STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS‟ COMPENSATION,

Petitioner,

vs.

CABINETRY BY DESIGN OF COLLIER CO., LLC,

Respondent.

/

Case No. 13-2515

RECOMMENDED ORDER

Pursuant to notice, a final hearing was initially held on October 2, 2013, by video teleconference in Ft. Myers and Tallahassee, Florida, before Thomas P. Crapps, a designated Administrative Law Judge of the Division of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Alexander Brick, Esquire

Department of Financial Services Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399-4229

For Respondent: Kristian E. Dunn, Esquire

1606 Redwood Drive

Tallahassee, Florida 32301

STATEMENT OF THE ISSUES

Whether Respondent violated the provisions of chapter 440, Florida Statutes (2013)1/, by failing to obtain workers‟ compensation insurance coverage, as alleged in the Stop-Work Order and Amended Order of Penalty Assessment; and, if so, the

appropriate penalty.

PRELIMINARY STATEMENT

On March 19, 2013, the Florida Department of Financial Services, Division of Workers‟ Compensation (Department) hand- delivered a Stop-Work Order to Respondent, Cabinetry by Design of Collier County, L.L.C., based on the alleged failure to provide workers‟ compensation insurance coverage. On June 4, 2013, the Department issued an Amended Order of Penalty Assessment seeking a penalty of $21,436.61 based on Respondent‟s failure to provide workers‟ compensation insurance coverage for one employee.

Respondent requested an administrative hearing, and the Department referred the case to DOAH. At the final hearing, the Department presented the testimony of Jack Gumph, an investigator with the Department, Andrea Airall, a penalty auditor with the Department, and Ian Jackson. The Department, also, introduced into evidence Petitioner‟s Exhibits numbered P1 through P11, and presented the deposition testimony of Mark and Brett Markisen.

Respondent presented the testimony of Mark and Brett Markisen,

but did not offer any exhibits into evidence. The undersigned judicially recognized Florida Administrative Code Rule 69L-6.028.

The court reporter filed a one-volume Trial Transcript on November 12, 2013, and the parties filed Proposed Recommended Orders on November 22, 2013.

FINDINGS OF FACT

1. The Department is the state agency responsible for enforcing the requirement that employers secure the payment of workers‟ compensation insurance coverage, pursuant to

   chapter 440, Florida Statutes, for their employees.

   
   

2. Respondent is a Florida-limited liability company engaged in business operations for the time period of March 16, 2010, through March 15, 2013. Mark Markisen is the managing member of Respondent listed with the State of Florida, Division of Corporations.

3. On March 15, 2013, Jack Gumph, an investigator with the Department, conducted a random on-site compliance inspection of a construction site for a single family residence.

4. Gumph determined that the general contractor for the job was Gulf Shore Homes and that it had subcontracted with Tradewinds Design for certain work inside the home.

5. As Gumph interviewed the different workers present on the worksite, he spoke with Mark and Brett Markisen, who informed

   
   

   him that they worked for Tradewinds Design. Gumph observed Brett Markisen installing a wine cabinet in the home.

6. Gumph confirmed through the Department‟s online records that Gulf Shores Homes and Tradewinds Design had current workers‟ compensation insurance coverage on March 15, 2013. Based on this initial information, Gumph left the worksite.

7. On March 19, 2013, Gumph subsequently learned from a conversation with Mark Markisen that Mark and Brett Markisen were not employees of Tradewinds Design. Rather, Tradewinds had subcontracted with Respondent, Cabinetry by Design of Collier County, L.L.C., to build and install the wine cabinets.

8. Mark Markisen stated that he was the managing member of Cabinetry by Design of Collier County, L.L.C., and that he had selected to be exempt from workers‟ compensation insurance coverage.

9. Gumph confirmed that Mark Markisen had selected to be exempt from workers‟ compensation insurance coverage. However, because Respondent did not have worker‟s compensation coverage for Brett Markisen, the Department issued a Stop-Work Order on March 19, 2013, and Request for Production of Business Records for Penalty Assessment Calculation on April 8, 2013.

10. Mark Markisen possessed an exemption from the workers‟ compensation insurance coverage requirement during the penalty period of March 16, 2010, through March 15, 2013.

    
    

11. Brett Markisen did not possess an exemption from the workers‟ compensation insurance coverage requirement during the penalty period.

12. Brett Markisen was employed by Respondent throughout the penalty period.

13. During the penalty period, Brett Markisen received approximately $187,000.00 from Respondent. The amount of this money attributed to wages is unclear, based on the fact that Mark Markisen indicated that some of the payments reflected loans, not wages.

14. Respondent was an “employer” as defined in chapter 440, Florida Statutes, throughout the penalty period.

15. On March 15, 2013, Brett Markisen was Respondent‟s “employee” working on the installation of cabinets in the single family residence.2/

16. On March 15, 2013, Respondent failed to provide workers‟ compensation insurance coverage for Brett Markisen. Respondent also failed to provide coverage during the penalty period of March 16, 2010, through March 15, 2013. Therefore, the Department properly entered a Stop-Work Order on March 19, 2013.

17. Respondent failed to provide sufficient business records in order to establish a payroll. Therefore, the Department correctly imputed payroll against Respondent.

