The Issue The issue is whether proposed rule 25-14.031 of the Public Service Commission constitutes an invalid exercise of delegated legislative authority.
Findings Of Fact Background The Public Service Commission (Commission) proposed rule 25-14.102, Florida Administrative Code, governing accounting for other postretirement benefits (OPEBs), by publication in the Florida Administrative Weekly. The Citizens of the State of Florida (Citizens) filed a timely challenge to that proposed rule, and they have standing to bring the challenge. The proposed rule applies to utilities regulated by the Commission under Chapters 364, 366 and 367, Florida Statutes (1991), which include telecommunications companies, investor-owned electric and gas utilities, and water and wastewater utilities. No specific statute requires that a regulated utility use the accrual accounting method for OPEBs. Section (1) of the proposed rule defines postretirement benefits other than pensions, and prescribes the sole acceptable method for measuring and recognizing the employer's accumulated postretirement benefit obligation.1 Under Section (2), utilities must account for the cost of such benefits in the manner required by Statement of Financial Accounting Standards No. 106, entitled "Employers' Accounting For Postretirement Benefits Other Than Pensions" published by the Financial Accounting Standards Board in December 1990, and they are prohibited from using deferral accounting under Statement of Financial Accounting Standards No. 71 (Accounting for the Effects of Certain Types of Regulation) for these benefits unless the utility obtains prior approval from the Commission. Section (3) specifies that unfunded accumulated postretirement benefit obligations will be treated as a reduction to rate base in Commission rate proceedings. This means a utility is not entitled to earn a return on an amount equal to the accumulated postretirement benefit obligation recognized on its financial statement which the utility has not actually funded. This can be done by treating the unfunded obligation as a reduction to the utility's working capital by adding it to current liabilities. Section (3) also makes explicit that if the Commission disallows a specific OPEB expense, the cost of that disallowed expense does not reduce the utility's rate base. The Board and its Standards The Financial Accounting Standards Board is the authoritative body which promulgates standards of financial accounting for the accounting profession. It was organized in 1972 as the successor to the Accounting Principles Board. The Board derives its authority through Rule 203 of the Code of Professional Ethics of the American Institute of Certified Public Accountants. Its pronouncements are an important source of what are known as "generally accepted accounting principles." These principles are concerned with both measurement and disclosure. Measurement principles determine the timing and amounts of items which enter the accounting cycle and have an impact on financial statements. They are quantitative standards which require numerically precise answers to problems and activities which may be subject to substantial uncertainty. Disclosure principles deal with factors which may not be numerical. They compliment measurement standards by explaining the standards and giving other information on accounting policies, contingencies and uncertainties which are essential ingredients in the analytical process of accounting. Generally accepted accounting principles thus include the measurement of economic activity, the time when such measurements are made and recorded, disclosures surrounding these activities, and the preparation and presentation of summarized economic activities found in financial statements. Complicated business activities often give rise to complex accounting principles. The Board has issued 110 Statements on Financial Accounting Standards to date, issued Interpretations and Technical Bulletins, and devoted substantial time and resources to development of a Conceptual Framework for Financial Accounting. Once adopted by the Financial Accounting Standards Board, the text of numbered financial accounting standards are not amended. If, for some reason, the Board wished to change the accounting treatment required by a Financial Accounting Standard, a new standard bearing a new number would be adopted. Under current practice of the Financial Accounting Standard Board, the Commission's adoption of FAS 106 is not an attempt to currently adopt future changes to FAS 106, for there will be none. Moreover, the language of section (1) of the proposed rule adopts the Standard as promulgated in December 1990. Standard 106, which the proposed rule would adopt, is not solely applicable to utilities, but is part of generally accepted accounting principles applicable to all business enterprises. Standard 106 sets measurement and disclosure standards for the manner in which postretirement benefits other than pensions are treated in external financial statements. Standard 106 itself consists of 38 pages of black letter text, and is supplemented with appendices which include a comparison of accounting for other postemployment benefits with accounting for pensions; illustrations; background information concerning considerations which were the basis for the conclusions reached in Standard 106 which are an integral part of the Standard; and a glossary (Commission composite Exhibit 1, at tab 2). The Standard treats OPEBs as a form of deferred compensation and requires accrual accounting. Expected postretirement costs are to be attributed to the period when an employee renders services. The Standard prescribes a uniform methodology for measuring and recognizing the employer's accumulated postretirement benefit obligation. The Standard applies to all postretirement benefits, and benefits payable to disabled workers. The benefits encompassed include tuition assistance, legal services, day care, housing subsidies, and other benefits. The most significant one is postretirement health care. Benefits most often depend on a formula established by the employer, using factors such as years of service, or compensation before retirement. These benefits may be available to current employees, former employees, beneficiaries such as spouses and to persons dependent on the retiree. The Standard focuses on the substantive benefit plan--the one employees understand based on past practice or by the employer's communication of intended plan changes. This is usually the same as the employer's current benefit plan, but if the written plan and practice differ, practice controls. Using the substantive benefit plan, the Standard attempts to account for the exchange between employers who provide OPEBs and employees whose services are provided at least in part to obtain these OPEBs. Standard 106 requires that the employer's liability be fully accrued when the employee is fully eligible for all expected benefits, even if the employee continues to work, since the employee has already provided the service which has earned the benefits. The costs are attributed in equal amounts (unless the plan text loads a disproportionate share of benefits in early years of employment) over the period from initial employment until the employee attains full eligibility for all benefits. The basic tenet of FAS 106 is that while it requires the use of some variables that are difficult to measure, recognition and measurement of the overall liability of the employer to provide OPEBs is best done through accrual accounting. The use of estimates is superior to implying, by failure to accrue, that no cost or obligation exists prior to the actual cash payment of benefits to retirees. The Financial Accounting Standards Board began work on accounting for OPEBs in 1979, as part of an ongoing project on accounting for pensions. By 1984, the Board decided to separate out accounting for OPEBs as a separate project. In April 1987 the Board issued, as an interim measure, its Technical Bulletin No. 87-1, Accounting For A Change In Method Of Accounting For Certain Postretirement Benefits. Standard 106 amends another, older source of generally accepted accounting principles, Opinion 12 of the Accounting Principles Board of the American Institute of Certified Public Accountants, a predecessor to the Financial Accounting Standards Board. The amendment is effective for fiscal years beginning after March 15, 1991. Portions of Standard 106, which are wholly new and not an amendment to APB 12, are effective for fiscal years beginning after December 15, 1992. Standard 106 shares with other accounting standards a salient characteristic of pension accounting--delayed recognition. Changes are not made immediately, but are recognized in a gradual and systematic way. This is why there is a transition obligation in Standard 106. The employer's accumulated postretirement benefit obligation for benefits attributable to the period before Standard 106 became effective is recognized on a delayed basis. The recognition period used must result in recognition of the accumulated obligation at least as rapidly as it would be recognized on a "pay- as-you-go" or cash basis. Until a utility actually recognizes a portion of its accumulated postretirement benefit obligation, that portion of the obligation plays no part in setting the utility's rates. The Standard requires the use of some assumptions, i.e., the estimates about the occurrence of future events, such as plan continuity. Continuity of the substantive plan for OPEBs is presumed in the absence of evidence to the contrary. Actuarial assumptions are also required, such as retirement age, salary progression in pay-related benefit plans, the probability of payment based on employee turnover, mortality and dependency status. When discount rates are used in present value calculations required by the Standard, they are to be based on current interest rates, as of the measurement date, for high quality fixed income investments with similar face amounts and maturities at which the postretirement benefit obligations could be settled. Present value factors for health care benefits require consideration of cost trend rates, medicare reimbursement rates and per capita claims cost by age. Standard 106 requires companies to recognize and account for the cost of OPEBs during the time period in which employees earn those benefits. Companies have generally recognized the expense of OPEBs on their financial statements only as those benefits were paid out to retired employees rather than accruing a liability for those future payments as they were earned by employees (the "accrual method"). The pay-as-you-go method was acceptable when OPEB expenses were small, but those expenses are now so significant that the Financial Accounting Standards Board has determined that the pay-as-you-go method of accounting distorts financial statements and is inappropriate. The utility rate payers pay the cost of OPEBs and other expenses in their utility rates. Recognition of OPEB expenses under the pay-as-you-go method causes current utility rate payers to fund benefits paid to retired utility employees. After the transition period, the implementation of accrual accounting for OPEBs will match employees' OPEB expenses solely with the group of rate payers who actually benefit from service from those employees. The accrual accounting method also contributes to containment of health care costs, since utilities must currently measure the value of the benefits promised in the future and also book a liability for those future health care costs attributable to all employees, not just retired employees. Other accrual requirements of the Commission The Commission already requires utilities to use accrual accounting for other significant expenses. Utilities accrue depreciation expenses after their initial cash outlay for plant so that the cost of construction is paid over the useful life of the plant by rate payers who receive service from that plant, rather than from rate payers who happened to be using the system during the period in which the plant was constructed and the construction cost incurred. These expenses do not represent actual cash outlays. As is typical of depreciation, these non-cash expenses are not matched with deposits in internal or external accounts to provide a fund out of which to build new plants as current plants are retired. Rather, depreciation expenses recovered in utility rates become an additional source of cash, which is matched by a corresponding decrease in the value of plant on which a utility earns a rate of return. Utilities accrue nuclear decommissioning expenses before those expenses actually become current cash outlays. Through this method, rate payers who have received the benefit of power produced at a nuclear plant pay an estimated portion of the eventual dismantlement cost of the plant in each of the years during which the plant is actually in service. Unlike depreciation, the Commission requires that these expenses be funded currently, because the cost of closure of nuclear plants will be large--perhaps hundreds of millions of dollars in a one-year period. It could be difficult or impossible for a utility to raise such amounts in the capital markets at the time they are needed. Requiring accrual accounting treatment for OPEB expenses is consistent with existing Commission policy for the treatment of these other large expenses. Commission policy development Before this rule was proposed, the Commission was developing a policy on proper accounting for OPEB expenses in utility rate hearings conducted under Section 120.57, Florida Statutes. In rate cases for Centel and Gulf Power Corporation, the Commission required the use of accrual accounting for OPEBs. In the latest rate case for Florida Power Corporation, Final Order PSC-92-1197- FOF-EI entered October 22, 1992, the Commission ordered the utility to adopt accrual accounting for OPEB expenses under FAS 106 (Commission Exhibit 2 at 67, paragraph Z). In the latest rate case for United Telephone Company of Florida, Final Order PSC-92-0708-FOF-TL, the Commission also ordered that utility to adopt accrual accounting for OPEBs under FAS 106 (Commission Exhibit 3 at 34, paragraph VII.C.1.) In none of these cases did the Commission take the position that the use of accrual accounting under FAS 106 automatically required Commission approval of all expenses shown by the utilities as OPEB expenses in their rate filings with the Commission. The