STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION,

Petitioner,

vs.

D. TECH NETWORKING SERVICES, LLC,

Case No. 15-2707

Respondent.

/

RECOMMENDED ORDER

A hearing was conducted in this case pursuant to sections

120.569 and 120.57(1), Florida Statutes (2015), before Cathy M. Sellers, an Administrative Law Judge ("ALJ") of the Division of Administrative Hearings ("DOAH"), on October 6, 2015, by video teleconference at sites in Port St. Lucie and Tallahassee, Florida.

APPEARANCES

For Petitioner: Leon Melnicoff, Esquire

Thomas Nemecek, Esquire Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229

For Respondent: No Appearance

STATEMENT OF THE ISSUE

The issue in this case is whether the Stop-Work Order issued by Petitioner for Respondent's failure to comply with a business records request served in connection with Petitioner's workers' compensation coverage audit of Respondent was issued in conformance with section 440.107(7)(a), Florida Statutes (2014).1/

PRELIMINARY STATEMENT

On December 1, 2014, Petitioner issued a Stop-Work Order, ordering Respondent to cease all business operations for all worksites in the state. Respondent timely requested an administrative hearing challenging the Stop-Work Order. The matter was referred to DOAH for assignment of an ALJ to conduct a hearing pursuant to sections 120.569 and 120.57(1), Florida Statutes.

The hearing initially was scheduled to be held in Tallahassee, Florida, on July 13, 2015, but pursuant to the parties' joint motion, was continued and rescheduled to be conducted by video-teleconference on October 6, 2015.

The final hearing was held on October 6, 2015. Petitioner presented the testimony of Michael Cicio, compliance investigator. Petitioner's Exhibits 1, 2, and 4 through 11 were admitted into evidence. Respondent did not present any witnesses or offer any exhibits for admission into evidence.

The one-volume Transcript was filed on November 6, 2015.

The proposed recommended orders were due to be filed on November 23, 2015. Petitioner timely filed its Proposed Recommended Order, which was duly considered in preparing this Recommended Order.

FINDINGS OF FACT

1. Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation insurance covering their employees, pursuant to chapter 440, Florida Statutes.

2. Respondent, D. Tech Networking Services, LLC, is a registered Florida limited liability company engaged in the technology service business. At the time of Petitioner's audit giving rise to this proceeding, Respondent's principal address was 2933 Southwest Lakemont Place, Palm City, Florida 34990. Respondent actively conducted business between July 29, 2014, and October 28, 2014, the audit period pertinent to this proceeding.

3. As the result of an injury referral filed with Petitioner by an employee of Respondent, on October 28, 2014, Petitioner's Compliance Inspector Michael Cicio attempted to visit Respondent's business site.

4. The principal business address identified in the Division of Corporations Sunbiz records for Respondent was a

   
   

   residential mailing address, so Cicio was unable to conduct a site visit at that address.

5. Thereafter, Cicio attempted to conduct a site visit at an alternate address, which was identified in Sunbiz records as the location of Respondent's business operation. However, he was unable to locate the business at that address, so again was unable to conduct a site visit.

6. To determine whether Respondent had obtained workers' compensation coverage for its employees as required by law, Cicio checked the State of Florida Coverage and Compliance Automated System and the National Council on Compensation Insurance computer databases, which contain information regarding workers' compensation insurance policies that have been obtained by employers. These databases showed no record of any workers' compensation policies covering Respondent's employees having been issued.

7. Thereafter, Petitioner served a Request for Production of Business Records ("RPBR") on Respondent. Respondent received the RPBR on October 30, 2014.

8. The RPBR ordered Respondent to produce, within ten business days, the following business records: payroll documents; bank account documents; business disbursements; contracts for work performed by the business; documents evidencing workers' compensation coverage secured by the

   
   

   business; professional employer organization records, including certificates of workers' compensation coverage for leased employees; independent contractor records; documentation of any exemptions from the workers' compensation coverage requirement obtained by the business; documents regarding subcontractors employed by the business; and documentation of subcontractors' workers' compensation coverage.

9. Florida Administrative Code Rule 69L-6.0152/ requires these specific types of business records to be maintained by Respondent and to be produced to Petitioner upon request.

10. Respondent did not produce the requested business records in response to the RPBR within ten business days.

11. Accordingly, on December 1, 2014, Petitioner issued a Stop-Work Order, directing Respondent to cease all business operations for all worksites in the state on the basis that Respondent failed to produce required business records, in violation of section 440.107(7)(a).

12. By its terms, the Stop-Work Order remains in effect until Petitioner either: (1) issues an order releasing the Stop- Work Order upon finding that the employer has come into compliance with the workers' compensation coverage law and paid applicable penalties, or (2) issues an agreed order of conditional release subject to certain specified conditions. Neither of these actions can occur unless and until the employer

    
    

    provides records showing current compliance with the workers' compensation requirements of chapter 440.

13. On December 13, 2014, Respondent requested an administrative hearing challenging the issuance of the Stop-Work Order.

14. Also on that date, Respondent produced some business records in response to the RPBR. Respondent also sent correspondence to Petitioner asserting that all persons who worked for Respondent were independent contractors who were responsible for obtaining their own workers' compensation insurance coverage, so that the Stop-Work Order was issued in error.

15. The records produced did not adequately respond to the RPBR. Specifically, Respondent failed to produce records3/ sufficient to substantiate its claim that its workers were independent contractors for whom Respondent was not required to provide workers' compensation coverage. Indeed, the payroll records produced indicated that the workers were, in fact, employed by Respondent rather than being independent contractors. Respondent also produced a copy of a liability insurance policy covering the business itself, but did not produce any workers' compensation policies showing that any workers were covered. Respondent produced additional documents that similarly were unhelpful in enabling Petitioner to determine whether

    
    

    Respondent's workers were independent contractors or whether they were employees for whom Respondent was responsible for securing workers' compensation coverage.

