Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Respondent, Charles Vincent Suter (Suter), is a licensed real estate salesman having been issued license number 0502107 by petitioner, Department of Professional Regulation, Division of Real Estate (Division). When the events herein occurred, respondent was employed as a salesman for Tom Roderick Realty, 2440 Palm Ridge Road, Sanibel, Florida. He has been licensed as a salesman since September 1987. Through a mutual friend, Mary Jane Briney, Suter was introduced in 1988 to Norma Winkler, a resident of Indianapolis, Indiana, who occasionally visited Sanibel Island near Fort Myers on vacation during the winter months. Winkler was interested in renting a three bedroom condominium on the beach in January and February 1989. Briney recommended to Winkler that she rent a unit at an apartment/condominium complex known as Janthinia located on Sanibel Island and that she use respondent as her rental agent. Relying on Briney's recommendation, Winkler agreed to rent the unit and telephoned Suter in September 1988 and requested that he make reservations for her. Although Suter did not normally handle rental transactions, he agreed to assist Winkler and thereafter made reservations with Executive Services, Inc. (ESI), a corporation which managed various units in the Sanibel area including Janthinia. On September 21, 1988, Suter sent Winkler a letter confirming her reservations for Unit 2A at Janthinia with an arrival date of January 26, 1989 and a departure date of February 23, 1989. The total rent, including tax, was $7,091.23. Suter also advised Winkler that she needed to furnish a 10% deposit, or $709.12, within ten days to secure the reservation. On September 30, 1989, Winkler sent a check in the amount of $709.23 made payable to Tom Roderick Realty. The check was deposited into the firm's escrow account the same day. On October 4, 1989, the realty company issued a check in the same amount to ESI as a reservation deposit for Winkler. After the deposit was forwarded to the real estate firm, Winkler changed her date of arrival in Florida from January 26 to January 20 but kept her date of departure the same. On December 9, 1989, ESI confirmed Winkler's reservation for those dates and sent a 10% commission to the realty company. The rental fee was shown as $8,395.42 less the deposit, or a total amount still due of $7,686.30. On January 30, 1989, Suter was paid $352.75 as his share of the commission. Approximately a week before her scheduled arrival, Suter telephoned Winkler and advised her the total amount due was $8,686.30, or $1,000 more than was reflected on ESI's statement. However, Winkler had requested that Suter furnish her with a VCR, liquor, piano and other items so Suter estimated the total bill would be approximately $1,000 greater than the rent still due. On January 20, 1989, Winkler, her sister, niece and a neighbor flew from Indianapolis to Fort Myers. They were met at the airport by Suter and two mutual friends. That same morning, and before Winkler arrived, Suter received by mail Winkler's check in the amount of $8,686.30. When Suter received Winkler's check, he immediately deposited it in his own checking account and not the firm's account. The check was made out to Suter, and not the realty firm, since Winkler had suggested that she make it out in that manner. Upon depositing the check, Suter immediately asked the bank to verify if it was good, and after receiving assurances that it was, he went across the street and wrote a $7,686.30 check to ESI to pay for Winkler's rent. When Winkler, Suter and other members of the group reached Janthinia, Suter advised Winkler that he owed her a refund. Winkler told him not to worry, that she would settle up later. She then had Suter purchase a quantity of liquor and obtain a VCR for her apartment. During one of the social gatherings attended by Winkler and Suter a few weeks later, the two had a falling out. At that point, Winkler telephoned Suter's broker and told him she was due money from Suter. On February 7, the broker confronted Suter around 4:00 p.m. regarding Winkler's allegation. Suter readily acknowledged that Winkler still had money due and that he would immediately pay her. He also acknowledged that the money had been placed in his own bank account rather than the broker's escrow account. Although Suter volunteered to hand carry a check to Winkler that afternoon, she insisted he pay it to the broker who would then write her a check. Suter did so within the hour and Winkler later received a check for $1,000 from the real estate firm. The broker then made an inquiry with the Division concerning Suter's actions, and upon advice from a Division attorney, filed a complaint against Suter. Winkler was described by a longtime friend as a 1,dangerous person", a "troublemaker", and someone who had caused problems for many persons over the years with various types of accusations, most of which were unfounded. Suter denied that he knew it was unlawful to deposit the rent check in his personal account since he considered the transaction as a favor for a friend. He blamed the entire episode on Winkler who became mad at him for paying too much attention to a young widow, and not Winkler, at a dinner party in early February 1989. There was no intent on the part of Suter to use the deposited funds in an illicit manner or to defraud his broker and Winkler. Even so, Winkler's check should have been deposited in the broker's escrow account. There is no evidence that Suter has ever been disciplined by the Division on any prior occasion. Further, Suter's initial reluctance to give a statement to an investigator was founded on the valid reason that he first wished to consult an attorney.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty as charged in Counts II, III, and IV of the administrative complaint and that Count I be dismissed with prejudice. It is further RECOMMENDED that respondent be given a $500 fine to be paid within thirty days from date of order. DONE and ENTERED this 8th day of November, 1990, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of November, 1990. APPENDIX Petitioner: 1-3. Partially adopted in finding of fact 1. 4. Partially adopted in finding of fact 3. 5-6. Partially adopted in finding of fact 4. Partially adopted in finding of fact 5. Partially adopted in findings of fact 6 and 8. 9-10. Partially adopted in finding of fact 2. 11. Rejected as being unnecessary. 12-13. Partially adopted in finding of fact 6. 14. Partially adopted in findings of fact 7 and 8. 15-16. Partially adopted in finding of fact 10. 17-18. Partially adopted in finding of fact 12. 19-21. Partially adopted in finding of fact 10. Respondent: 1-2. Partially adopted in finding of fact 1. Partially adopted in finding of fact 2. Partially adopted in findings of fact 2 and 3. Partially adopted in finding of fact 4. Partially adopted in finding of fact 5. Partially adopted in findings of fact 5 and 6. 8-9. Partially adopted in finding of fact 5. 10-11. Partially adopted in finding of fact 8. Partially adopted in finding of fact 7. Partially adopted in finding of fact 9. 14-15. Rejected as being unnecessary. 16. Partially adopted in finding of fact 10. Note - Where findings have been partially used, the remainder has been rejected as being cumulative, unnecessary, subordinate, irrelevant or not supported by the more credible and persuasive evidence. COPIES FURNISHED: Steven W. Johnson, Esquire P. O. Box 1900 Orlando, FL 32802-1900 Jerrold S. Stern, Esquire P. O. Box 112 Sanibel, FL 33957 Kenneth E. Easley, Esquire 1940 North Monroe Street, Suite 60 Tallahassee, FL 32399-0792 Darlene Keller, Executive Director Division of Real Estate P. O. Box 1900 Orlando, FL 32802-1900
The Issue At issue in this proceeding is whether Respondent failed to abide by the coverage requirements of the Workers' Compensation Law, Chapter 440, Florida Statutes (2002), by not obtaining workers' compensation insurance for her employees; and whether Petitioner properly assessed a penalty against Respondent pursuant to Section 440.107, Florida Statutes (2002).