proposed rule instructs utilities how to prepare their accounting information for Commission review. The rule's text does not require the Commission to allow recovery of all costs presented for review in each rate case. A utility recovers accrued OPEB expenses through rates only when the Commission takes action to change rates, and that action always takes place in the context of a rate case which is subject to a Section 120.57(1) evidentiary hearing. In a rate case, the Commission will review the utility's accrual for OPEB expenses, and has the authority to disallow any expense which the Commission finds imprudently incurred, unreasonable in amount, or not related to providing utility service. Adoption of FAS 106 does not limit the Commission's ability to adjust expenses claimed by utilities. The Commission has recognized in the Economic Impact Statement for the proposed rule that intervenors can challenge a utility's actuarial assumptions, discount rates, benefit levels, cost containment efforts, or other accruals in rate hearings (Commission Composite Exhibit 1, tab 3, EIS at page 5). The proposed rule represents a policy decision made by the Commission, which is consistent with the conclusion reached by the Financial Accounting Standards Board, that accrual accounting under FAS 106 is the most appropriate method to account for OPEB expenses. Impermissible Assumptions? Citizens object that the rule provides vague guidance to utilities about what should be included in the calculation of OPEB expenses, but sets no specific formula for expense calculations so that two companies would apply a formula and arrive at the same result if they were providing similar benefits. Under FAS 106 the utilities must make estimates and assumptions, and the manner in which they are used can affect the final benefit cost used in rate setting. Under the proposed rule, the utilities are not required to fund the accumulated postretirement benefit obligation, which is an expense, with an internal or external account. Just as depreciation expenses result in a write- down of the value of the depreciated asset, so that the utility earns a rate of return only on the depreciated asset value, any unfunded accumulated postretirement benefit expense allowed by the Commission reduces the utility's rate base so no return is earned on that amount. This can be done as a reduction to the utility's working capital, by treating any portion of the accumulated postretirement benefit obligation which has been allowed but not actually funded by the utility as a current liability. For some utilities, such as water and sewer utilities, the regulatory accounting derives working capital in an unusual way--i.e., by computing one eighth of the operation and maintenance expense rather than subtracting current liabilities from current assets (Tr. 118). For these utilities, the reduction to rate base will have to be accomplished in some other way. If a specific OPEB expense for retirees is disallowed by the Commission (e.g., dental coverage for retirees) the utility does not recover that expense in its rate base. Concomitantly the disallowed expense does not become a reduction to rate base [Tr. 151, proposed rule section (3)]. 1. The Substantive Benefit Plan. 25. The first assumption a utility must make concerns the substantive content of the future benefit plan. Standard 106 requires a utility to assume that its current written benefit plan will be the plan in effect throughout the time used to calculate benefits for employees who will retire in the future. The utility may deviate from this written plan if it has communicated to its employees that their postretirement benefits will be something other than what is found in its current plan. Standard 106 requires the utility to decide whether it has communicated something other than its current plan to its employees and if so, what that plan is. The substantive plan must be disclosed in the utility's filings with the Commission [Standard 106, paragraph 74(a)]. The witness for the Citizens has reviewed benefit plans for nine utilities, and found that although they are quite detailed, all contain language which permits the utility to modify, amend, withdraw, or terminate benefits. This does not invalidate the proposed rule. Assumptions must necessarily be made today about benefits payable in the future. The Commission retains the authority to review the explicit assumptions the utility makes about the future content of its benefit plans when evaluating a utility's current OPEB expense. The disclosure requirement will draw attention to the utility's choices, which the Commission can review. Significant matters which must be disclosed include any changes in cost-sharing provisions between the utility and retirees in the form of co- payments or deductibles, changes in monetary benefits, changes in employees covered or types of benefits provided, or the utility's funding policy for its allowed OPEB expenses. 2. Transition obligation and amortization period. 26. Standard 106 also permits utilities to make assumptions and requires disclosures about their transition obligation and amortization period. The transition obligation is one of six cost components that a utility may include in the calculation of postemployment benefits under FAS 106. The transition obligation attempts to quantify and recognize the employer's liability for benefits that employees accrued or earned before accruals for OPEB expenses became mandatory. It attempts to recognize prior period costs, and to include those costs on the utilities' financial statements. The amortization period for the transition obligation is not a set number of years, FAS 106 allows the utilities a range of choices. Prior period costs can be immediately recognized in the first year FAS 106 is effective, or amortized over the average service life of employees, or over some set number of years. The amortization period may be anywhere from one to twenty years for a particular utility, but cannot be slower than the recognition of the obligation on a pay-as-you-go or cash basis. The shorter the amortization period, the higher the annual cost that will be recognized currently. Rate payers in those years covered by the amortization period will pay for a portion of the prior period costs in each of those years. Thus, if a ten-year period is used, the rate payers for the next ten years will be charged currently for benefits to be paid in the future to employees, which benefits were earned before the accrual method of accounting for OPEBs was required by FAS 106, in addition to accruals for current employees. Standard 106, paragraph 74 (b) includes required disclosures about amortization of unrecognized transition obligations. 3. Attribution period. 27. The Standard also requires the utilities to compute an attribution period, which measures the timing of an employee's eligibility for benefits, and attributes the benefit earned by the employee to that period. For example, if the utility's substantive plan promises employees that they will receive OPEB benefits once they reach the age of 55 if they also have five years of service with the utility, then the utility must accrue the full liability associated with the total cost of that employee's OPEBs by the time the employee reaches age 55 and has five years of service, even though the employee may continue to work beyond that time. Standard 106 does not require the utility's substantive plan to contain any specific attribution period. This permits utilities with otherwise similar circumstances but different substantive plans to have an attribution period of "55 years old with ten years of service" while another may select a period of "55 years old and five years of service." Because the second utility promises the employees benefits in a shorter period of time, the annual cost, which is recovered from the rate payers, will be greater under FAS 106 for the second utility than for the first. The terms of the substantive plan control because it is the best evidence of the exchange transaction between employer and employee. 4. Marital and Dependent Status. 28. The Standard also directs the utility to develop an explicit assumption about its employees' marital status and number of covered dependents on retirement. This is important because substantive plan provisions which entitle a spouse or dependents to health care or other welfare benefits substantially increase the employer's cost and obligation for postretirement benefits. Utilities historically have used differing assumptions about these matters. These factors can be determined based on the actual experience of each utility, and may vary from utility to utility. 5. Discount Rate. 29. A discount rate is applied to a company's calculated future postretirement benefit liability in order to discount that amount back to a present value. The liability for OPEB expenses for the period prior to the adoption of FAS 106 is amortized. In other words, the discount rate is used to calculate a present value of the utility's transition obligation. The selection of a discount rate is initially left to the utility. The discount rates used by business enterprises have varied. Since a difference in the discount rate selected could result in approximately a ten percent difference in the utilities' annual expense for OPEBs, two different utilities, in similar circumstances and with similar customer bases in geographic proximity to one another could use different discount rates, and generate different expenses for similar OPEBs. Discount rates are, however, to be chosen based on the interest rates paid, as of the measurement date, on high grade investment securities that have cash flows matching the timing and amount of benefit payments due to employees. The variability should be minor from utility to utility if the measurement dates involved are similar and the timing and amounts of benefits due are similar. The weighted-average of assumed discount rates used to measure the accumulated postretirement benefit obligation must be disclosed. Standard 106, paragraph 74(e). 6. Future Medical Expenses. Standard 106 requires utilities to measure expected postretirement benefit obligations for health care benefits by making explicit assumptions about the timing and amount of these benefits payable to plan participants in the future. Recent medical claims costs in the geographic area are useful in making estimates of assumed per capita claims cost by age from the earliest date benefits could be due to a participant through the longest life expectancy of participants. Utilities must also calculate their best estimate of the projected medical inflation trend far into the future. The FAS 106 does not require or even suggest a specific time frame that the utilities' estimated trend rate is to encompass. There are a number of indices currently used to evaluate medical inflation which could be used, such as the National Hospital Input Price Index, or a utility could develop a Florida hospital input price index. Some indices show medical inflation trend rates as high as 21 percent, others are as low as 13 percent. The effect of a one percent change in the medical inflation trend can result in a change of 15 to 19 percent in the utilities' current expense level, to be charged to current rate payers. Over time it should be possible to use claims cost data specific to each utility, based on 1) current medical care utilization and delivery patterns, 2) evidence of the health status of covered employees, and 3) the location of employees, to project costs specifically for the Florida markets where retirees reside. More art than science is inherent in factoring in assumptions about changes in health care utilization patterns based on technological advances. This is the stock-in-trade of consulting actuaries, and such estimates can be made. These estimates are more easily evaluated because a sensitivity analysis of the effect of a 1% increase in assumed health care cost trend rates on the accumulated postretirement benefit obligation for health benefits, and on the aggregate of the service and interest cost components of net periodic postretirement health care benefit costs are required to be presented by the utility. Standard 106, paragraph 74(f). The short answer to the problem of variability arising from the use of permissible assumptions under FAS 106, is that the rule is not invalid because acceptable choices are not etched in stone. All choices available under FAS 106 are subject to review by the Commission. Important ones must be highlighted by disclosures and, in some cases, sensitivity analyses. Unreasonable assumptions could be rejected by the Commission, even though the rule does not state this in haec verba as to each of the estimates or assumptions available to utilities under the proposed rule. The simplest example would be the utilities' selection of a discount rate. The Commission has modified the discount rate selected by a utility in the past. If the rate selected is unreasonable, based on the market interest rate being paid on high quality fixed income investments as of the measurement date, the Commission could disallow the utilities' assumption, and use instead another rate which the Commission determined from evidence more closely reflected the market rate for analogous investment vehicles providing necessary cash flows for expected benefit payouts. The text of FAS 106 requires the utility to use the assumption that "individually represents the best estimate of a particular future event, to measure the expected postretirement benefit obligation." FAS 106, paragraph 29. The utility is not free to make whatever assumption it believes will result in the highest charge to its customers. The test is whether the assumption made reflects the utility's "best estimate of the plan's future experience solely with respect to that assumption" (FAS 106, Glossary, definition of Explicit Assumptions, at page 197, Commission Composite Exhibit 1, tab 2 [emphasis added]). The Commission retains authority to question whether an assumption is the best estimate of future experience, which is a fact specific inquiry into the circumstances of each utility, its employee cohort and its substantive plan. The Commission has authority in the text of FAS 106 to make a searching inquiry into each explicit assumption to insure that the best estimate, given the utility's unique circumstances, has been used. If not the Commission can disallow the expense the assumption generates.