16. In sum, the records Respondent produced in response to the RPBR were insufficient to enable Petitioner to determine whether Respondent was in compliance with the workers' compensation coverage requirements of chapter 440. Respondent did not submit any additional records rectifying this deficiency.

17. Accordingly, Petitioner did not lift the Stop-Work Order, which remains in effect.

    CONCLUSIONS OF LAW

    
    

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

19. This is a penal proceeding brought to enforce the workers' compensation coverage requirements in chapter 440, Florida Statutes. Here, Petitioner has issued a Stop-Work Order requiring Respondent to cease all of its business operations in the state. Because Petitioner's action at issue in this proceeding is penal, Petitioner has the burden of proof to show, by clear and convincing evidence, that Respondent committed the violations alleged in the administrative charging document, which is the Stop-Work Order. Dep't of Banking and Fin. v. Osborne Stern and Co., 670 So. 2d 932, 935 (Fla. 1996); Ferris v.

    Turlington, 510 So. 2d 292 (Fla. 1987).

    
    

20. The clear and convincing evidence standard of proof has been described by the Florida Supreme Court as follows:

Clear and convincing evidence requires that the evidence must be found to be credible; the facts to which witnesses testify must be distinctly remembered; the testimony 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 a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.

In re Davey, 645 So. 2d 398, 404 (Fla. 1994)(quoting Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983)).

21. Pursuant to sections 440.10, 440.107(2), and 440.38, Florida Statutes, every employer is required to obtain workers' compensation insurance coverage for the benefit of its employees unless exempted or otherwise excluded under chapter 440. Strict compliance with the workers' compensation law by the employer is required. See C & L Trucking v. Corbett, 546 So. 2d 1185, 1187

(Fla. 5th DCA 1989); Dep't of Fin. Servs. v. L & I Consol.

Servs., Inc., Case No. 08-5911 (Fla. DOAH May 28, 2009; Fla. DFS July 2, 2009).

1. "Employer" is defined, in pertinent part, as "every person carrying on any employment . . . ." § 440.02(16), Fla. Stat.

2. "Employee" is defined to include "any person who receives remuneration from an employer for the performance of

   
   

   work or service under any appointment or contract for hire or apprenticeship." § 440.02(15)(a), Fla. Stat.

3. Section 440.02(15)(d) expressly excludes from the definition of "employee" an independent contractor who is not engaged in the construction industry. Thus, if a worker is an independent contractor, he or she is not an "employee" for purposes of triggering the employer's statutory obligation to obtain workers' compensation insurance coverage.

4. However, for a worker to be considered an independent contractor, it must be shown that certain conditions, specified in section 440.02(15)(d)1.a., are met.

5. As discussed above, Respondent did not timely produce business records in response to the RPBR, so Petitioner issued a Stop-Work Order pursuant to section 440.107(7)(a). This statute 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 or to produce the required business records under subsection (5) within 10 business days after receipt of the written request of the department, 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.

   
   

   § 440.107(7)(a)(emphasis added).

   
   

6. The plain language of this statute makes clear that Petitioner is authorized to issue a stop-work order if an employer fails to produce required business records within ten days of receiving a request to produce such records.

7. Here, it is undisputed that Respondent did not timely respond to the RPBR, so Petitioner's issuance of the Stop-Work Order was authorized and justified under section 440.107(7)(a).

8. Although Respondent did ultimately respond to the RPBR, asserting that its workers were independent contractors, it did not produce business records demonstrating such, or otherwise demonstrating compliance with the workers' compensation coverage. Thus, the Stop-Work Order was not lifted and remains in effect.

9. Further, Respondent did not present any evidence at the final hearing showing that Petitioner issued the Stop-Work Order in error.

10. Based on the foregoing, it is concluded that Petitioner has demonstrated, by clear and convincing evidence, that issuance of the Stop-Work Order was authorized by, and in full conformance with, section 440.107(7)(a).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner, Department of Financial Services, Division of Workers' Compensation, issue a final order adopting the Stop-Work Order as its final agency action.

DONE AND ENTERED this 15th day of January, 2016, in Tallahassee, Leon County, Florida.

S

CATHY M. SELLERS

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 15th day of January, 2016.

ENDNOTES

1/ Petitioner does not seek to impose a monetary penalty on Respondent in this proceeding. At the final hearing, Petitioner's qualified representative confirmed that because Petitioner does not have complete business records for purposes of determining a monetary penalty, it is seeking to verify and permanently impose the Stop-Work Order. This would have the effect of preventing Respondent from operating its business. As Petitioner's qualified representative noted, the purpose of the Florida Workers' Compensation law is to ensure that employees are covered if there is a workplace accident. If the business does not demonstrate compliance with the law, Petitioner is authorized, via issuance of a stop-work order, to prevent the business from operating.

2/ The version of rule 69L-6.015 that was in effect when the Stop-Work Order was issued applies to this proceeding. The RPBR issued to Respondent requested records that are required under this rule to be maintained and produced by the employer.

3/ Such records would consist of requests for federal tax identification numbers, such as W-9 forms, or end-of-year tax documents, such as 1099 forms. These documents would show whether the workers were, in fact, independent contractors.

COPIES FURNISHED:

David Elebute

D. Tech Networking Services, LLC 2933 Southwest Lakemont Place Palm City, Florida 34990

Leon Melnicoff, Esquire Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed)

Thomas Nemecek, Esquire Department of Financial Services

Division of Workers' Compensation

200 East Gaines Street Tallahassee, Florida 32399 (eServed)

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

200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)

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: 15-002707

Orders for Case No: 15-002707