Findings Of Fact Based upon observation of the witnesses and their demeanor while testifying; documentary materials received in evidence; stipulations by the parties; evidentiary rulings made pursuant to Section 120.57, Florida Statutes (2003); and the record evidence submitted, the following relevant and material finding of facts are made: The Department is the state agency responsible for enforcing the requirement of the Workers' Compensation Law that employers secure the payment of workers' compensation for their employees. § 440.107, Fla. Stat. (2002).1 On August 8, 2003, Respondent was a sole proprietor in the construction industry by framing single-family homes. On that day, Respondent was the sub-contractor under contract with Marco Raffaele, general contractor, providing workers on a single-family home(s) located on Navigation Drive in the Panther Trace subdivision, Riverview, Florida. It is the responsibility of the Respondent/employer to secure and maintain workers' compensation coverage for each employee. During the early morning hours of August 8, 2003, Donald Lott, the Department's workers' compensation compliance investigator, was in the Panther Trace subdivision checking on site workers for potential violations of the workers' compensation statute. While driving down Navigation Drive in the Panther Trace subdivision, Mr. Lott approached two houses under construction. There he checked the construction workers on site and found them in compliance with the workers' compensation statute. Mr. Lott recognized several of the six men working on the third house under construction next door and went over to investigate workers' compensation coverage for the workers.2 At the third house Mr. Lott interviewed Darren McCarty, Henry Keithler, and Mike Sabin, all of whom acknowledged that they worked for Respondent, d/b/a Riopelle Construction. Mr. Lott ascertained through Southeast Leasing Company (Southeast Leasing) that three of the six workers, Messrs. Keithler, Sabin, and McCarthy were listed on Southeast Leasing Company's payroll through a valid employee lease agreement with Respondent as of August 8, 2003. The completed employee lease agreement provided for Southeast Leasing Company to provide workers' compensation coverage for only those employees whose names, dates of birth, and social security numbers are contained in the contractual agreement by which Southeast Leasing leased those named employees to the employing entity, Respondent, d/b/a Riopelle Construction. Mr. Lott talked with the other three workers on site, Ramos Artistes, Ryan Willis, and Robert Stinchcomb. Each worker acknowledged working for (as an employee) Respondent on August 8, 2003, in the Panther Trace subdivision. In reply to his faxed inquiry to Southeast Leasing regarding the workers' compensation coverage status for Messrs. Artistes, Willis, and Stinchcomb, Southeast Leasing confirmed to Mr. Lott that on August 8, 2003, Southeast Leasing did not have a completed employee leasing contractual agreement with Respondent for Messrs. Artistes, Willis or Stinchcomb. Southeast Leasing did not provide workers' compensation coverage for Messrs. Artistes, Willis or Stinchcomb on August 8, 2003.3 Southeast Leasing is an "employee" leasing company and is the "employer" of "leased employees." As such, Southeast Leasing is responsible for providing workers' compensation coverage for its "leased employees" only. Southeast Leasing, through its account representative, Dianne Dunphy, input employment applications into their system on the day such application(s) are received from employers seeking to lease employees. Southeast Leasing did not have employment applications in their system nor did they have a completed contractual employment leasing agreement and, therefore, did not have workers' compensation coverage for Messrs. Artistes and Willis at or before 12:08 p.m. on August 8, 2003. After obtaining his supervisor's authorization, Mr. Lott served a Stop Work and Penalty Assessment Order against Respondent on August 8, 2003, at 12:08 p.m., requiring the cessation of all business activities and assessing a penalty of $100, required by Subsection 440.107(5), Florida Statutes, and a penalty of $1,000, as required by Subsection 440.107(7), Florida Statutes, the minimum penalty under the statute. On August 12, 2003, the Department served a Corrected Stop Work and Penalty Assessment Order containing one change, corrected federal identification number for Respondent's business, Riopelle Construction. Mr. Stinchcomb, the third worker on the construction job site when Mr. Lott made his initial inquiry, was cutting wood. On August 8, 2003, at or before 12:00 p.m., Mr. Stinchcomb was not on the Southeast Leasing payroll as a leased employee covered for workers' compensation; he did not have individual workers' compensation coverage; and he did not have a workers' compensation exemption. On that day and at that time, Mr. Stinchcomb worked as an employee of Riopelle Construction and was paid hourly by Riopelle Construction payroll check(s). Respondent's contention that Mr. Stinchcomb, when he was working on the construction job site between the hours of 8:00 a.m. and 1:00 p.m. on August 8, 2003, was an independent contractor fails for the lack of substantial and competent evidence in support thereof. On August 8, 2003, the Department, through Mr. Lott, served an administrative request for business records on Respondent. Respondent failed and refused to respond to the business record request. An Order requiring Respondent to respond to Petitioner's discovery demands was entered on December 1, 2003, and Respondent failed to comply with the order. On December 8, 2003, Respondent responded that "every effort would be made to provide the requested documents by the end of the day" to Petitioner. Respondent provided no reliable evidence and Mr. Stinchcomb was not called to testify in support of Respondent's contention that Mr. Stinchcomb was an independent contractor as he worked on the site on August 8, 2003. Respondent's evidence, both testamentary and documentary, offered to prove that Mr. Stinchcomb was an independent contractor on the date in question failed to satisfy the elements required in Subsection 440.02(15)(d)1, Florida Statutes. Subsection 440.02(15)(c), Florida Statutes, in pertinent part provides that: "[f]or purposes of this chapter, an independent contractor is an employee unless he or she meets all of the conditions set forth in subparagraph(d)(1)." Subsection 440.02(15)(d)(1) provides that an "employee" does not include an independent contractor if: The independent contractor maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations; The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal requirements; The independent contractor performs or agrees to perform specific services or work for specific amounts of money and controls the means of performing the services or work; The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform; The independent contractor is responsible for the satisfactory completion of work or services that he or she performs or agrees to perform and is or could be held liable for a failure to complete the work or services; The independent contractor receives compensation for work or services performed for a commission or on a per-job or competitive-bid basis and not on any other basis; The independent contractor may realize a profit or suffer a loss in connection with performing work or services; The independent contractor has continuing or recurring business liabilities or obligations; and The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures. The testimony of Respondent and the testimony of her husband, Edward Riopelle, was riddled with inconsistencies, contradictions, and incorrect dates and was so confusing as to render such testimony unreliable. Based upon this finding, Respondent failed to present evidence sufficient to satisfy the requirement of Subsection 440.02(15)(d)1, Florida Statutes, and failed to demonstrate that on August 8, 2003, Mr. Stinchcomb was an independent contractor. Petitioner proved by a preponderance of the evidence that on August 8, 2003, Mr. Stinchcomb, while working on the single-family construction site on Navigation Drive in the Panther Trace subdivision was an employee of Respondent and was not an independent contractor. Petitioner proved by a preponderance of the evidence that Mr. Stinchcomb did not have workers' compensation coverage on August 8, 2003. On August 8, 2003, Mr. Willis was a laborer on the single-family construction site on Navigation Drive in the Panther Trace subdivision as an employee of Respondent, who paid him $7.00 per hour. Mr. Willis was not listed on the employee list maintained by Southeast Leasing, recording those employees leased to Respondent. Mr. Willis did not have independent workers' compensation coverage on August 8, 2003. Mr. Willis had neither workers' compensation coverage nor a workers' compensation exemption on August 8, 2003. Petitioner proved by a preponderance of the evidence that Mr. Willis did not have workers' compensation coverage on August 8, 2003. On August 8, 2003, Mr. Artises was a laborer on the single-family construction site on Navigation Drive in the Panther Trace subdivision and was an employee of Respondent. Mr. Artises had been in the employment of Respondent for approximately one week before the stop work order. Mr. Artises did not have independent workers' compensation coverage on August 8, 2003. Mr. Artises did not have a workers' compensation coverage exemption on August 8, 2003. Petitioner proved by a preponderance of the evidence that Mr. Aristes did not have workers' compensation coverage on August 8, 2003.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleading and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, affirming and adopting the Corrected Stop Work and Penalty Assessment Order dated August 12, 2003. DONE AND ENTERED this 29th day of March, 2004, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of March, 2004.