The Issue The issue is whether Horace Bradley Sheffield Builders, LLC (“Sheffield Builders”), had insufficient workers’ compensation insurance during the time period in question; and, if so, the amount of the resulting penalty.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following Findings of Fact are made: The Department is the state agency responsible for enforcing the requirement in chapter 440, Florida Statutes (2016),1/ that employers in Florida secure workers’ compensation coverage for their employees. While an exemption can be obtained for up to three corporate officers, any employer in the construction industry with at least one employee must have workers’ compensation coverage. § 440.02(15), Fla. Stat. The Department fulfills its enforcement duty by conducting compliance investigations, and a compliance investigation can begin with a Department investigator visiting a worksite. Lewis Johnson is employed in Tallahassee, Florida, as a compliance investigator for the Department. Mr. Johnson monitors construction and non-construction entities to ensure that they have obtained workers’ compensation coverage. On April 20, 2017, Mr. Johnson was conducting routine checks in the Killearn Lakes area of Tallahassee. He had just visited three worksites and found that the construction firms working those sites had workers’ compensation coverage. Mr. Johnson then drove past a site where a fence was being built: As I saw the fence being built, I stopped momentarily. I took a picture to document the work activity. I then got out and I made contact with the two workers. The first worker identified himself as Horace Bradley Sheffield [III], he advised that he was the subcontractor, owned his own business, Bradley’s Quality Framing and Trim, LLC. He had another gentleman there with him, that gentleman was initially very quiet. I asked Sheffield III whom he worked for, he told me that he was employed by his dad. I asked him who his dad was, he said that his dad was Horace Bradley Sheffield, and that his dad owned Horace Bradley Sheffield Builders, LLC, and that he was the general contractor for the home that was under construction, and that he was working directly for his dad. I then spoke briefly with the gentleman that was with Horace Bradley III regarding his employment. Initially during my conversation with Horace Bradley III, he said that he was trying out this worker. He said that he’d only – he’d been on the job for two days himself, but this was this guy’s first day, and he was just trying him out. So in my conversation with the employee who was identified as Colter Gilmore, Colter said “No, I’m being paid $10 dollars an hour,” and so I documented that information. After the conversation with Mr. Sheffield III, Mr. Johnson looked for any records pertaining to Quality Framing and Trim, LLC, within the Coverage and Compliance Automated System (“CCAS”) and the Division of Corporations. CCAS is a database maintained by the Department, and it enables Department investigators, such as Mr. Johnson, to ascertain if any construction company operating in Florida has workers’ compensation coverage. CCAS indicated that Quality Framing and Trim, LLC, had been dissolved and had no workers’ compensation coverage. CCAS also revealed that Mr. Sheffield III’s exemption had expired on July 10, 2015. After reporting to his supervisor that Mr. Sheffield was paying his son as a subcontractor, Mr. Johnson received authorization to issue a Stop-Work Order to Mr. Sheffield III on April 20, 2017. After issuing the Stop-Work Order, Mr. Johnson testified that he: placed a call to Mr. Horace Bradley Sheffield, the owner of Horace Bradley Sheffield Builders, LLC, Bradley’s dad, and I made him aware of the fact that I had just issued his son a Stop-Work Order for violation of Florida Statute 440; did not have proof of compliance. And then we spoke on the phone regarding that, and he expressed that he did not know, he did not – he was unaware that his son’s workers’ comp exemption had expired. What he said that was most interesting was that he did hire his son as a subcontractor; that he was paying his son directly. I asked him how much, he was paying his son approximately $4.50 a square foot to build a fence, and so that was the renumeration between son and father for the build. And so I then expressed to him that, because of that violation, his son being in violation of Florida Statute 440, that he himself was also in violation because, as a general contractor, it is Mr. Sheffield’s job to demand and require the proof of workers’ compensation coverage from any employer to include a subcontractor. Q: And did Mr. Sheffield do that in this case? A: No, sir, he did not. He sort of indicated that he just failed to do so. Mr. Johnson learned through CCAS that Sheffield Builders had no workers’ compensation policy but that Mr. Sheffield had an exemption for himself. After conferring with his supervisor regarding Mr. Sheffield’s lack of workers’ compensation coverage for those working for Sheffield Builders, Mr. Johnson served a Stop-Work Order and an Order of Penalty Assessment on Mr. Sheffield via hand-delivery on April 21, 2017. The Stop-Work Order required Sheffield Builders to cease all business operations at the Killearn Lakes worksite and was to remain in effect until lifted by the Department. The Order of Penalty Assessment notified Sheffield Builders that it was required to pay an amount: [e]qual to 2 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 within the preceding 2-year period. Employers who have not been previously issued a Stop-Work Order may receive a credit for the initial payment of the estimated annual workers’ compensation policy premium [for] the dollar or percentage amount attributable to the initial payment of the estimated workers’ compensation expense to a licensed employee leasing contract. In all cases a minimum penalty of $1,000 is assessed against the employer. Section 440.107(7)(d), F.S. Mr. Johnson also served on April 21, 2017, a “Request for Production of Business Records for Penalty Assessment Calculation” (“the Request for Production”). Through the Request for Production, the Department sought various types of financial documents pertaining to Sheffield Builders’ payroll during the period between December 10, 2015, and April 20, 2017 (“the noncompliance period”), so that it could calculate the penalty to be imposed on Sheffield Builders. The business records requested by the Department consisted of payroll documents such as time sheets, check stubs, earnings records, and federal income tax documents; account documents such as all business check journals and statements, including cleared checks for all open and closed business accounts; check and cash disbursements; proof of any workers’ compensation insurance or exemptions; and subcontractor information. The Request for Production required Sheffield Builders to provide the aforementioned records within 10 business days of receiving the Request for Production. Mr. Sheffield provided business records, and the Department used those records to reduce the proposed penalty to $7,801.92. Eunika Jackson, a penalty auditor employed by the Department, calculated the aforementioned penalty based on the business records provided by Mr. Sheffield. For each person for whom Sheffield Builders failed to obtain workers’ compensation coverage during the noncompliance period, Ms. Jackson determined how much money Sheffield Builders paid each person during that period. Sheffield Builders paid $32,477.00 to Mr. Sheffield, III; $1,578.00 to Risocani Alfredo; $16,861.50 to Roland Hedrington; and $100.00 to Adam Chew during the noncompliance period. The gross payroll amount for each person was divided by 100 in order to create a percentage, and the percentage associated with each person was then multiplied by an “approved manual rate.” An approved manual rate is associated with a particular class code. A class code describes an employee’s scope of work based on the type of work he or she performs on a daily basis. The National Council on Compensation Insurance publishes the Scopes Manual, and the Scopes Manual sets forth class codes for numerous types of work. Multiplying the gross payroll percentage by an approved manual rate results in a workers’ compensation insurance premium for a particular employee. As required by section 440.107(7)(d)1., Florida Statutes, each premium amount is multiplied by two in order to calculate a penalty associated with each employee for whom workers’ compensation insurance was not obtained. Ms. Jackson then added the individual penalties associated with Horace Sheffield III, Risocani Alfredo, Roland Hedrington, and Adam Chew in order to calculate the total penalty of $7,801.92. With regard to Mr. Sheffield III, Mr. Sheffield acknowledged at the final hearing that his son did not have workers’ compensation coverage during the time period in question. Mr. Sheffield testified that his son had attempted to renew his exemption on-line but failed to realize that his attempt had been unsuccessful. Mr. Sheffield testified that Roland Hedrington had workers’ compensation through his employer, Professional Electrical Systems. Also, Mr. Sheffield supplied the Department with the workers’ compensation policy that Mr. Hedrington provided to him. Ms. Jackson testified as to why she included the compensation paid to Mr. Hedrington in the penalty calculation: Q: And so Roland Hedrington, why did you put that individual down on the penalty? A: He’s on there because the check images that I reviewed had his name written on the check images. [Mr. Sheffield] came back and gave us a certificate of insurance for Professional Electrical Services – or Systems, I did review that document. In addition to that, I went in to CCAS to determine whether or not if Mr. Roland had a workers’ comp exemption, because per statute and rule, we cannot exempt the payments to an individual if they do not have a workers’ comp exemption, even though the company that they work for may have a workers’ comp policy. So in my review of CCAS, it was determined that Professional Electrical did have a valid workers’ comp policy, but on the exemption tab, there was only one individual who had an exemption, and it wasn’t Mr. Roland. So therefore, the payments issued to Mr. Roland [are] considered uninsured, because the payment was issued to that individual and not the entity. Q: Is Roland listed as an owner of the company? A: He wasn’t. When I did my research in Sunbiz, I didn’t find his name on the employer’s detail. Q: And so from the records, Roland is simply an employee of Professional Electrical Systems, correct? A: Yes. Q: And so the payment that went from [Sheffield Builders] in this case to Roland did not go through the – that transaction was not pursuant [to] a worker’s compensation policy of Professional Systems, correct? A: Correct. Q: Okay. ALJ: So let me make sure I understand. So the check in question – or the payment in question to Mr. Roland Hedrington, he works for some sort of LLC, but the check was made payable to him as an individual? A: Correct. ALJ: All right. And the LLC had [a] workers’ compensation exemption? A: Coverage and an exemption, yes. ALJ: Okay. But the coverage did not apply to Mr. Hedrington? A: It wouldn’t apply because the payment was a direct payment to Mr. Hedrington, and not the payment to Professional Electrical. So if the payment was to Professional Electrical, then it’s indicating that Professional Electrical did the services, and whoever that employer is, in turn, would pay his employees, so the payments are covered. But because the payment document had Roland’s name on it, it’s indicating it’s a direct transaction between a subcontractor and a general contractor, not the actual entity that he works for. ALJ: So let me ask a question. So because a check was written to this individual, Mr. Roland Hedrington, I guess in theory he could have been working on his own accord, and that – and he doesn’t have workers’ comp as an individual, so that’s why you put him in the penalty calculation. A: Correct. ALJ: Okay. But if the check had been written payable to the LLC that had coverage, then it would not have gone to the calculation? A: Correct. There is no dispute regarding the mechanics behind the Department’s calculation of the penalty. The only dispute concerns the Department’s inclusion of the funds paid to Mr. Sheffield III, and Mr. Hedrington in the penalty calculation. The Department has proven by clear and convincing evidence that the payments from Sheffield Builders to Horace Sheffield III, Risocani Alfredo, and Adam Chew were not covered by workers’ compensation coverage and that Sheffield Builders should be fined $6,031.46. The Department has not proven by clear and convincing evidence that Roland Hedrington was not working under the auspices of Professional Electrical Systems when Mr. Hedrington performed work for Sheffield Builders during the noncompliance period. As a result, the payment to Mr. Hedrington should not be included in the Department’s penalty calculation.
