STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. )

) ALL FLORIDA WELL DRILLING, ) INC., )

)

Respondent. )

Case No. 10-9404

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case on August 31, 2011, by video teleconference with sites in Tallahassee and Fort Myers, Florida, before Lynne A. Quimby- Pennock, an Administrative Law Judge of the Division of Administrative Hearings (Division).

APPEARANCES

For Petitioner: Jamila Georgette Gooden, Esquire

Department of Financial Services Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399

For Respondent: Robert Henshaw, pro se

All Florida Well Drilling, Inc. 2361 Flora Avenue

Fort Myers, Florida 33907

STATEMENT OF THE ISSUES

The issues in this case are whether Respondent failed to provide workers' compensation coverage, and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

On August 11, 2010, Petitioner, Department of Financial Services, Division of Workers' Compensation (Department or Petitioner), issued a Stop-Work Order against Respondent, All Florida Well Drilling Inc. (All Florida). On September 8, 2010, an amended order of penalty assessment was hand-served on All Florida.

All Florida disputed the original Stop-Work Order and amended order of penalty assessment and requested an administrative hearing. The case was forwarded to the Division on September 30, 2010, for the assignment of an Administrative Law Judge.

On October 20, 2010, the Division issued an Order granting the Department's unopposed motion to amend the penalty assessment. The Department issued a second amended order of penalty assessment that reduced the original penalty assessment. On April 19, 2011, the Department issued a third amended order of penalty assessment to All Florida, reducing the penalty assessment to $12,721.73. The Department filed a motion to amend the order of penalty assessment (the third amended order),

which was granted without objection at hearing. The Stop-Work Order and each order of penalty assessment were based on the alleged failure of All Florida to secure the payment of workers' compensation within the meaning of section 440.107(2), Florida Statutes (2010).1/

Following several continuances and one abatement period, the final hearing was scheduled. At the final hearing, the Department called the following witnesses: Amy Thielen and Melissa Geissler. Petitioner's Exhibits 1 through 13 were offered and admitted in evidence without objection. Robert Henshaw, the president of All Florida, was present at the hearing, but did not testify.

The one-volume Transcript was filed on September 14, 2011.

The parties agreed to file their proposed recommended orders within ten days of the filing of the Transcript. To date, All Florida has not filed any post-hearing documents. On September 26, 2011, the Department filed its Proposed Recommended Order, which has been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. The Department is the state agency responsible for enforcing section 440.107. That section mandates, in relevant part, that employers in Florida secure workers' compensation

   
   

   insurance coverage for their employees. § 440.107(3), Fla. Stat.

2. At all times relevant, All Florida was a Florida corporation engaged in the business of well drilling for water, a construction business, with its principal office located at 2250 Havana Avenue, Fort Myers, Florida.

3. On August 3, 2010, Amy Thielen (Ms. Thielen), a compliance investigator for the Department, conducted an on-site investigation at a work site located at 129 Montrose Street, Fort Myers, Florida. Ms. Thielen observed a parked truck with the All Florida logo on it at this work site and an individual working nearby. After identifying herself to the individual, the individual identified himself as Edward Perez (Mr. Perez), an employee of and working for All Florida at that time.

4. Ms. Thielen then consulted the Department's Coverage and Compliance Automated System (CCAS) database to determine if All Florida had workers' compensation coverage. The insurance companies report any workers' compensation coverage to the Department through this CCAS database, which is kept current. The CCAS showed that All Florida had two periods in which its workers' compensation coverage lapsed: March 3, 2009, through October 24, 2009, and a second period when the workers' compensation policy was cancelled from January 9, 2010, to August 3, 2010. Ms. Thielen contacted All Florida's last

   
   

   workers' compensation carrier and was informed that there was no workers' compensation policy in place. There was no workers' compensation coverage in effect on August 3, 2010, when

   Ms. Thielen confirmed that Mr. Perez was working for All Florida.

5. Ms. Thielen testified that any construction company could obtain an exemption from having workers' compensation coverage through an application to the Department. All Florida did not have an exemption for any corporate officers.2/

6. Ms. Thielen checked the Department of State, Division of Corporations', records and learned that Robert Henshaw

   (Mr. Henshaw) was the president and only officer of All Florida.

   
   

7. Based on her investigation, Ms. Thielen determined that All Florida did not have the requisite workers' compensation coverage at that time. After consulting with her supervisor, Ms. Thielen issued a Stop-Work Order to All Florida on

   August 11, 2010. A stop-work order is an enforcement action issued against employers that forces the employer to cease all business operations in Florida until they obtain the requisite workers' compensation coverage and return to full compliance.

8. At the time Ms. Thielen served All Florida with the Stop-Work Order, she also served a request for production of business records for penalty assessment calculation to All Florida. This document requests certain business records from

   
   

   the employer for a three-year period in order for an audit to be performed to properly calculate the penalty assessment.

9. All Florida produced the requested business records to the Department. Melissa Geissler (Ms. Geissler), a penalty calculator for the Department's Bureau of Compliance, calculated the penalty assessment based on All Florida's business records. Based on a review of the produced business records, the initial penalty assessment was $18,216.73.

10. On September 8, 2010, Mr. Henshaw, acting on behalf of All Florida, executed a "payment agreement schedule for periodic payment of penalty" with the Department. Mr. Henshaw paid ten percent of the penalty assessment, put the remainder of the penalty assessment in a payment plan, and obtained the requisite worker's compensation coverage. The Department then issued an "Order of Conditional Release from Stop-Work Order," thus allowing All Florida to continue to operate while paying the remaining penalty assessment in specific increments.