The Issue The issue in this case is whether Respondent failed to provide workers' compensation insurance coverage for employees, and, if so, what penalty should be assessed.
Findings Of Fact Petitioner is the state agency responsible for, inter alia, monitoring businesses within the state to ensure that such businesses are providing the requisite workers' compensation insurance coverage for all employees. The Division's headquarters are located in Tallahassee, Florida, but its investigators are spread throughout the state in order to more effectively monitor businesses. Respondent is a construction company that has been operating in excess of 30 years. It is a small company and usually only has a few employees at any given time. The company is located in Charlotte Harbor, Florida. Workers' compensation coverage is required if a business entity has one or more employees and is engaged in the construction industry in Florida. Workers' compensation coverage may be secured via three non-mutually exclusive methods: 1) The purchase of a workers' compensation insurance policy; 2) Arranging for the payment of wages and workers' compensation coverage through an employee leasing company; or 3) Applying for and receiving a certificate of exemption from workers' compensation coverage, if certain statutorily-mandated criteria are met. On January 8, 2009, Ira Bender, investigator for the Division, was doing on-site inspections in Port Charlotte, Florida. Bender stopped at the site on Edgewater Drive where new construction was underway at a YMCA. Bender observed a man (later identified as Thomas Woodall) sweeping the floor. Bender questioned Woodall and was told that Woodall worked for Respondent. When asked about his workers' compensation insurance coverage, Woodall advised that his insurance was maintained through Frank Crum Leasing Company ("Crum"). Bender called Crum and found that although Woodall had been carried as an employee of Respondent in the past, he had been released from coverage. The reason for his release was that his employment had been terminated for lack of business. Bender called Respondent to inquire about workers' compensation coverage. He was told that Respondent did not realize Woodall had been dropped from the Crum insurance coverage and that he would be reinstated immediately. In fact, coverage was restarted on that same day. Based on his finding that an employee had been working without coverage, Bender called his supervisor and provided his findings. The supervisor authorized issuance of a SWO based on the findings. The SWO was served on Respondent via hand- delivery at 11:45 a.m., on January 8, 2009. The SWO was also posted at the work site. The Division then requested business records from Respondent in order to determine whether there were any violations. If there were violations, then the Division would ascertain the amount of penalty to assess. Respondent cooperated and submitted the business records, as requested. After review of the business records, the Division issued its first Amended Order of Penalty Assessment ("Order") on January 14, 2009. The process employed by the Division was to locate all uncovered employees, i.e., those working without workers' compensation insurance for any period of time. The employees were then assigned a class code from the National Council on Compensation Insurance (NCCI) publication. Each trade or type of employment is assigned a code which sets the rate to be applied to an individual depending on the type of work he/she is performing. The Division assigned codes to the employees, determined how much the employee had been paid during the period of non-coverage, assigned the rate to the gross pay, and calculated the insurance premium needed to cover the worker for the time in question. A penalty of 1.5 times the premium was then assigned. The Order assessed a total penalty of $21,165.98 against Respondent. Respondent objected to the amount and refused to sign it due to errors contained in the Penalty Worksheet attached to the Order. Signing the Order would have allowed Respondent to return to work, but he refused to sign because he knew it was not correct. Pursuant to discussions between the parties and "additional records received," the Division issued a second Order on January 16, 2009, assessing a penalty of $6,501.27. Respondent believed that the Division was still in error and provided yet additional information--some verbal--to the Division. A third Order was issued on January 21, 2009, reducing the penalty to $3,309.56. However, Respondent still believed the penalty worksheet contained errors. Again, Respondent refused to sign and provided additional information to the Division. The Division issued a fourth Order on January 28, 2009, assessing a penalty of $2,822.24. That Order had an error concerning the spelling of an employee's name, but the penalty amount was correct. Respondent would not sign the fourth Order, because he did not believe he had intentionally violated any statute or rule concerning workers' compensation coverage for his employees. A corrected (fifth amended) Order was ultimately issued on May 19, 2009.1 The fifth Order asserts the amount of penalty now in dispute, which is the same amount appearing in the fourth amended Order. Respondent signed the fifth Order and entered into a payment plan for payment of the penalty, paying a down payment of $1,000 and monthly payments of $30 until paid in full. Respondent takes great offense to the fact that the penalty assessments were not faxed to him more quickly. He maintains that he had every intention to resolve this matter as quickly as possible, but the Division delayed and dragged out the process. The penalty worksheet attached to the fifth Order listed nine "Employee Names" that are subject to the penalty assessment. Each will be discussed below. The first "employee" is listed as "Cash" and is assigned Class Code 5403. This "employee" represents checks found in Respondent's records with the payee listed as "cash- casual labor" totaling $2,178.00 in gross payroll. Code 5403 was assigned because that is the code used by Crum for Respondent's general business. The manual rate for Code 5403 is $24.74. A penalty of $808.26 was assessed for that employee. The second employee is Jacob Prewitt. Prewitt was assigned Class Code 5221, due to the word "driveway" appearing on a check issued to him. Driveway work falls under a lower approved manual rate ($10.37) than general construction. The gross payroll amount was $1,960, and the penalty assigned to Prewitt was $304.88. The third employee is Woodall, assigned a Class Code of 5606, with a manual rate of $3.84. That code is used for supervisors and is, again, not as dangerous an occupation as general construction. The gross payroll for this entry was $1,008, and the penalty assessed for Woodall was $58.07. Cash is the fourth employee and has been covered in the discussion in paragraph 16, above. Barry Lawrence is the fifth employee; he is assigned Class Code 5437 as a cabinet maker/installer with a manual rate of $13.01. Lawrence had a Verification Letter issued by the Division indicating he was exempt from workers' compensation coverage. However, that exemption was limited to cabinet- making. By installing the cabinets, Lawrence performed work outside his exemption status. The gross payroll for his work was $6,200, and the penalty assessed for Lawrence was $1,209.33. Respondent was completely unaware that the exemption letter did not cover installation and had, in fact, always allowed cabinet- makers to install the cabinets as well. Brunderman Builders is listed as the sixth employee. It is assigned Class Code 5403 with a manual rate of $14.39. The gross payroll for this entry was $550, resulting in