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 imposing a penalty of $6,031.46 on Sheffield Builders, LLC. DONE AND ENTERED this 27th day of July, 2018, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL 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 27th day of July, 2018.
The Issue Whether Petitioner properly issued a Stop-Work Order and Penalty Assessment against Respondent for failing to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes.
Findings Of Fact Petitioner is the state agency responsible for enforcing the Florida Workers' Compensation Law, chapter 440, Florida Statutes, including those provisions that require employers to secure and maintain payment of workers? compensation insurance for their employees who may suffer work- related injuries. Respondent is an active Florida limited liability company, having been organized in 2006. Howard?s Famous Restaurant is a diner-style restaurant located at 488 South Yonge Street, Ormond Beach, Florida. It seats approximately 60 customers at a time, and is open for breakfast and lunch. In 2006, Edward Kraher and Thomas Baldwin jointly purchased Howard?s Famous Restaurant. They were equal partners. Mr. Baldwin generally handled the business aspects of the restaurant, while Mr. Kraher was responsible for the food. At the time the restaurant was purchased, Mr. Baldwin organized That?s Right Enterprises, LLC, to hold title to the restaurant and conduct the business of the restaurant. Mr. Baldwin and Mr. Kraher were both identified as managing members of the company.1/ On June 27, 2007, a 2007 Limited Liability Company Annual Report for That?s Right Enterprises, LLC, was filed with the Secretary of State. The Annual Report bore the signature of Mr. Kraher, and contained a strike-through of the letter that caused the misspelling of Mr. Kraher?s name. Mr. Kraher testified that the signature on the report appeared to be his, but he had no recollection of having seen the document, or of having signed it. He suggested that Mr. Baldwin may have forged his signature, but offered no explanation of why he might have done so. Although Mr. Kraher could not recall having signed the annual report, and may have had little understanding of its significance, the evidence supports a finding that Mr. Kraher did, in fact, sign the annual report for That?s Right Enterprises, LLC, as a managing member of the business entity. From March 9, 2009, through March of 2011, Mr. Kraher and Mr. Baldwin received salaries as officers, rather than employees, of That?s Right Enterprises, LLC. Their pay was substantially equivalent during that period. The paychecks were issued by the company?s accountant. Mr. Kraher denied having specific knowledge that he was receiving a salary as an officer of That?s Right Enterprises, LLC. Since Mr. Baldwin left the company, Mr. Kraher has continued to use the same accountant, and has continued to receive his salary as an officer of That?s Right Enterprises, LLC. On March 24, 2011, after having bought out Mr. Baldwin?s interest in the company by paying certain company- related debt owed by Mr. Baldwin, Mr. Kraher filed an annual report for That?s Right Enterprises, LLC. In the annual report, which was prepared and filed at his request, Mr. Kraher assumed control as the sole member and registered agent of the company. Mr. Baldwin was removed as a managing member and registered agent, and other changes were made consistent therewith. Mr. Kraher denied any understanding of the significance of his operating as the same corporate entity, but rather thought he was “buying a new LLC.” On March 8, 2012, Petitioner's investigator, Carolyn Martin, conducted an inspection of Howard?s Famous Restaurant. Ms. Martin introduced herself to one of the waitresses working at the restaurant. The waitress called Mr. Kraher from the kitchen to speak with Ms. Martin. Mr. Kraher identified himself as the owner of the restaurant for the past six years. Ms. Martin asked Mr. Kraher for evidence that Respondent?s employees were covered by workers? compensation insurance. Mr. Kraher retrieved a folder containing the restaurant?s insurance policies and information. Ms. Martin reviewed the folder, and determined that Respondent did not have workers? compensation insurance. Mr. Kraher, who was very cooperative with Ms. Martin throughout the inspection, was genuinely surprised that the restaurant employees were not covered by workers? compensation insurance. He had taken out “a million-dollar insurance policy” that he thought covered everything he needed to have. While Ms. Martin was at the restaurant, Mr. Kraher called his insurance agent who, after reviewing his file, confirmed that Respondent did not have workers? compensation insurance. Mr. Kraher immediately asked his agent to bind a policy, and paid his first six-month premium using a business credit card. A copy of the policy was quickly faxed by the agent to Ms. Martin. Ms. Martin took the names of Respondent?s employees, which included two kitchen staff and four wait staff. Some of the employees worked in excess of 30 hours per week, while others worked part-time. Ms. Martin went to her vehicle and completed a Field Interview Worksheet. Ms. Martin reviewed the Coverage and Compliance Automated System (CCAS), which is the statewide database for workers? compensation information, to confirm Respondent?s status in the workers? compensation system. Using the CCAS, Ms. Martin confirmed that Respondent had no workers? compensation coverage on file for any employee of the company. She also accessed the Florida Division of Corporations website to ascertain Respondent?s corporate status. After having gathered the information necessary to determine Respondent?s status, Ms. Martin contacted her supervisor and received authorization to issue a consolidated Stop-Work Order and Order of Penalty Assessment. The Stop-Work Order required Respondent to cease all business operations statewide. The Order of Penalty Assessment assessed a penalty, pursuant to section 440.107(7)(d), equal to 1.5 times the amount the employer would have paid in premium when applying the approved manual rates to the employer's payroll for the preceding three-year period. The consolidated order was hand- delivered to Mr. Kraher on behalf of Respondent at 11:00 a.m. on March 8, 2012. At the time she delivered the consolidated Stop-Work Order and Order of Penalty Assessment, Ms. Martin also hand- delivered a Request for Production of Business Records for Penalty Assessment Calculation. The Request required that Respondent produce business records for the preceding three-year period, from March 9, 2009, through March 8, 2012. Respondent was given five days in which to provide the records. On or about March 12, 2012, Mr. Kraher produced three boxes of business records to Ms. Martin. Those records were forwarded by Ms. Martin, and placed in the queue for review by the penalty auditor. The records were reviewed by Petitioner?s penalty auditor, Lynne Murcia, and were found to be insufficient to establish the actual compensation paid to Respondent?s employees for the preceding three year period. Therefore, pursuant to section 440.107(7)(e), salaries were imputed for each of the six employees based on the statewide average weekly wage. Ms. Murcia used the “Scopes Manual” published by the National Council on Compensation Insurance to ascertain the classification of Respondent?s business, based upon the nature of the goods and services it provided. Class code 9082, titled “Restaurant NOC,” is described as “the „traditional? restaurant that provides wait service.” Ms. Murcia correctly determined that Howard?s Famous Restaurant fell within class code 9082. The salaries of Respondent?s six employees, as employees of a class code 9082 restaurant, were imputed as though they worked full-time for the full three-year period from March 9, 2009, to March 8, 2012, pursuant to section 440.107(7)(e). The total imputed gross payroll amounted to $1,130,921.64. The penalty for Respondent?s failure to maintain workers? compensation insurance for its employees is calculated as 1.5 times the amount Respondent would have paid in premium for the preceding three-year period. The National Council on Compensation Insurance periodically issues a schedule of workers? compensation rates per $100 in salary, which varies based on the Scopes Manual classification of the business. The workers? compensation insurance premium was calculated by multiplying one percent of the imputed gross payroll ($11,309.21) by the approved manual rate for each quarter (which varied from $2.20 to $2.65, depending on the quarterly rate), which resulted in a calculated premium of $26,562.06. The penalty was determined by multiplying the calculated premium by 1.5, resulting in the final penalty of $39,843.18. On March 28, 2012, Petitioner issued an Amended Order of Penalty Assessment assessing a monetary penalty amount of $39,843.18 against Respondent. Respondent subsequently provided Petitioner with additional payroll records regarding the six employees. The records had been in the possession of Respondent?s accountant. The records, which included Respondent?s bank statements and payroll records for the six employees, were determined to be adequate to calculate the actual employee salaries for the preceding three-year period. Ms. Murcia revised her penalty worksheet to reflect that payroll was now based on records, rather than being imputed.2/ Respondent?s total payroll for the three-year period in question was determined to be $154,079.82. Applying the same formula as that applied to determine the penalty amount reflected in the Amended Penalty Assessment, the premium was calculated to have been $3,624.33, with a resulting penalty of $5,436.64. On April 24, 2012, Petitioner issued a 2nd Amended Order of Penalty Assessment reducing Respondent's penalty from $39,843.18 to $5,436.64.