    
    

18. The Amended Order of Penalty Assessment used the proper class code for the calculation of the penalty, concerning the installation of cabinets, and correctly followed the procedure set out in section 440.107(7)(d)1, Florida Statutes, and Florida Administrative Code Rule 69L-6.028.

    CONCLUSIONS OF LAW

    
    

19. DOAH has jurisdiction over the parties and subject matter of this proceeding. §§ 120.57(1) and 120.569, Fla. Stat.

20. The Department seeks to penalize Respondent for failing to secure the payment of workers‟ compensation insurance coverage pursuant to section 440.107(7). Because the Department seeks a penalty here, it has the burden of proving the allegations by clear and convincing evidence. See In re Davey, 645 So. 2d 398,

    405 (Fla. 1994); Dep't of Banking & Fin. v. Osborne Stern & Co., Inc., 670 So. 2d 932 (Fla. 1996).

21. The Department is statutorily responsible for enforcing the law that employers secure the payment of workers‟ compensation insurance coverage for the benefit of employees.

    § 440.107(3), Fla. Stat. In order to fulfill its responsibility, the Department is empowered to examine and copy the business records of any employer conducting business in Florida to determine whether or not the business is in compliance with the Workers‟ Compensation Law. § 440.107(3). Whenever the Department determines that an employer has failed to provide its

    
    

    employees with workers‟ compensation insurance coverage, the failure is considered “an immediate serious danger to public health, safety, or welfare sufficient to justify service by the department of a stop-work order . . . .” § 440.107(7)(a), Fla. Stat.

22. The law provides that “„securing the payment of workers‟ compensation‟ means obtaining coverage that meets the requirements of this chapter and the Florida Insurance Code.”

    § 440.107(2). The law requires “[e]very employer coming within the provisions of this chapter shall be liable for, and shall secure, the payment to his or her employees ”

    § 440.10(1)(a), Fla. Stat.

    
    

23. “Employment” in the construction industry includes “all private employment in which one or more employees are employed by the same employer.” § 440.02(17)(b)(2), Fla. Stat.

24. An “employer” is defined, in pertinent part, as “every person carrying on any employment . . . .” § 440.02(16)(a), Fla. Stat. In turn, “employment” is defined as “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.

25. An “employee” is defined, in pertinent 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.

26. The Department is required to assess a penalty against an employer who has failed to obtain the requisite workers‟ compensation insurance coverage in an amount equal to:

    1.5 times the amount the employer would have paid in the premium when applying the approved manual rates to the employer‟s payroll during the periods for which it failed to secure payments of worker‟s compensation . . . within the preceding

    3-year period or $1,000.00, whichever is greater. § 440.07(7)(d), Fla. Stat.

    
    

27. Furthermore, the Department is required to impute the payroll of any employer that is out of compliance, and fails to provide business records sufficient to allow the Department to determine the employer‟s payroll for the period requested for the penalty calculation. § 440.107(7)(e), Fla. Stat. This imputed payroll is equal to 1.5 times the statewide weekly wage. Id.

    The statewide weekly wage is determined by the Agency for Workforce Innovation to be “the average weekly wage paid by employers subject to the Florida Unemployment Compensation Law as reported to the Agency for Workforce Innovation for the four calendar quarters ending each June 30 . . . .” § 440.12(2), Fla.

    Stat.

    
    

28. Applying the rules of law to the facts in the instant

    
    

    case, the fact show by clear and convincing evidence that Brett

    
    

    Markisen was Respondent‟s employee engaged in the installation of cabinets on March 15, 2013, and that Respondent did not have valid workers‟ compensation insurance coverage for Brett Markisen. Brett Markisen‟s work in installing the cabinets on March 15, 2013, falls within the statutory and rule definition of “construction industry.” § 440.02(8), Fla. Stat. and Fla. Admin Code R. 69L-6.021(2)(dd). Based on the application of these facts to the law, the Department properly entered its Stop-Work Order against Respondent on March 19, 2013.

29. Next, the Department properly imputed a payroll against Respondent based on the inadequate payroll records. The testimony showed by clear and convincing evidence that the information Respondent supplied was insufficient to determine a payroll.

30. Finally, the Amended Penalty Order of Assessment used the proper classification code, and properly calculated the penalty based on the imputed payroll and penalty.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order upholding the Stop-Work Order and Amended Order of Penalty Assessment, assessing a penalty against Respondent in the amount of $21,436.61.

DONE AND ENTERED this 30th day of December, 2013, in Tallahassee, Leon County, Florida.

S

THOMAS P. CRAPPS

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 30th day of December, 2013.

ENDNOTES

1/ All references to the Florida Statutes are the 2013 edition, unless otherwise stated.

2/ The undersigned found that Respondent‟s defense that Brett Markisen was not an employee, but rather working because he had lost a fishing wager to be a fisherman‟s tale, prone to exaggeration and not believable. The testimony shows that Brett Markisen had acted as an employee and been paid for over three years working as Respondent‟s employee. Consequently, the undersigned did not believe the defense that on the one particular day that Investigator Gumph observed Brett Markisen installing cabinets, Brett Markisen was not being paid for his work.

COPIES FURNISHED:

Alexander Brick, Esquire Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399

Kristian Eiler Dunn, Esquire Dickens and Dunn, P.L.

517 East College Avenue Tallahassee, Florida 32301

Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial 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: 13-002515

Orders for Case No: 13-002515