a penalty assessment of $118.73. The seventh employee is Jorge Gonzolas, assigned Class Code 5403, the general contracting code. Gonzolas was the employee of a contractor who was subcontracting with Respondent. The contractor died unexpectedly, and Gonzolas was left without payment for the work he had performed. Respondent generously decided to pay Gonzolas for his work, thereby, effectively making Gonzolas a de facto employee. The amount paid Gonzolas was $599.00; the penalty assessed for Gonzolas was $129.30. Woodall is again listed as employee number eight, this time with Class Code 5610, reflecting casual labor he did on one date that his insurance was not in place. The payroll amount for this work was $37.50. The penalty assessed for Woodall was $4.02. The ninth employee was Julio Garcia, assigned Class Code 8742 for outside sales, with a manual rate of $.64. The payroll amount for Garcia was $1,300. His penalty assessment amount was $12.48. Garcia was another one of the deceased subcontractor's employees that Respondent volunteered to pay for work Garcia had performed. The total payroll at issue for Respondent was $14,477.50. The total premium for that amount of payroll would have been $1,881.48, and the penalty assessed was $2,822.84. This is a fairly insignificant portion of Respondent's $5.5 million annual payroll. Respondent did not intentionally attempt to avoid the payment of workers' compensation insurance for its employees. There is no pattern of avoidance or indication that non-payment was Respondent's goal. Rather, there are plausible and reasonable explanations about the unpaid premiums. For Woodall, Respondent believed he was still covered through the Crum policy. For Gonzolas and Garcia, Respondent was simply attempting to be a nice guy. For Prewitt, the employee's exemption had unknowingly lapsed. For Lawrence, Respondent relied upon a Verification Letter from the state, but misinterpreted its scope. The Division, on the other hand, only pursued Respondent based on an actual finding of non-coverage. But for Woodall's presence at a work site doing manual labor (sweeping the floor), the Division would not have looked at Respondent's records. There is no indication the Division acted other than in strict accordance to its governing rules.
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, upholding the assessment of a penalty of $2,822.24 against Respondent, Brunderman Building Company, Inc. DONE AND ENTERED this 9th day of October, 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 9th day of October, 2009.
The Issue Whether Respondent owes $1,568,399.00 or $2,323,765.60 as a penalty for failing to secure workers' compensation insurance for its employees, as required by Florida law.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the sweeping factual stipulations set forth in the parties' June 1, 2005, Joint Stipulation3: Legislative History of the "Penalty Calculation" Provisions of Section 440.107(7), Florida Statutes Since October 1, 2003, the effective date of Chapter 2003-412, Laws of Florida, Section 440.107(7)(d)1., Florida Statutes, has provided as follows: 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. Prior to its being amended by Chapter 2003-412, Laws of Florida, Section 440.107(7), Florida Statutes, read, in pertinent part, as follows: 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 in the following amount: An amount equal to at least the amount that the employer would have paid or up to twice the amount the employer would have paid during periods it illegally failed to secure payment of compensation in the preceding 3-year period based on the employer's payroll during the preceding 3- year period; or One thousand dollars, whichever is greater. The Senate Staff Analysis and Economic Analysis for the senate bill that ultimately became Chapter 2003-412, Laws of Florida, contained the following explanation of the "change" the bill would make to the foregoing "penalty calculation" provisions of Section 440.107(7), Florida Statutes4: The department is required to assess an employer that fails to secure the payment of compensation an amount equal to 1.5 times, rather than 2 times, the amount the employer would have paid in the preceding three years or $1,000, which is greater. There was no mention in the staff analysis of any other "change" to these provisions. The NCCI Basic Manual The National Council on Compensation Insurance, Inc. (NCCI) is a licensed rating organization that makes rate filings in Florida on behalf of workers' compensation insurers (who are bound by these filings if the filings are approved by Florida's Office of Insurance Regulation, unless a "deviation" is permitted pursuant to Section 627.11, Florida Statutes). The NCCI publishes and submits to the Office of Insurance Regulation for approval a Basic Manual that contains standard workers' compensation premium rates for specified payroll code classifications, as well as a methodology for calculating the amount of workers' compensation insurance premiums employers may be charged. This methodology is referred to in the Basic Manual as the "Florida Workers Compensation Premium Algorithm" (Algorithm). According to the Algorithm, the first step in the premium calculating process is to determine the employer's "manual premium," which is accomplished by applying the rates set forth in the manual (or manual rates) to the employer's payroll as follows (for each payroll code classification): "(PAYROLL/100) x RATE)." Adjustments to the "manual premium" are then made, as appropriate, before a final premium is calculated. Among the factors taken into consideration in determining the extent of any such adjustments to the "manual premium" in a particular case are the employer's loss experience, deductible amounts, premium size (with employers who pay "larger premium[s]" entitled to a "Premium Discount"), and, in the case of a "policy that contains one or more contracting classifications," the wages the employer pays its employees in these classifications (with employers "paying their employees a better wage" entitled to a "Contracting Classification Premium Adjustment Program" credit). Petitioner's Construction of the "Penalty Calculation" Provisions of Section 440.107(7), Florida Statutes In discharging its responsibility under Section 440.107(7), Florida Statutes, to assess a penalty "against any employer who has failed to secure the payment of compensation as required," Petitioner has consistently construed the language in the statute, "the amount the employer would have paid," as meaning the aggregate of the "manual premiums" for each applicable payroll code classification, calculated as described in the NCCI Basic Manual. It has done so under both the pre- and post-Chapter 2003-412, Laws of Florida, versions of Section 440.107(7). This construction is incorporated in Petitioner's "Penalty Calculation Worksheet," which Florida Administrative Code Rule 69L-6.027 provides Petitioner "shall use" when "calculating penalties to be assessed against employers pursuant to Section 440.107, F.S." (Florida Administrative Code Rule 69L-6.027 first took effect on December 29, 2004.) Penalty Calculation in the Instant Case In the instant case, "1.5 times the amount the [Respondent] would have paid in premium when applying approved manual rates to [Respondent's] payroll during periods for which it failed to secure the payment of workers' compensation" equals $2,323,765.60.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner order Respondent to pay a $2,323,765.60 penalty for failing to secure workers' compensation insurance for its employees. DONE AND ENTERED this 5th day of August, 2005, in Tallahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of August, 2005.