Recommendation Based on the findings of fact and conclusions of law, it is RECOMMENDED that the Department of Financial Services, Division of Workers? Compensation, enter a final order assessing a penalty of $5,436.64 against Respondent, That?s Right Enterprises, LLC, for its failure to secure and maintain required workers? compensation insurance for its employees. DONE AND ENTERED this 31st day of August, 2012, in Tallahassee, Leon County, Florida. S E. GARY EARLY 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 31st day of August, 2012.
The Issue The issue is whether Respondent discriminated against Petitioner based on marital status in determining his monthly retirement benefits in violation of the provisions of the Florida Civil Rights Act of 1992.
Findings Of Fact Petitioner Kenneth Fritz (Petitioner or Mr. Fritz) has been a firefighter with the City of Pembroke Pines (Respondent or the City) since 1991. His date of birth is June 6, 1948, and he entered the Deferred Retirement Option Program (DROP) on December 1, 2006, at age 58.5 years old. As Respondent's employee, Mr. Fritz participated in the City's Pension Plan for Firefighters and Police Officers (the Plan). The DROP option that Mr. Fritz chose allowed him to name a joint annuitant and contingent survivors. Mr. Fritz, who has been divorced since 1986, chose his daughter who on December 1, 2006, was 32.25 years old, and his son who was 29.333 years old, as his surviving beneficiaries. Each will receive a 50 percent share of the retirement income upon his death payable for the remainder of their lives. Mr. Fritz alleged that the pension fund benefit system discriminates against him based on marital status. There is no factual dispute that his benefits, with a 32-year-old daughter are $3,938.12 a month, as compared to $4,366.59 a month if he had a 32-year-old wife. The benefits are not affected by his having named his son as an additional beneficiary. Mr. Fritz brought his concerns to the attention of Patricia Shoemaker, the Benefits Administrator for Municipal Police Officers' and Firefighters' Retirement Funds for the State of Florida Department of Management Services. On January 29, 2008, March 17, 2008, July 9, 2008, and September 25, 2008, Ms. Shoemaker sent letters to Mr. Anthony Napolitano, Chairman of the Pembroke Pines Firefighter's Pension Plan, requesting an explanation of the apparent violation of the following statutory provisions: § 175.333. Discrimination in benefit formula prohibited; restrictions regarding designation of joint annuitants. For any municipality, special fire control district, chapter plan, local law municipality, local law special fire control district, or local law plan under this chapter: and (1) No plan shall discriminate in its benefit formula based on color, national origin, sex, or marital status. § 175.071(2) Any and all acts and decisions shall be effectuated by vote of a majority of the members of the board; however, no trustee shall take part in any action in connection with the trustee's own participation in the fund, and no unfair discrimination shall be shown to any individual firefighter participating in the fund. (Emphasis added.) In her letter of September 25, 2008, Ms. Shoemaker noted that she had received no responses to her previous letters and that "[W]hile state premium tax moneys were released this year based on our understanding that the Board was researching this matter, future state tax moneys will not be released unless the plan is determined to be in compliance with Chapters (sic) 175, F.S." On October 15, 2008, Deputy City Attorney Julie F. Klahr finally responded to Ms. Shoemaker as follows: Your letter to the Pembroke Pines Police and Fire Retirement Plan has been referred to this office for reply. The issue is whether a spouse only benefit is discriminatory on the basis of marital status. For the reasons which follow, the benefit is fully in compliance with Florida law. Section 175.333(2)(a), Florida Statutes, clearly recognizes the propriety of a plan offering a spouse only survivorship benefit that alone should resolve this issue. The benefit at issue in Pembroke Pines is a spouse-only benefit, which not only exceeds the minimums required by Chapter 175, but also pre-dates the enactment of Ch. 99-1, Laws of Florida (1999). The complaining employee sought to designate a child as a beneficiary but without an age appropriate actuarial reduction. Nothing in Chapter 175, or any other law, mandates a retirement plan to provide a costly, generation skipping benefit without providing for actuarial equivalence. To the extent that your view is that the plan provision must be altered, it is a "minimum benefit" which is required, only if unencumbered Chapter 175 insurance premium tax rebates are present to pay the full cost as provided in §175.351. The City does not concede this is a correct interpretation, nor does any such Chapter money exist. Any required action to the contrary is an improper unfunded mandate. Moreover, the provisions of the Internal Revenue Code and corresponding regulations of the Department of the Treasury mandated the use of the actuarial factors at issue. Nothing in Chapter 175, Florida Statutes, directs a plan to violate tax provisions necessary to maintain qualification. It is the City's position that according a benefit to a spouse of a deceased member, provided the plan otherwise exceeds minimum benefits under Chapter 175, is a matter reserved to the City under its home rule powers in the Florida Constitution and Chapter 166, Florida Statutes. If any member feels aggrieved by the structure of the Ordinance Code, that person may seek remedies under Chapter 760, Florida Statutes. It should be observed, however, that the status at issue is that of the purported survivor and not the member. As a result, no violation of Florida's civil rights law is presented. See, Donato v. AT & T, 767 So.2d 1146 (Fla. 2000). Further §760.10(8)(b), Florida Statutes, exempts bona fide retirement plans from coverage under this law. The first provision cited as support for the City's position is as follows: § 175.333(2)(a) If a plan offers a joint annuitant option and the member selects such option, or if a plan specifies that the member's spouse is to receive the benefits that continue to be payable upon the death of the member, then, in both of these cases, after retirement benefits have commenced, a retired member may change his or her designation of joint annuitant or beneficiary only twice. Although the Deputy City Attorney asserted that this section alone should resolve the matter, Mr. Fritz observed the subsection does not authorize discrimination based on marital status but only limits the number of times that a joint annuitant or beneficiary may be changed. The City also relied on the fact that the Plan predates Chapter 99-1, Laws of Florida, but the statement of legislative intent indicates that the law is applicable to existing plans, and reads as follows: Legislative declaration. It is hereby declared by the Legislature that firefighters, as hereinafter defined, perform state and municipal functions; . . . and that their activities are vital to the public safety. It is further declared that firefighters employed by special fire control districts serve under the same circumstances and perform the same duties as firefighters employed by municipalities and should therefore be entitled to the benefits available under this chapter. Therefore, the Legislature declares that it is a proper and legitimate state purpose to provide a uniform retirement system for the benefit of firefighters as hereinafter defined and intends, in implementing the provisions of s. 14, Art. X of the State Constitution as they relate to municipal and special district firefighters' pension trust fund systems and plans, that such retirement systems or plans be managed, administered, operated, and funded in such manner as to maximize the protection of the firefighters' pension trust funds . . . This chapter hereby establishes, for all municipal and special district pension plans existing now or hereafter under this chapter, including chapter plans and local law plans, minimum benefits and minimum standards for the operation and funding of such plans, hereinafter referred to as firefighters' pension trust funds. The minimum benefits and minimum standards set forth in this chapter may not be diminished by local charter, ordinance, or resolution or by special act of the Legislature, nor may the minimum benefits or minimum standards be reduced or offset by any other local, state, or federal law that may include firefighters in its operation, except as provided under s. 112.65. (Emphasis added.) The City claimed, but Ms. Shoemaker's reference in her letter to the release of state premium tax moneys appears to contradict its claim, that it does not have to pay minimum benefits required by Chapter 175, although not conceding its applicability, because it has no unencumbered insurance premium tax money, a prerequisite the imposition of the following requirement: § 175.351. Municipalities and special fire control districts having their own pension plans for firefighters. For any municipality, special fire control district, local law municipality, local law special fire control district, or local law plan under this chapter, in order for municipalities and special fire control districts with their own pension plans for firefighters, or for firefighters and police officers, where included, to participate in the distribution of the tax fund established pursuant to s. 175.101, local law plans must meet the minimum benefits and minimum standards set forth in this chapter. * * * However, local law plans in effect on October 1, 1998, shall be required to comply with the minimum benefit provisions of this chapter only to the extent that additional premium tax revenues become available to incrementally fund the cost of such compliance as provided in s. 175.162(2)(a). (Emphasis added.) Apparently, not satisfied with the answer, on January 20, 2009, Ms. Shoemaker wrote again, this time to Ms Klahr, as follows: Dear Ms. Klahr This is to acknowledge receipt of your October 15, 2008 letter in response to my July 9, 2008 letter to the Board of the Firefighters' Pension Plan. While we appreciate your response regarding the propriety of a plan offering a spousal benefit and the appropriateness of an age appropriate actuarial reduction, our question for the Board was a different one relating to the plan's compliance with the provisions of ss. 175.333(1) and 175.071(2), F. S. as they relate to discrimination based on marital status. Based on our understanding of the issue relating to the calculation of the member's benefits, Mr. Fritz does not have a spouse, but wishes to designate his daughter as his beneficiary. He understands and agrees that it is appropriate to actuarialty [sic] adjust his benefit based on the age of his daughter. The actuary provided two calculations, one based on a spouse that was his daughter's age and one based on a beneficiary that was his daughter's age. His benefit when calculated with a young age spouse was greater than his benefit when calculated with the same young age beneficiary. It appears that the only difference in the two calculations is the marital status of the member and not the age of the joint annuitant. If our understanding of the facts relating to this issue are incorrect, please let me know. We have asked that the Board review the plan provisions with their plan attorney and actuary and provide an explanation as to how the plan meets the statutory provisions, specifically ss. 175.333(1) and 175.071 (2), F. S. Mr. Fritz pointed out that, in addition to the statutory provisions cited in Ms. Shoemaker's letter and various others that he cited, the City's Employee Handbook also includes a statement that the City does not discriminate based on marital status. The City's actuary noted that, however outdated, the additional benefit is based on the assumption that a firefighter's spouse is more dependent on the employee's income and pension then any other adult relative. In addition, the deputy city attorney testified that the Plan was adopted in the firefighters' collective bargaining agreement.