STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RECOMMENDED ORDER

Pursuant to notice, a final hearing was conducted in this case on February 3, 2009, in Ft. Myers, Florida, before Administrative Law Judge R. Bruce McKibben of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Kristian E. Dunn, Esquire

Division of Workers' Compensation Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229

For Respondent: Steven M. Clapper, pro se

Decorative Concrete and Curbing, Inc. 1860 Boy Scout Drive, Suite 205

Fort Myers, Florida 33907 STATEMENT OF THE ISSUE

The issue in this case is whether Respondent, Decorative Concrete and Curbing, Inc. ("Decorative Concrete"), complied

with the requirements of Sections 440.10, 440.107, and 440.38,

Florida Statutes (2008).1

PRELIMINARY STATEMENT

On September 17, 2008, Petitioner, Department of Financial Services, Division of Workers' Compensation (the "Department"), conducted a compliance investigation at a construction worksite and determined a subcontractor at that site to be out of compliance with the coverage requirements of Chapter 440, Florida Statutes. The Department issued a Stop-Work Order, Order of Penalty Assessment, and a Request for Business Records to Decorative Concrete.

Decorative Concrete timely filed a request for administrative hearing, and it was duly forwarded to the Division of Administrative Hearings ("DOAH") on November 19, 2008. At the final hearing, the Department relied upon the testimony of Maria Seidler, Investigative Analyst II for the Department; and Lynne Murcia, compliance specialist for the Department. The Department offered five exhibits into evidence, each of which was admitted without objection. Decorative Concrete presented the testimony of Steven M. Clapper, owner of the business. Respondent did not offer any exhibits into evidence.

The parties advised the undersigned that a transcript would be ordered of the final hearing. They were given ten days from

the date the transcript was filed at DOAH to submit proposed recommended orders. The Transcript was filed on February 26, 2009, and the Department filed a Proposed Recommended Order on March 9, 2009. As of the date of this Recommended Order, Decorative Concrete has not filed a post-hearing submission.

FINDINGS OF FACT

1. The Department is the government agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation coverage for the benefit of their employees and corporate officers.

2. Decorative Concrete is a business, duly incorporated by the State of Florida, which is generally engaged in the construction industry.

3. On September 17, 2008, Seidler, as an investigative analyst for the Department, visited a work site at 5423 Parker Drive in Ft. Myers, Florida, at approximately 8:30 a.m. She witnessed two men (later identified as Sam Gibson and Kevin Miller), doing some sort of concrete construction work.2 Seidler drove around to some other work sites and returned to the Parker Drive site around 10:00 a.m. Gibson and Miller were still engaged in their construction work at that time.

4. Seidler approached the men and identified herself as a Department investigator and presented her credentials. Based on her questions to the men, she learned that they worked for

   Decorative Concrete. It was Miller's first day on the job, according to his statement. However, Clapper said Miller had never worked for Decorative Concrete. Rather, he and Gibson were "fishing buddies and drinking buddies," and Miller was simply helping Gibson get a small job done so they could go fishing. There is no other evidence that Miller was or ever had been employed by Decorative Concrete.

5. Seidler then confirmed the identity and corporate status of Decorative Concrete using the Department of State, Division of Corporations website. Using a data base called the Coverage and Compliance Automated System, Seidler determined that there was no workers' compensation insurance coverage in place, nor were there any officer Certificates of Exemption for workers' compensation coverage for Decorative Concrete. She found that Decorative Concrete had previously had coverage through a Professional Employment Organization (PEO) called Decision HR. However, that insurance coverage had been terminated by Decision HR on July 27, 2008.

6. Decorative Concrete had also had workers' compensation insurance coverage through another PEO, Southeast Personnel. However, Southeast Personnel had terminated their relationship with Decorative Concrete on August 11, 2008, approximately five weeks prior to Seilder's site visit.

7. Seidler then met with Suzette Clapper, identified as the vice-president and registered agent for Decorative Concrete, and learned that Decorative Concrete was negotiating with Southeast Personnel for coverage, but they had not come to an agreement. Decorative Concrete had not had any concrete work for the period August 26 through September 17, 2008. As a result, Southeast Personnel had not issued any coverage. (It was the policy of Southeast Personnel to cancel coverage during times of inactivity, then reinstate the insurance--for a fee-- once work recommenced.)