Findings Of Fact At all times material hereto, Respondent, Pedro Luis Hereu, was licensed and eligible for licensure as a life and health and general lines insurance agent by Petitioner, Department of Insurance. Respondent also served as President and registered agent of P.H. Insurance, Inc. P.H. Insurance, Inc. was an incorporated life, health, and general lines insurance agency engaged in the business of selling life, health and general lines insurance products through Respondent and other agency personnel acting under the supervision and control of Respondent. Respondent was licensed to represent Union Bankers Insurance Company as a health insurance agent. Sometime prior to October 17, 1989, Respondent applied to become a resident agent for U.S. Security Insurance Company. On or around February 21, 1986, Respondent assisted Mr. Pablo Beade in the preparation of an application for health insurance for Mr. Beade and his family through Union Bankers Insurance Company. Mr. Beade is not fluent in English, and the application is written in English. Respondent, however, speaks Spanish which is Mr. Beade's native language, and with Mr. Beade's permission read the application in Spanish to Mr. Beade and completed the form in English in Mr. Beade's presence. The form consists primarily of "yes" and "no" questions. Mr. Beade answered "no" to all but one question regarding medical treatment in the previous five years. Mr. Beade told Respondent that during that time he had visited a Dr. Gualberto Navarro for a regular checkup only. Respondent noted the information on the form. In his testimony, Mr. Beade, however, stated that he informed Respondent that he had been treated for ulcers in addition to his regular checkup with Dr. Navarro. Respondent disagrees. Considering that Respondent was aware that the Union Bankers would verify Mr. Beade's health history prior to issuing the policy, that Respondent supplied the company with Dr. Navarro's telephone number and address and Respondent's demeanor at the hearing, Respondent's testimony is found to be credible. During his visit with Mr. Beade, Respondent explained to Mr. Beade that the application did not assure that his coverage would be approved by the company. Then, after completing the application, reviewing it with Mr. Beade, and witnessing the execution of it by the Beade's, Respondent collected $3,093.99 in premium dollars from Mr. Beade. Although it is Respondent's custom to collect funds in the form of a check payable to the insurer, Mr. Beade preferred to pay him in cash. Respondent accepted the cash and issued a receipt to Mr. Beade for it. Respondent returned to the P.H. Insurance and gave the cash and the application to his secretary for deposit and processing. According to Respondent, his secretary deposited the cash in the agency trust account and forwarded the application and a deposit to Union Bankers. Respondent's agent's contract with Union Bankers and the regular course of business, which Respondent admitted, obligate him to submit all money collected on behalf of Union Bankers to it immediately upon receipt. Union Banker's attempted to obtain more information from Dr. Navarro concerning Mr. Beade's health, and Respondent attempted to contact Dr. Navarro on behalf of Union Bankers. However, Union Bankers did not receive a response from Dr. Navarro and issued its policy, excluding Mr. Beade. Since coverage of Mr. Beade was excluded from the policy, the premium owed by Mr. Beade required adjustment. Respondent, however, had left Miami during the Summer of 1986 and did not return until October, 1986. It was not until then that he became aware of the company's refusal to insure Mr. Beade. On several occasions Respondent tried to telephone Mr. Beade to discuss the premium adjustment and return of a portion of the premium. His attempts were unsuccessful. On January 30, 1987, he wrote Mr. Beade, but the letter was returned. He physically went to the last known address which Respondent had for Mr. Beade, but no one was home. Respondent has not personally been contacted by Mr. Beade since Respondent's return to Miami. Mr. Beade did, however, file suit against Union Bankers and Respondent; however, the relevant evidence did not indicate the allegations or the judgment, if any, in the litigation. Meanwhile the funds remained in the non-interest bearing trust account. In May, 1989, Petitioner filed the instant complaint against Respondent, and on September 14, 1989, Respondent issued a check in the amount of $1,982.56 to Mr. Beade from the trust account. On October 17, 1989, Petitioner issued its letter demonstrating its intent to deny Respondent's application to become a registered agent for U.S. Security Insurance Company. The instant claim represents the first and only complaint filed with Petitioner against Respondent.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Insurance enter a final order which dismisses the administrative complaint against Respondent, Pedro Luis Hereu, and approves the subject application. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 22 day of March 1990. JANE C. HAYMAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22 day of March 1990. APPENDIX TO THE RECOMMENDED, ORDER IN CASE NO. 89-4931 The following rulings are made on the proposed findings of fact submitted by Petitioner: The proposed findings of fact in paragraph 1 are adopted in material part by paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 2 are adopted in material part by paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 3 are adopted in material part by paragraph 2 of the Recommended Order. The proposed findings of fact in paragraph 4 are adopted in material part by paragraph 2 of the Recommended Order. The proposed findings of fact in paragraph 5 are adopted as subordinate to paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph 6 are adopted in material part by paragraph 2 of the Recommended Order. The proposed findings of fact in paragraph 7 are adopted in material part in paragraphs 3. The proposed findings of fact in paragraph 8 are adopted in material part in paragraphs 3. The proposed findings of fact in paragraph 9 are adopted in material part by paragraphs 5 of the Recommended Order. The proposed findings of fact in paragraph 10 are adopted in material part by paragraph 9 of the Recommended Order. The proposed findings of fact in paragraph 11 are adopted in material part by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph 12 are adopted in material part by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph 13 are adopted in material part by paragraph 6 of the Recommended Order. The proposed findings of fact in paragraph 14 are rejected as a conclusion of law. The proposed findings of fact in paragraph 15 are adopted in material part by paragraphs 8-10 of the Recommended Order. The following rulings are made on the proposed findings of fact submitted by Respondent: The proposed findings of fact in paragraph 1 are adopted in material part in paragraph 1 of the Recommended Order. The proposed findings of fact in paragraph 2 are adopted in material part in paragraph 2 of the Recommended Order. The proposed findings of fact in paragraph 3 are adopted in material part in paragraphs 3-5 of the Recommended Order. The proposed findings of fact in paragraph 4 are adopted in material part in paragraph 4 the Recommended Order. The proposed findings of fact in paragraph 5 are adopted in material part in paragraph 5 of the Recommended Order. The proposed findings of fact in paragraph 6 are adopted in material part in paragraph 6. The proposed findings of fact in paragraph 7 are adopted in material part in paragraph 7 of the Recommended Order. The proposed findings of fact in paragraph 8 are adopted in material part in paragraph 7. The proposed findings of fact in paragraph 9 are rejected as irrelevant. The proposed findings of fact in paragraph 10 are adopted in material part in paragraph 8 of the Recommended Order. The proposed findings of fact in paragraph 11 are adopted in material part in paragraph 8 of the Recommended Order. The proposed findings of fact in paragraph 12 are adopted in material part in paragraph 8 of the Recommended Order. The proposed findings of fact in paragraph 12 are adopted in material part in paragraph 10 of the Recommended Order. COPIES FURNISHED: Christopher Anderson, Esquire Office of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Thomas F. Woods, Esquire Alex D. Barker, Esquire GATLIN, WOODS, CARLSON & COWDERY 1709-D Mahan Drive Tallahassee, Florida 32308 Don Dowdell General Counsel The Capitol Plaza Level Tallahassee, Florida 32399-0300 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 =================================================================
The Issue Whether petitioner should impose fines and other administrative sanctions against respondents, and order them "to cease and desist from further violating Florida laws and take appropriate corrective action," for the reasons alleged in the administrative complaint?