11. After the original penalty assessment order was issued, All Florida submitted additional business records, and the Department sought to and did revise the penalty assessment amount downward. As the case was already at the Division, the Department, with All Florida's consent, requested that a second amended order of penalty assessment be issued, reducing the penalty amount to $13,267.24. On October 20, 2010, the Division

    
    

    issued an Order allowing the second amended order of penalty assessment to be issued.

12. In April 2011, after still more business records were delivered to the Department, the Department issued a third amended order of penalty assessment. This time the penalty assessment was reduced to $12,721.73. On August 24, 2011, the Department filed a motion to amend order of penalty assessment. There was insufficient time for All Florida to respond to the motion, and, at hearing, All Florida, through its president, Mr. Henshaw, voiced no objection to the reduction in the penalty assessment amount.

13. Ms. Geissler's duties at the Department include reviewing financial documentation from employers, identifying payroll transactions, and verifying workers' compensation coverage. Ms. Geissler testified that she utilizes the CCAS database to confirm whether any employer has secured workers' compensation coverage. When she finds a payroll transaction that reflects such coverage, that transaction is not used in the penalty assessment calculation; otherwise, the transaction is used in calculating the coverage cost amount. Ms. Geissler also testified that she utilizes the penalty worksheet authorized in Florida Administrative Code Rule 69L-6.027 to aid in the penalty calculation process.

    
    

14. Ms. Geissler conducted an audit of All Florida based on the business records it provided to the Department.

    Ms. Geissler determined the amount of workers' compensation premium that All Florida would have paid had it been in compliance with Florida law between August 12, 2007, and

    August 11, 2010 (excluding October 25, 2009, through January 8, 2010, when there was coverage). Ms. Geissler testified that, during this three-year period, All Florida was an active construction based employer. It was confirmed that there were four employees (including Mr. Henshaw) of All Florida.

15. In order to calculate the appropriate penalty,

    
    

    Ms. Geissler took 1/100th of the gross payroll and multiplied that figure by the approved manual rate applicable to class code 6204 (the class code designated to specialist contractors engaged in drilling work as found in the approved Scopes Manual3/). The approved manual rates are determined by the National Council on Compensation Insurance, adopted by the Florida Office of Insurance Regulation, and represent the recent trends in workers' compensation loses associated with each individual class code.

16. After reviewing all of the business records submitted by All Florida, and using the applicable formula, Ms. Geissler credibly testified that the final penalty assessment was

    $12,721.73. Ms. Geissler's calculations for the penalty

    
    

    assessment were performed in accordance with the requirements of section 440.107(7) and rule 69L-6.027.

17. Mr. Henshaw did not provide any testimony during the proceeding, but rather made the statement that there was no point in fighting the allegation, "everything is correct."

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. §§ 120.569 & 120.57, Fla. Stat. (2011).

19. Employers are required to secure workers' compensation coverage for their employees. Chapter 440 is known as the "Workers' Compensation Law." §§ 440.10(1)(a) & 440.38(1), Fla. Stat.

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

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

    
    

21. "Employee" is defined, in part, as "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. . . ." § 440.02(15)(a), Fla. Stat.

22. Section 440.107(7)(a) provides 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.

    
    

23. Section 440.107(7)(d)1. provides:

    
    

    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

    
    

24. The Department has the burden of proof in this case and must show by clear and convincing evidence that the employer violated the workers' compensation law and that the penalty assessments were correct under the law allegations. Dep't of

    
    

    Banking & Fin. v. Osborne Stern & Co., 670 So. 2d 932 (Fla. 1996); and Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

25. In Evans Packing Co. v. Department of Agriculture and Consumer Services, 550 So. 2d 112, 116, n.5 (Fla. 1st DCA 1989), the Court defined clear and convincing evidence as follows:

    Clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the evidence must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact the firm belief of conviction, without hesitancy, as to the truth of the allegations sought to be established. Slomowitz v. Walker, 429 So.

    2d 797, 800 (Fla. 4th DCA 1983).

    
    

26. The Department has alleged that All Florida failed to secure workers' compensation coverage for its employees. Section 440.10 provides that "[a]ny contractor or subcontractor who engages in any public or private construction in the state shall secure and maintain compensation for his or her employees under this chapter as provided in s. 440.38." Section 440.03 states "every employer and employee as defined in s. 440.02 shall be bound by the provisions of this chapter."

27. The Department has established by clear and convincing evidence that All Florida did not have workers' compensation coverage from March 3, 2009, through October 24, 2009, for its employees and did not have coverage from January 10, 2010,

through August 10, 2010, for its employees. Additionally there was no exemption of workers' compensation coverage for All Florida during the applicable periods.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that All Florida failed to secure workers' compensation coverage and assessing a penalty of $12,721.73 against All Florida.

DONE AND ENTERED this 5th day of October, 2011, in Tallahassee, Leon County, Florida.

S

LYNNE A. QUIMBY-PENNOCK

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 5th day of October, 2011.

ENDNOTES

1/ Unless otherwise indicated, all references to the Florida Statutes are to the 2010 version.

2/ Section 440.05(3) provides that each corporate officer of a construction business may elect to be exempt from workers' compensation coverage by filing an appropriate notice with the Department.

3/ The class codes are contained in the Scopes Manual promulgated by the National Council on Compensation Insurance. Based on

Ms. Thielen's investigation, class code 6204 was appropriate for All Florida.

COPIES FURNISHED:

Robert Henshaw

All Florida Well Drilling, Inc. 2361 Flora Avenue

Fort Myers, Florida 33907

Jamila Georgette Gooden, Esquire Department of Financial Services Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399

Julie Jones, CP, FRP, Agency Clerk Department of Financial Services Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399-0390

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: 10-009404

Orders for Case No: 10-009404