8. The Department requested certain business records from Decorative Concrete in order to assess the proper penalty for failure to have workers' compensation coverage. No business records were provided, so the Department was required to impute a penalty according to established Department policies and rules. In the absence of records, such as bank statements, cancelled checks, and general ledger books, the Department assesses a penalty on a structured formula.

9. The Department uses the average weekly wage for the particular construction industry at issue (in this case Class Code 5221) as the imputed wage for the employees at issue. A factor of 1.5 is then added, wherein the imputed wage is multiplied by that number to obtain a gross imputed salary. The period of non-coverage is then determined, i.e., the number of

   weeks there was no workers' compensation coverage for each employee. The Department may impute income for workers for a period of up to three years. In the instant case, Decorative Concrete had only been incorporated since January 1, 2008, and so that date was used as the beginning date. The gross imputed salary is then multiplied by the number of uncovered work weeks. The workers' compensation rate for that particular classification code (in this case, $6.97) is then assigned to the calculation. This figure then results in a number equal to the actual amount of the premium that is due for the employee.

   In this case, the premium per employee was $2,885.79. That figure is then multiplied by 1.5 to determine the penalty ($4,328.68 per employee) to be assessed against the employer.

10. The Department then issued an Amended Order of Penalty Assessment against Decorative Concrete with a total penalty amount of $8,657.38 (i.e., the calculated penalty times two employees).

11. Decorative Concrete did not provide business records to the Department on the advice of counsel. That advice was clearly wrong, but Clapper relied upon the advice to his detriment. For example, business records would have verified workers' compensation coverage for part of the period in dispute, because Decorative Concrete was obviously covered for certain periods by two different PEOs.

    CONCLUSIONS OF LAW

    
    

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

13. The administrative fines being imposed by the Department against Decorative Concrete are penal in nature. Therefore, the Department has the burden of proof by clear and convincing evidence that Decorative Concrete failed to comply with the coverage requirements of Chapter 440, Florida Statutes. Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern, Inc., 670 So. 2d 932, 935 (Fla. 1996).

14. Sections 440.10 and 440.38, Florida Statutes, impose upon all employers the obligation to provide for the payment of workers' compensation. Decorative Concrete is an "employer" as defined by statute. § 440.02(16), Fla. Stat.

15. Subsection 440.02(15), Florida Statutes, provides in pertinent part:

    1. "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.

16. Subsection 440.02(15), Florida Statutes, states:

    
    

    (d) "Employee" does not include:

    
    

    * * *

    
    

    6. A volunteer, except a volunteer worker for the state or a county, municipality, or other governmental entity. . . .

    
    

17. Clearly Gibson is an employee of Decorative Concrete under the statutory definition. However, Miller is, at best, a volunteer and, at worst, an employee who was working without coverage for one single day. Imputing nine months of income and assessing a penalty against Decorative Concrete for Miller is not warranted under the facts of this case.

18. The Department properly imputed income due to Decorative Concrete's failure to provide required business records. § 440.107(2)(e), Fla. Stat. See also Department of Financial Services, Division of Workers' Compensation v. Twin City Roofing Construction Specialist, Inc., Case No. 06-0024 (DOAH August 30, 2006). However, income should not have been imputed to Miller.

RECOMMENDATION

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

RECOMMENDED that a final order be entered by Petitioner, Department of Financial Services, Division of Workers'

Compensation, assessing a penalty against Respondent, Decorative Concrete and Curbing, Inc., in the amount of $4,328.68.

DONE AND ENTERED this 20th day of March, 2009, in Tallahassee, Leon County, Florida.

R. BRUCE MCKIBBEN 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 20th day of March, 2009.

ENDNOTES

1/ Unless specifically stated otherwise herein, all references to the Florida Statutes shall be to the 2008 version.

2/ The construction work involved was the pouring of a small, five by six-foot concrete slab as an addition to an existing porch at the worksite.

COPIES FURNISHED:

Honorable Alex Sink Chief Financial Officer

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

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

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

200 East Gaines Street Tallahassee, Florida 32399-4229

Steve Clapper

Decorative Concrete & Curbing, Inc. 1860 Boy Scout Drive, Suite 205 Fort Myers, Florida 33907

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: 08-005817

Orders for Case No: 08-005817