Findings Of Fact Credicorp, Incorporated (Credicorp) is a Texas corporation whose principal place of business is located in Dallas, Texas. Credicorp is not licensed pursuant to Chapter 520, Florida Statutes, and never has been. Originally incorporated in 1990 under the name FAFCO, Credicorp began mailing solicitations to Florida in November of 1990. John Rheinfrank was president of Credicorp from November of 1990 until October of 1992. T. at 15. Since then, Stevan Brown, who has been corporate secretary at all pertinent times, has served as president. Credicorp has no employees or agents in Florida, and owns no property in Florida. Credicorp has not registered to do business in Florida and does not collect Florida sales or use taxes. Credicorp mails solicitations, also called invitations, to Florida residents and others. Before the corporate name change, invitations sent to prospects read as follows: TELEGRAM APPROVAL NO: [account number specified] APPROVAL EXPIRATION DATE: [date specified] [Name and address of targeted individual] YOU HAVE BEEN PRE-APPROVED FOR A GOLD CARD WITH A $10,000.00 LINE OF CREDIT. *MAIL YOUR $29.95 ANNUAL FEE BY CHECK OR MONEY ORDER BY (specified date) ALONG WITH THIS SIGNED NOTICE TO ACTIVATE YOUR CREDIT IMMEDIATELY. FAILURE TO DO SO WILL RESULT IN OUR REEVALUATION OF YOUR ELIGIBILITY. PLEASE RETURN THIS TELEGRAM WITH PAYMENT BY (date specified). MAKE CHECK OR MONEY ORDER PAYABLE TO FAFCO GOLD CARD. SINCERELY, ROBERT J. ARMSTRONG, NEW ACCOUNTS MANAGER RESPOND TODAY! Petitioner's Exhibit No. 19. Robert J. Armstrong, the putative accounts manager, does not exist. T. at 121. Recently invitations have included a 60- day money-back guarantee and a disclaimer in small type disclosing Credicorp's lack of affiliation with a financial institution. Petitioner's Exhibit No. 19. The solicitation arrives in an envelope stamped "DATED MATERIAL: YOUR IMMEDIATE REPLY REQUESTED," and the return address is shown as "CREDIT APPROVAL DEPT." Petitioner's Exhibits Nos. 8 and 21; Admission No. 13. Ordinarily the solicitation contains all the information an individual receives before paying money to Credicorp to secure its services. Respondents offer potential customers residing in Florida a "Gold Card" with "a $10,000 line of credit" at a 12 percent annual interest rate, in exchange for a $29.95 fee. Petitioner's Exhibits Nos. 19 and 20; Admission 46. The services Credicorp in fact provides to members are offers to sell merchandise, loans for purchasing the merchandise that Credicorp sells, assorted coupons, and hotel and rental car discounts. Petitioner's Exhibits Nos. 15 and 29, line 23. Not one of these services is clearly identified on the initial solicitation sent to potential members. Petitioner's Exhibit No. 19; T. at 120- 121. After the customer submits a pre-approved application and pays the membership fee, Credicorp mails a "fulfillment package." Petitioner's Exhibit No. 15, p.77, line 22. The customer must pay a $29.95 fee before Credicorp performs any service on the customer's behalf. Petitioner's Exhibit No. 20; Admission No. 47. The fulfillment package contains a letter that states, in part: WELCOME TO CREDICORP, YOUR LINE OF CREDIT IS $10,000 HERE IS YOUR CREDICORP MEMBERSHIP CARD! ACCOUNT # START USING YOUR CREDICORP MEMBERSHIP AND BONUS COUPONS IMMEDIATELY TO PURCHASE NAME BRAND PRODUCTS FROM OUR HOME VALUES AND GIFT CATALOG. ENCLOSED IS OUR GIFT TO YOU, YOUR PREFERRED MEMBER SAVINGS COUPON BOOKLET WORTH UP TO $1,000.00 IN COUPONS REDEEMABLE IN YOUR AREA. ALSO SEE INFORMATION ENCLOSED ABOUT 50 percent DISCOUNTS AT THOUSANDS OF LOCATIONS THROUGH OUT THE U.S. Petitioner's Exhibit No. 6. This letter is the first notice Credicorp gives the "new member" that he or she has joined a catalogue shopping club. The fulfillment package also contains a second letter addressed "Dear New Credicorp Member," a copy of the Credicorp Rules and Regulations, a collection of Home Values and Gifts Bonus Coupons, a booklet of Super Saver coupons, and the Home Values and Gifts catalogue. For the past six months or so, Petitioner's Exhibit No. 16, p.44, the package has contained an application for a "Privilege Card." Petitioner's Exhibits Nos. 1, 2 6, and 15, p. 78 1. 22. A member can purchase merchandise listed in the Home Values and Gifts catalogue by completing order forms contained in the catalogue and mailing them, along with payment, to Credicorp. T. at 108. Credicorp extends members a line of credit of up to $10,000 to purchase this merchandise. T. at 108, 111. The member's "Gold Card" number must be included when ordering products from the catalogue. Petitioner's Exhibit No. 15, p. 83, line 9. A member cannot use the "Gold Card" to purchase goods or services from retail sellers other than Credicorp. T. at 111-114. Members cannot use their "Gold Cards" or their membership to obtain cash from anybody. The Better Business Bureau of Texas received over 34,000 inquiries in 1992 regarding Credicorp's activities. T. at 122-123. Credicorp receives a mark-up on the merchandise it sells members. Petitioner's Exhibit No. 16, p.60, line 5. Members who purchase merchandise on credit must initially submit a specified down payment with the order. Petitioner's Exhibits Nos. 1, 2 and 14. Two prices are available to a Credicorp member, a cash price and a "credit price," which reflects a 12 percent financing fee. Petitioner's Exhibits Nos. 1, 2, 14. Merchandise purchased on credit arrives with an installment coupon book for each item ordered. Petitioner's Exhibit No. 6, Credicorp Rules and Regulations p. 2. The Credicorp Rules and Regulations, the order forms contained in the catalogue, and all other materials Credicorp provides members make no mention of any contingency once the member completes, signs and sends in a form order for merchandise with the amount of money required. Petitioner's Exhibits Nos. 1, 2, 6, 12, 14, 17. Many Florida residents complete and sign these order forms in Florida. Petitioner's Exhibit No. 17. Credicorp has received at least 378 form orders for merchandise from Florida residents. Id. Approximately 1,600,000 individuals have submitted to Credicorp membership applications, each accompanied by $29.95. New members' names and addresses are entered into a computer data base and "batch edit sheets," each listing 100 names of new members, are printed. Petitioner's Exhibits Nos. 4 and 5; Petitioner's Exhibit No. 15, page 73, line 1; T. at 47. Sample batch edit sheets obtained from Credicorp by the Department listed the names of 640 Florida residents who had sent a membership application form and $29.95 to Credicorp to obtain membership. Petitioner's Exhibit Nos. 4, 5, 18. On a single day, June 24, 1992, money and membership application forms from 243 residents of Florida reached Credicorp. Petitioner's Exhibit No. 18.