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law it is RECOMMENDED that the FCHR issue a final order finding that Respondent did not commit an unlawful employment practice. DONE AND ENTERED this 1st day of September, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER 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 1st day of September, 2009. COPIES FURNISHED: James A. Cherof, Esquire Goren, Cherof, Doody & Ezrol, P.A. 3099 East Commercial Boulevard Fort Lauderdale, Florida 33308 Kenneth R. Fritz 16389 Malibu Drive Fort Lauderdale, Florida 33326 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Larry Kranert, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
Findings Of Fact Petitioner, Department of Labor and Employment Security, Division of Unemployment Compensation (Division), administers the State Unemployment Compensation Program, which includes the payment of benefits to unemployed individuals and the collection of taxes or reimbursement payments from employers to finance these benefits. By law petitioner is authorized to seek reimbursement from political subdivisions for a pro-rata portion of benefits paid to their employees. If a subdivision fails to timely reimburse the State, the Division may certify the delinquent amount to the Department of Banking and Finance, and request the Comptroller to transfer funds otherwise due that entity to the Unemployment Compensation Trust Fund (Trust Fund). If a subdivision contends an employee is not entitled to unemployment benefits, it may contest a claim for benefits with a claim examiner employed by the Division. That decision may be reviewed by an appeals referee, and if either side is still aggrieved, a final administrative appeal may be heard by the full Unemployment Compensation Commission. Those decisions are then reviewed only by the First District Court of Appeal. Respondent, Board of County Commissioners of Flagler County (Board), is a political subdivision of the state, and is required by law to reimburse the Trust Fund for its pro-rate share of benefits paid to former employees. On July 10, 1984, petitioner issued to respondent a notice of intent to certify delinquency wherein it claimed that between October 1, 1979 and December 31, 1983 respondent incurred a liability to the State totaling $6,409.71. This amount included $5,704.92 in benefits paid to former employees and $703.79 for 6 percent interest on overdue payments. That precipitated the instant controversy. The amount due was later reduced to $5,204.79 by the issuance of an amended notice of intent to certify delinquency on January 11, 1985. At hearing respondent conceded it owed all claimed monies except those due for two individuals: Emma Worthington and Margaret Prather. This resolved more than 60 percent of the Division's claim leaving only around $600 in dispute. Emma Worthington was a former employee of the Clerk of the Circuit Court of Flagler County (Clerk) and was never employed by the Board of County Commissioners of Flagler County. Nonetheless, for some reason, the Clerk reported Worthington's wages to the Division under the Employer Identification Number assigned to respondent. Because of this, the Division assumed respondent was Worthington's employer. When Worthington was terminated by the Clerk's office, she requested unemployment benefits. The Clerk filed an appeal with a claims examiner contesting the payment of such benefits. The examiner ruled that such benefits were due, and this decision was affirmed by both an appeals referee and the full commission. As required by law, on an undisclosed date the Division forwarded a reimbursement notice to respondent advising that certain monies were due because of unemployment compensation payments made to Worthington. The Board did not respond to this notice but simply referred it to the Clerk's office. There is no evidence that the Division was ever formally notified by the Board that the employee was actually a Clerk employee, that the bill was forwarded to another party, or that the wrong Employer Identification number had been used. The bill was never paid. Margaret Prather was an employee of the Flagler County Supervisor of Elections (Supervisor) when she was terminated from employment. Before that, she was a Board employee. While employed by the Supervisor of Elections, Prather's wages were erroneously reported to the Division under the Employer Identification number of respondent. Because of this, the Division assumed Prather was a Board employee. After she was terminated by the Supervisor, Prather received unemployment benefits. Whether the Supervisor contested these benefits is not known. In any event, the Division sent the Board a Reimbursement Invoice on an undisclosed date requesting reimbursement for benefits paid to Prather. The Board did not respond to the Invoice but simply forwarded it to the Supervisor. Again, there is no evidence that the Board advised the Division of the erroneous use of its Employer Identification number, that the bill had been forwarded to another party, or that Prather was not an employee. To date, the bill has not been paid.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent reimburse petitioner for benefits paid to employees Worthington and Prather as set forth in the amended notice of intent to certify delinquency within thirty days from date of final order. DONE and ORDERED this 23rd day of April, 1985, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of April, 1985.
The Issue Whether Petitioner is entitled to receive Florida Retirement System (FRS) benefits from her deceased spouse’s retirement account, pursuant to FRS Option 3 (lifetime monthly benefit to joint annuitant).
Findings Of Fact Petitioner, Lettie Jones, is the wife of FRS member, James Jones, and a designated beneficiary of his FRS account. Respondent, Department of Management Services, Division of Retirement, is the state agency with the responsibility to administer the FRS. Background Findings Mr. Jones applied to the State of Florida for disability retirement on July 13, 1994. On his application, Mr. Jones noted that the “[m]uscles in [his] feet and legs [were] deteriorating.” In response to a question regarding any other physical impairments, Mr. Jones answered, “Losing strength in right hand.” The record does not reflect the effective date of Mr. Jones’ retirement. Mr. Jones suffered a stroke in April 1996. On January 27, 1997, Mr. Jones obtained from the state an “Estimate of Disability Retirement Benefits” listing the approximate monthly benefit payment amounts for all four FRS payment options. On that date, Mr. Jones also obtained Form 11o, the FRS retirement benefit election option form, and Form FST 12, the FRS beneficiary designation form. On March 18, 1997, Mr. Jones executed Form 11o, choosing Option 2 for payment of his monthly retirement benefits, and Form FST 12, designating Petitioner as primary beneficiary, and his daughter as contingent beneficiary, of his retirement account. Form 11o provides the following explanation of Option 2: A reduced monthly benefit payable for my lifetime. If I die before receiving 120 monthly payments, my designated beneficiary will receive a monthly benefit in the same amount as I was receiving until the monthly benefit payments to both of us equal 120 payments. No further benefits are then payable. Form 11o requires the spouse’s signature acknowledging the member’s election of Option 2. The spousal acknowledgment section appears in a box on Form 11o following the description of Options 1 and 2. The first line inside the box reads, in all capital letters, “THIS SECTION MUST BE COMPLETED IF YOU SELECT OPTION 1 OR 2.” On March 18, 1997, Petitioner signed the box on Form 11o acknowledging her husband’s election of Option 2. Mr. Jones received more than 120 monthly retirement benefit payments prior to his death in 2013. Petitioner’s Challenge Petitioner alleges that Mr. Jones lacked the capacity to make an informed election of benefit payments on March 18, 1997, because he had reduced cognitive function. Both Petitioner and her daughter testified that they accompanied Mr. Jones to the FRS office on March 18, 1997, but were not allowed to “go back” with him when he met with an FRS employee to select his retirement option and execute Form 11o.2/ Petitioner admitted that she did sign the box on Form 11o, which acknowledges spousal election of Option 2, but testified that the form was blank at the time her husband presented it to her for signature. Petitioner signed the spousal acknowledgment on Form 11o the same day her husband executed the form. Petitioner introduced no evidence, other than the testimony of her daughter, that Mr. Jones suffered from reduced cognitive function on March 18, 1997. The fact that Mr. Jones suffered a stroke in 1996 is insufficient evidence to prove that he lacked the mental capacity to make an informed retirement option selection on the date in question.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of Retirement, enter a final order denying the relief requested in the Petition for Administrative Hearing. DONE AND ENTERED this 25th day of October, 2016, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK 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 25th day of October, 2016.
The Issue The issue presented is whether Petitioner is entitled to a refund of monies paid into his medical reimbursement account.
