Regarding the penalty that has been assessed, Subsection 440.107(7)(d)1., Florida Statutes, states:

    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.

    
    

14. Petitioner adopted a Penalty Calculation Worksheet to use in calculating penalties to assess against employers who do not secure the payment of workers' compensation. That worksheet was properly completed in this case.

15. Petitioner applied the proper methodology in calculating the penalty. Subsection 440.107(d)(1), Florida Statutes, requires Petitioner to penalize non-compliant employers by requiring them to pay 1.5 times the evaded premium, i.e., the premiums the employer should have been paying for the previous three years.

16. Respondent did not dispute the accuracy of Petitioner's calculation of the penalty.

17. The evidence has clearly and convincingly proved that Respondent violated Sections 440.10 and 440.38, Florida Statutes, from the period from January 23, 2005, through January 19, 2008, by failing to provide workers' compensation insurance and that its penalty was accurately calculated.

RECOMMENDATIONS

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

RECOMMENDED that Petitioner, Department of Financial Services, Division of Workers' Compensation, enter a final order:

1. Finding that Respondent, Harold's Plumbing, Inc., failed to secure the payment of workers' compensation for its employees, in violation of Subsections 440.10(1)(a) and 440.38(1), Florida Statutes; and

2. Assessing a penalty against Respondent in the amount of

$29,668.72, which is equal to 1.5 times the evaded premium based on Petitioner's records and the applicable approved manual rate and classification code.

DONE AND ENTERED this 17th day of December, 2008, in Tallahassee, Leon County, Florida.

S

JEFF B. CLARK

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 17th day of December, 2008.

COPIES FURNISHED:

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

Kristian E. Dunn, Esquire Justin H. Faulkner, Esquire

Department of Financial Services Division of Workers' Compensation

200 East Gaines Street, 6th Floor Tallahassee, Florida 32399-4229

Harold Whitfield

1125 5th Street Southwest Winter Haven, Florida 33880

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: 08-003892

Orders for Case No: 08-003892