Recommendation It is, accordingly, RECOMMENDED: That petitioner order respondents Credicorp, John Rheinfrank and Stevan Brown to cease and desist violating Chapter 687, Florida Statutes. That petitioner levy an administrative fine against Credicorp in the amount of three million five hundred seventy-eight thousand dollars ($3,578,000) to be paid within thirty (30) days of entry of the final order. That petitioner levy an administrative fine against respondent John Rheinfrank in the amount of two hundred fifty thousand dollars ($250,000) to be paid within thirty (30) days of entry of the final order. That petitioner levy an administrative fine against respondent Stevan Brown in the amount of two hundred fifty thousand dollars ($250,000) to be paid within thirty (30 days of entry of the final order. DONE AND ENTERED this 4th day of October, 1993, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of October, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-911 Petitioner's proposed findings of fact Nos. 1-22, 24-38, 40, 41, 42, and 43 have been adopted, in substance, insofar as material. With respect to petitioner's proposed findings of fact Nos. 23 and 39, extrapolation is problematic. Respondent's proposed findings of fact Nos. 1, 2, 3, 5, 7, 8, 9, 11, 16, 24, 25, 26, and 27 have been adopted, in substance, insofar as material. Respondent's proposed findings of fact Nos. 4 and 21 pertain to matters that are not material to petitioner's allegations. Respondent's proposed findings of fact Nos. 6, 22 and 23 pertain to subordinate matters. With respect to respondent's proposed finding of fact No. 10, it is clear from all the circumstances that it was Credicorp's intent to mislead recipients into believing that there was no such restriction. With respect to respondent's proposed finding of fact No. 12, Credicorp lends money to finance merchandise it sells on credit. With respect to respondent's proposed findings of fact Nos. 13 and 14, it is clear from all the circumstances that Credicorp used the term "Gold Card" to mislead recipients of its solicitations into believing they were being offered a credit card. With respect to respondent's proposed finding of fact No. 15, the evidence did not show that the "Credicorp Gold Card is useful to members as a reminder of their membership." With respect to respondent's proposed finding of fact No. 17, the word card does appear. With respect to respondent's proposed findings of fact Nos. 18 and 19, Credicorp so held itself out. With respect to respondent's proposed finding of fact No. 20, the sales contract comes into existence when the member mails the order and payment. COPIES FURNISHED: Honorable Gerald Lewis Comptroller, State of Florida Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350 William G. Reeves, General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0350 Bridget L. Ryan, Esquire Department of Banking & Finance Suite 1302, The Capitol Tallahassee, Florida 32399 William E. Williams, Esquire Rex Ware, Esquire 106 East College Avenue Post Office Box 1794 Tallahassee, Florida 32301
The Issue Whether the Respondent committed the violations alleged in the Second Amended Order of Penalty Assessment filed February 2, 2006, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department is the state agency charged with the responsibility of enforcing the requirement of Section 440.107, Florida Statutes, that employers in Florida secure workers' compensation insurance coverage for their employees. § 440.107(3), Fla. Stat. Twin City is a Minnesota corporation that registered to do business in Florida on October 24, 2004. During the times material to this proceeding, Twin City was engaged in the roofing business. On July 8, 2004, an investigator employed by the Department stopped at Twin City's office in Jupiter, Florida, because he had observed vehicles parked around the office that had signs indicating that the company engaged in roofing work. He arrived at the office early, and waited about 15 minutes, when individuals began arriving in the office parking lot. Most of the individuals wore shirts that carried the name "Twin City Roofing." When he consulted the database routinely used by the Department to determine whether businesses operating in Florida had workers' compensation insurance coverage as required by Florida law, the Department's investigator found no record that Twin City had obtained a Florida policy providing workers' compensation insurance coverage for its employees. Twin City did, however, have workers' compensation insurance coverage through the Minnesota Workers' Compensation Assigned Risk Plan, which issued a Standard Workers' Compensation and Employers' Liability Policy covering Twin City only under the Workers' Compensation Law of Minnesota. Pursuant to Section 3.C. of the policy, the policy did not apply in any state other than Minnesota. The Department's investigator issued a Stop Work Order and an Order of Penalty Assessment on July 8, 2004, and personally delivered them to the Twin City office. The Stop Work Order required that Twin City "cease all business operations in this state" and advised that a penalty of $1,000.00 per day would be imposed if Twin City were to conduct any business in violation of the Stop Work Order. Twin City violated the Stop Work Order by continuing to engage in business activities on July 12 and 13, 2005. At the same time he delivered the Stop Work Order and the Order of Penalty Assessment to Twin City's office, the Department's investigator hand-delivered a Request for Production of Business Records for Penalty Assessment Calculation. Identification of Twin City's employees The Department's investigator questioned a number of the individuals he saw in Twin City's parking lot on the morning of July 8, 2005, and asked if they were employed by Twin City. On the basis of a "Turn Around Report" provided later in the day by Twin City, the Department's investigator verified that, except for Aaron Colborn, Jimmy Benegas, and Jaime Andrade, the individuals he questioned in the parking lot were leased employees and that the leasing company provided these employees with workers' compensation insurance coverage, as required by Florida law. Aaron Colborn and Jimmy Benegas were not leased employees, and, based on the admission of Twin City, Aaron Colborn and Jimmy Benegas were employees of Twin City during the period extending from October 24, 2004, through July 8, 2005.3 Jaime Andrade was one of the individuals standing outside the Twin City office on the morning of July 8, 2004. Unlike the other individuals, Mr. Andrade was not wearing a shirt bearing Twin City's name. Mr. Andrade told the investigator that he was a Twin City