Findings Of Fact Petitioner has a Ph.D and has been a professor at Florida State University (FSU) since November 2003. Petitioner met his now-wife Veronika in England in September 2004. In the summer of 2005 she quit her job in London and came to Tallahassee. She enrolled in FSU's graduate program to fulfill the conditions of her visa. Petitioner attempted to add her to his health insurance coverage claiming that she was a dependent or a "partner," reasoning that since she was living with him she was "effectively" his wife. When required to produce a marriage license, Petitioner was unable to do so. Accordingly, since she was not legally his spouse and, therefore, was not eligible to be covered under Petitioner's benefits, his attempt to include her in his health insurance coverage was unsuccessful. From the beginning of his employment up through the time of the final hearing in this cause, Petitioner has received every year the Department's Benefits Guide for active State employees. He has also received additional information yearly regarding the State's benefits program and options during the annual open enrollment period. In 2005 Petitioner began participating in the State of Florida's pre-tax flexible spending account program by setting up a medical reimbursement account (MRA). Each year he had approximately $600 deducted from his gross salary (pre-tax) to cover medical expenses not covered under his health insurance plan. In 2008 he and Veronika began fertility treatments, incurring approximately $14,000 in bills for these treatments. In April 2008 Veronika became pregnant. Petitioner and Veronika were married on May 7, 2008. Because his marriage was a qualifying status change, he was allowed to add her to his health insurance coverage because she became eligible as his spouse. On approximately May 20, 2008, he took his check to the Human Resources office at FSU to pay the additional charge resulting from converting his health insurance from individual coverage to family coverage. He gave his check to Jackie Williams, who worked in that office and who had contacted him about the need to pay the additional money. On that date he also made arrangements to increase his MRA from $600 to $5,000, with the increased payroll deductions to begin July 1 since he was on a nine-month contract. In December 2008 he submitted a claim for reimbursement from his MRA for the fertility treatments that Veronika underwent prior to their marriage. That claim was denied because the treatments occurred prior to the time that Veronika became an eligible dependent. Since those expenses were not eligible for reimbursement, he next sought to reduce his election of $5,000 for his MRA back down to his normal level of $600. He told other personnel in FSU's Human Resources office that Williams had told him that he could claim reimbursement from his MRA for expenses incurred by Veronika before her marriage to him since the plan year for an MRA was from January through December. Based solely upon Petitioner's assertion that Williams gave him wrong information, other personnel in that office directed a memorandum to People First telling that company, which operates the State of Florida's payroll and employee benefits services, that due to an "agency error" Petitioner's MRA should be reduced to its prior level. That request was also denied because a change in Petitioner's MRA could only be made during open enrollment or because of a qualifying status change, and neither condition applied. Jackie Williams remembers her contacts with Petitioner because Veronika spells her name with a "k," which is an unusual way to spell it. Williams only discussed with Petitioner his health insurance coverage and did not discuss with him his MRA. Petitioner asserts that the Benefits Guide, which he consulted, lends credence to the misinformation he says Williams gave him because it provides in the section describing MRAs: "The entire amount in your account is available at the beginning of the plan year." That sentence, however, speaks only to the issue of the timing of claims filed against the account. It does not speak to the eligibility of expenses claimed. The Benefits Guide is very clear as to who is eligible to receive benefits under the State's employee benefits options. It uses plain language that has not changed from year to year although the page number on which the explanation is given may change. The Benefits Guide for 2008 on page 11, for example, states clearly that all active full-time or part-time State of Florida employees qualify for coverage under the benefits plans described in the Guide plus the employee's spouse and children. Eligibility for reimbursement of expenses is quite different from the time period during which claims for eligible expenses can be made. Although the State's MRA plan year runs from January through December, the expenses of only eligible persons will be covered. Since Veronika and Petitioner did not marry until May 7, 2008, her medical expenses before that date do not qualify for reimbursement from Petitioner's MRA, just as she did not qualify to be added to Petitioner's health insurance coverage until they married. To the extent that Petitioner claims he was misled by Jackie Williams, his argument is not persuasive. First, Petitioner had his Benefits Guide which gave the correct information, and his reliance on one sentence in the Guide which does not refer to eligible persons or eligible expenses is illogical and misplaced. Second, Williams' testimony that she did not discuss his MRA with him and that she remembers her transactions with him because of the unusual spelling of Veronika is credible and was supported by the way both Petitioner and Williams referred to that spelling during her testimony at the final hearing. Veronika's medical expenses incurred before her marriage to Petitioner do not qualify for reimbursement from Petitioner's MRA. Further, Petitioner is not entitled to a reduction in his 2008 MRA contribution due to an "agency error" or a misrepresentation by FSU's Human Resources office because no agency error or misrepresentation was made. Quite simply put, Petitioner herein seeks a benefit of marriage prior to the time he was entitled to enjoy it under both the law and the State of Florida's employee benefits plans.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying Petitioner’s request for a retroactive reduction in his MRA. DONE AND ENTERED this 16th day of September, 2009, in Tallahassee, Leon County, Florida. S LINDA M. RIGOT 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 16th day of September, 2009. COPIES FURNISHED: Sonja P. Mathews, Esquire Department of Management Services Office of the General Counsel 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399 Gavin Naylor 1531 Tallavana Trail Havana, Florida 32333 John Brenneis, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue The issue in this proceeding is whether Petitioner was the subject of an unlawful employment practice by Respondent based on her sex.
Findings Of Fact Bay is a nursing home and rehabilitation center for those in medical need of such services. It is located in Port. St. Joe, Florida. The facility has a number of residents staying at the facility who require help with mobility, standing and walking. The payroll services for Bay are performed by Signature Payroll Services, LLC, which is affiliated with Bay through a parent company. Bay offers all employees a package of employment benefits, including disability benefits. Section 7.2 of the Stakeholder Handbook states: Short & Long Term Disability In the event Stakeholders become disabled due to sickness, pregnancy or accidental injury, the company offers disability insurance . . . Short Term Disability provides for 60% of the Stakeholder's gross weekly wages up to a maximum of twenty four (24) weeks post fourteen (14) days of accident/injury. Long Term Disability provides for 60% of the Stakeholder's monthly wages up to one hundred eight[sic] (180) days after exhausting the Short Term Disability benefit. Please see Human Resources to review detailed summary plan documents for maximums. All new employees are offered the opportunity to enroll in Bay's employment benefit package for 90 days after their employment date. Each employee must affirmatively elect the employment benefits they wish to have and must pay any premiums for those benefits. After 90 days, an employee can only make changes to his or her benefit plan during the employee's annual enrollment period. In addition to the benefit plan, Bay also offers all employees Family Medical Leave for up to 12 weeks and/or a personal leave of absence when the employee is not eligible for leave under other company policies. Leave is addressed in section 8 of the Stakeholder Handbook. Petitioner is a Certified Nurse Assistant (CNA). She was employed by Bay on August 25, 2007. As a CNA, Petitioner was responsible for the direct care of residents at Bay. Her duties included lifting and moving residents as needed. Because of her duties, Petitioner was required to be able to lift a minimum of 50 pounds. Over that amount of weight, Petitioner had extra help and devices to assist with lifting. Throughout her employment, Petitioner was considered a diligent employee that performed her duties well. When Petitioner was hired, Bay offered her the opportunity to enroll in all of the benefits in its employment benefit plan, including disability insurance. Petitioner elected to enroll in life, health, dental and vision insurance. At the time of her hire, the only disability insurance offered to any employee by Bay was insurance under a MetLife group policy for Disability Income Insurance: Long Term Benefits issued to Signature Payroll. There was no evidence of any short-term disability insurance benefit offered to any of Bay's employees other than the MetLife policy described above. Given that there was no short-term disability insurance available to Bay's employees, it was not a discriminatory act for Respondent to not offer Petitioner short-term disability insurance. The insurance was simply not part of the benefit package offered by Bay at the time Petitioner was hired and Petitioner did not elect to enroll in either short term or long-term disability insurance. Petitioner did not change her enrollment elections during the 90-day period after her employment. She was therefore not eligible to add disability insurance to her benefit plan until late 2008. In November or December 2007, Ms. Mills sometimes worked with another CNA named Courtney Preston. At the time, Ms. Preston was pregnant. When Petitioner asked for some help lifting a resident, Ms. Preston told Petitioner that she was on light-duty due to her pregnancy. The charge nurse for the unit, who is the unit supervisor for any given shift, confirmed that Ms. Preston was on light-duty. However, the charge nurse had no authority to place an employee on light-duty. Additionally, there was no evidence in Ms. Preston?s personnel file that she had officially been placed on light-duty by anyone with the authority to do so. At best, it appears that Ms. Preston was simply being treated kindly by her fellow employees and was not officially placed on light-duty by a person with authority to do so. Ms. Preston eventually lost her baby while Petitioner was employed at Bay. The evidence was not clear as to the cause of Ms. Preston's miscarriage. However, the evidence established that Ms. Preston had a risky pregnancy of which the staff at Bay was aware. Later, Ms. Preston again became pregnant and again had a risky pregnancy. She was counseled on several occasions for her excessive absenteeism. In order to help Ms. Preston with her absenteeism, she was offered on-call status with less duty hours if she wanted it. Eventually, sometime after April 30, 2008, Bay terminated Ms. Preston for excessive absences caused, in part, by her pregnancy. On the other hand, Ms. Preston was clearly accommodated during both of her pregnancies while she was employed at Bay. In January or February 2008, Petitioner became pregnant. On February 15, 2008, Petitioner visited her doctor and was given a doctor?s note to limit her lifting to no more than 20 pounds even though she was not having any difficulty performing her job duties. The evidence was unclear as to why the doctor placed Petitioner under lifting restrictions since the doctor, within one to two weeks, raised those restrictions to not over a minimum of 50 pounds after Petitioner told him about the impact the lower-weight restrictions had on her job with Bay. On February 16, 2008, Petitioner gave a copy of the doctor?s note with the 20-pound lifting restrictions to the personnel department. On February 18, 2008, she discussed the lifting restrictions with her supervisors, Cathy Epps and Shannon Guy. They thought light-duty work could be arranged. On February 20, 2008, she discussed the lifting restrictions with David Kendrick, the corporate director of human resources, who was visiting Bay that day. He also thought that some light- duty work might be arranged. However, all of these supervisors wanted other higher-level corporate officials to have input on whether light-duty work was available. Eventually, the corporate legal counsel and the corporate risk manager were consulted on the issue of whether light-duty work was available. Petitioner did not receive light-duty work. Instead, on February 21, 2008, Petitioner was called into a meeting with Cathy Epps and Shannon Guy. Ms. Guy was very upset and tearfully told Petitioner that no light-duty was