employee, that he had been employed for only two days, and that he had not yet been paid. His name did not appear on the list of leased employees provided in the Turn Around Report. The Department's investigator included Mr. Andrade as an employee of Twin City based on Mr. Andrade's statements. The evidence presented by the Department is not sufficient, however, to establish that Jaime Andrade was an employee of Twin City during this period. The investigator also spoke with several individuals in the Twin City office during his early-morning visit on July 8, 2004, and during a visit later that morning. The investigator spoke with James Geisen, the president of Twin City, and Jeffrey Willett, Mr. Geisen's stepson, who both identified themselves as Twin City employees. The investigator also observed Karen Geisin, James Geisen's wife, apparently working at a desk in the office, and he assumed that Mrs. Geisen was also an employee of Twin City. Twin City does not dispute that Mr. Geisen and Mr. Willett were employed by Twin City during the time it did business in Florida.4 Mr. Geisen worked in Florida with Twin City for approximately half of the period extending from October 24, 2004, through July 8, 2005, and was paid a salary by Twin City during this period. Mr. Willett worked in Florida with Twin City for approximately half of the period extending from January 1, 2005, through July 8, 2005, and was paid a salary by Twin City during this period. Mr. Geisen and Mr. Willett were, therefore, imputed to be employees of Twin City for the period extending from October 24, 2004, through July 8, 2005. Mrs. Geisen often accompanied her husband to Florida during the period extending from October 24, 2005, through July 8, 2005. She sometimes worked for Twin City in Florida, but she did not receive any salary or other remuneration for her services. Based on the admission of Twin City, however, Mrs. Geisen was an employee of Twin City during the period at issue.5 The employees of Twin City for the period at issue, therefore, were James Geisin, Karen Geisin, Jeffrey Willett, Aaron Colborn, and Jimmy Benegas. Penalty assessment for failure to secure workers' compensation coverage. The penalty for failure to secure the workers' compensation insurance coverage required by Florida law is 1.5 times the premium that would have been charged for such coverage for each employee. The premium is calculated by applying the approved manual rate for workers' compensation insurance coverage for each employee to each $100.00 of the gross payroll for each employee. Twin City failed to provide payroll records on which the Department's investigator could base his calculation of the penalty for Twin City's failure to obtain the workers' compensation insurance coverage required by Florida law within 45 days of the date of the July 8, 2005, request. Based on his observations and because of the lack of payroll records for Twin City, the Department's investigator included as employees in his calculation the six individuals he observed at Twin City on July 8, 2005, who were not identified as leased employees: James Geisen; Karen Geisen; Jeff Willett; Aaron Colborn; Jimmy Benegas, and Jaime Andrade. Because Twin City failed to provide payroll records from which the Department's investigator could determine the gross payroll for these six individuals, the Department's investigator applied Florida's official statewide average weekly wage to determine the gross payroll to be imputed to each of the six individuals. Florida's official statewide average weekly wage was $626.00 per week for the period extending from October 24, 2004, through December 31, 2004, and $651.38 for the period extending from January 1, 2005, through July 8, 2005. The gross payroll imputed to each of the six employees was, therefore, $9,770.70 from October 24, 2004, through December 31, 2004, and $26,380.89 from January 1, 2005, through July 8, 2005. In calculating the premium for workers' compensation insurance coverage, the Department's investigator used the risk classifications and definitions of the National Council of Compensation Insurance, Inc. ("NCCI") SCOPES Manual. Because Twin City provided no payroll records, the Department's investigator classified all six individuals under the highest- rated classification for Twin City's business operations, which was classification code 5551, the classification code assigned to employees of businesses engaged in roofing activities of all kinds. The approved Florida manual rate assigned to Scopes classification code 5551 was $46.17 per $100.00 of payroll for the period extending from October 24, 2004, through December 31, 2004, and $37.58 per $100.00 of payroll for the period extending from January 1, 2005, through July 8, 2005. The Department's investigator used these figures to calculate the workers' compensation insurance coverage premium for each of Twin City's employees as $4,511.13 for the period extending from October 24, 2004, through December 31, 2004, and $9,913.94 for the period extending from January 1, 2005, through July 8, 2005, for a total premium of $86,550.42. The penalty assessment was calculated by multiplying the total premium by 1.5, for a penalty of $129,825.66. Because the evidence establishes that Twin City had five rather than six employees during the period at issue herein, the penalty calculation must be modified as follows: The total penalty must be reduced by $21,637.61 ($6,766.70 + $14,870.91), for a revised total penalty of $108,188.05 ($129,825.66 - $21,637.61).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order: Finding that Twin City Roofing Construction Specialists, Inc., failed to have Florida workers' compensation insurance coverage for five of its employees, in violation of Sections 440.10(1)(a) and 440.38(1), Florida Statutes; Assessing a penalty against Twin City in the amount of $108,188.05, which is equal to 1.5 times premium based on imputed payroll for these five employees and on the approved manual rate for the classification code 5551 for the period extending from October 24, 2004, through December 31, 2004, and from January 1, 2005, through July 8, 2005, as provided in Section 440.107(7)(a), (d), and (e), Florida Statutes; Finding that Twin City engaged in business operations for two days during the pendency of the Stop Work Order issued July 8, 2005, in violation of Section 440.107(7)(a), Florida Statutes, and imposing a penalty of $2,000.00, against Twin City for engaging in business operations on July 12 and 13, 2005, as provided in Section 440.107(7)(a) and (c), Florida Statutes. DONE AND ENTERED this 30th day of August, 2006, in Tallahassee, Leon County, Florida. S PATRICIA M. HART Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of August, 2006.