available and that Petitioner was terminated. Ms. Guy was upset because Petitioner was a good employee that she did not want to lose. Ms. Epps also wanted to keep Petitioner as an employee. Ms. Guy explained that someone from the corporate office decided Petitioner was terminated because they were afraid Petitioner was too much of a risk to employ since she could not meet the minimum-lifting requirements and "as a CNA she would be expected to assist residents, and . . . if we had a resident who was falling and she would be presented with a choice of either go to help the resident or run the risk of hurting herself or, . . . not helping the resident and, . . . allowing something to happen." Ms. Guy told Ms. Mills that she could return to work once her pregnancy was over. Importantly, Petitioner had been performing her normal duties without any problems or need for assistance throughout the several days that the corporate office was making a decision about whether light-duty work was available to Petitioner. This activity alone shows Petitioner was still qualified for her job since she continued to perform her job duties. During this period, no one from the corporate office or on the facility's premises expressed any concern that Petitioner continued to perform her regular job duties. Clearly, no one was relying on the restrictions in the doctor's note. There was no evidence to suggest that Petitioner would ignore any resident's needs while she was pregnant or would try to protect herself more than any other employee at the facility did. As indicated, Petitioner was simply terminated. There was no consideration given to whether she could still perform her duties as she clearly could do. She was not offered any leave time or even allowed to request leave as mentioned in Section 8 of the Stakeholder Handbook. The abruptness of the termination when Petitioner could still perform her job duties and the failure to offer leave were discriminatory acts on the part of Bay against Petitioner based on her pregnancy. Around February 29, 2008, eight days after her termination, Petitioner called David Kendrick to ask him about receiving light-duty. He told her that light-duty was available only for employees injured on the job. This policy is neutral on its face and there was no evidence that demonstrated the restriction of light-duty work to employees who are injured on the job had a disparate impact on pregnant women. Petitioner told Mr. Kendrick that her doctor had raised her lifting restrictions to 50 pounds. However, the new restriction did not satisfy the corporate perception that she was too much of a risk and could not perform her required duties even though she met the minimum job qualifications and had been a good employee. In ignoring the fact that she was qualified to perform her duties, Mr. Kendrick's reasoning is further evidence of Respondent's earlier intent to discriminate against Petitioner based solely on her pregnancy. Mr. Kendrick also advised Petitioner that she could not obtain the disability insurance employee benefit because she had not been an employee for more than a year and had not elected to enroll in the coverage during the 90-day period from when she was hired. There was no evidence that demonstrated Bay's denial of disability insurance coverage to Petitioner was a discriminatory act since Petitioner, like all of Bay's employees, had been offered the insurance when she was hired, had not selected the insurance as a benefit within 90 days after her hire date, and could not make changes to her benefit plan until sometime in late 2008. On or about April 28, 2008, Ms. Mills filed a complaint with FCHR/EEOC alleging gender discrimination based on sex due to her pregnancy. In early May 2008, Ms. Mills suffered a miscarriage and lost her baby. Sometime around June 1, 2008, a few weeks after her miscarriage, Ms. Mills returned to Bay and met with Cathy Epps and Gayle Scarborough. She asked to be rehired since she was no longer pregnant. Both were aware of the Petitioner's pending EEOC/FCHR complaint. Ms. Scarborough told Petitioner that she could possibly be rehired if she dropped her EEOC claim. Later, Ms. Scarborough called Ms Guy and spoke with her about rehiring Petitioner. Ms. Guy asked David Kendrick, who inquired further in the corporation. Ms. Guy does not recall receiving a response to her inquiry. However, she later called Petitioner asking if she would display a negative attitude if she were rehired and asking if she had dropped her EEOC claim. Petitioner was so discouraged by the phone call that she did not pursue getting rehired further. Because she was not rehired by Bay, Petitioner was out of work for an extended period of time. She eventually was hired and has continued her employment with a variety of employers. She was and is required to travel some distance to maintain her employment at greater expense than if she were employed in Port St. Joe. Because she lives in Port St. Joe, she wants to be reinstated to her earlier position. Petitioner is entitled to reinstatement as a CNA and to back wages and benefits until she is reinstated, less any unemployment compensation, wages and benefits earned during said period.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations issue a Final Order requiring: Reinstatement of Petitioner's employment with Respondent with all seniority and benefits as if she had not been terminated; and Payment of lost wages to Petitioner from the date of termination to reinstatement less any unemployment compensation, wages and benefits she received during the same period. DONE AND ENTERED this 7th day of October, 2010, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER 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 7th day of October, 2010. COPIES FURNISHED: Sandra Adams, Esquire Home Quality Management 2979 PGA Boulevard Palm Beach Gardens, Florida 33410 Ashley Nicole Richardson, Esquire McConnaughhay, Duffy, Coonrod Pope & Weaver, P.A. 1709 Hermitage Boulevard, Suite 200 Tallahassee, Florida 32302 Cecile M. Scoon, Esquire Peters & Scoon 25 East Eighth Street Panama City, Florida 32401 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Larry Kranert, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
The Issue Whether the Petitioner, Kellie Brown, on behalf of her minor son, Brandon Brown, is entitled to payment of the Health Insurance Subsidy on the retirement account of Corporal Arthur "Donnie" Brown, deceased, for the period of February 1, 1994, through and including September 1996.
Findings Of Fact Kellie M. Brown (Petitioner) is the natural mother and guardian of Brandon D. Brown, a minor child, whose deceased father was Donnie Brown. At the relevant times, Donnie Brown was employed by the Orange County Sheriff's Office (Sheriff's Office) as a deputy with the rank of Corporal, and was a compulsory member of the Florida Retirement System (FRS). On or about January 16, 1994, Cpl. Brown disappeared from public view and did not report for duty with the Sheriff's office. His last day of work was listed as January 15, 1994. He was subsequently terminated from his position for failure to report for duty. His body was later found on March 15, 1994, and after examination by the county medical examiner, it was determined that his date of death was January 15, 1994. Based on this determination, survivorship benefits became available to Brandon Brown as if his father had died while still employed with the sheriff's office. The Petitioner is the former spouse of the deceased. After the discovery of the body, the Sheriff's office offered to assist Petitioner in the completion and transmission of the necessary paperwork to obtain available benefits. The Sheriff's Office enrolled Brandon under its health insurance plan for one year at no cost to the Petitioner. In March 1994, Petitioner visited the personnel office of the Sheriff's Office. She was given many forms and applications to sign in order to obtain benefits for her son. Petitioner testified that one of the forms in the packet of material was the Health Insurance Subsidy (HIS) application form of the Respondent. She claimed it was given to her in a manila folder by Barbara Hill, a personnel specialist with the Sheriff's Office. Petitioner later had another conversation with Ms. Hill in which the Petitioner wanted to know where the completed form was and insisted that the HIS form was in the material given to her by Ms. Hill. Petitioner then stated that Ms. Hill called the offices of the Respondent in Tallahassee and was told that her son was not eligible for the HIS payment. Thereafter, Petitioner stated that she did not pursue the issue. On behalf of her minor son, the Petitioner applied for and began receiving a FRS retirement benefit on the account of Cpl. Brown, effective July 1994 and retroactive to February 1994. After Brandon's name was added to the retired payroll, in July 1994, Petitioner was notified by mail from the Respondent that Brandon was also eligible for payment of a HIS, which is a benefit separate from the retirement benefit that is paid to retirees and their beneficiaries to help offset the cost of health insurance. Petitioner did not return the HIS application form. Notification of new retirees after their name has been added to the retired payroll about their eligibility for the HIS is the normal and customary practice of Respondent. The HIS application form of Respondent is not given to the employing agency. Therefore, the Sheriff's office would not have a copy of the form to give to Petitioner. Instead, the HIS form is sent by the Respondent directly to the retired member or the beneficiary after the actual retirement. The form is sent out at the same time or shortly after the notice to the retiree that he or she has been placed on the retired payroll. Brandon Brown was added to the retired payroll in July 1994, retroactive to February 1994, and the notification letter form was sent to Petitioner in July 1994. The HIS form would have been sent at that time or shortly thereafter. In early 1997, Barbara Hill reviewed the roll of retirees because of a reengineering program instituted by the Sheriff's office. She found three widows who were not being paid the HIS benefits by Respondent, including Petitioner. She contacted all three women at the request of the Sheriff's office. Respondent sent information about the program to the women. As the result of conversations between Petitioner and Barbara Hill of the Sheriff's office, Petitioner was sent an HIS application form by Respondent, which she completed and returned to the Division on April 23, 1997. Brandon was added to the HIS payroll retroactive to October 1996. The amount of the benefit is $51.99 per month. The Sheriff's office has a health insurance subsidy program for its retired members that is similar to the FRS HIS program and is the same dollar amount as the HIS benefit paid by FRS. However, it is paid only to members and not to beneficiaries so that a beneficiary like Brandon would receive the FRS HIS payment but would not receive the Sheriff's Office HIS payment. The Respondent makes regular efforts to notify retirees of the various benefits offered to them under FRS. As it applies to this case, the Respondent issues a pamphlet entitled "After You Retire" on a periodic and ongoing basis. The then current edition was issued in October 1993, and provided on page 7, information about the HIS. The pamphlet stated as follows: The health insurance subsidy (HIS) is a monthly supplemental payment that you may be eligible to receive if you have health insurance coverage. This monthly payment, which you must apply for, is figured by multiplying your total years of creditable service at retirement (up to a maximum of 30 years) by $3. The minimum monthly subsidy is $30 and the maximum is $90. After your name is added to the retired payroll, an application for the health insurance subsidy, Form HIS-1, will be mailed to you. The completed application must be returned to the Division of Retirement within six (6) months of the date your retirement benefits commenced if you wish to receive the subsidy retroactive to your retirement date. If you fail to return the form within six (6) months, retroactive subsidy payments will be limited to a maximum of six (6) months. It is your responsibility to obtain certification of health insurance coverage and apply for the health insurance subsidy. (emphasis in quoted material) The Respondent also issued a "Retiree Newsletter" in December 1994, and informed all retirees about updates to the HIS program. On page 3, the Newsletter stated: The Health Insurance Subsidy (HIS) is an extra payment that is added to your monthly retirement benefit to help you pay the cost of health insurance. To be eligible for receive the HIS payment, retirees must have health insurance, Medicare or Champus. The subsidy payment which you must apply for, is $3 per month for each year of creditable service you had earned at retirement. The minimum monthly subsidy is $30 and the maximum is $90. If you believe you are eligible for the subsidy but are not currently receiving it, you should call or write the Disbursement Section and request Form HIS-1, Health Insurance Subsidy Certification. If you apply for the HIS after you retire, you will receive retroactive HIS payments limited to a maximum of six months, or the number of months you have been retired, if less than six months. (emphasis in quoted material) Petitioner was mistaken in her belief that the application form for FRS HIS benefits was provided to her by the Sheriff's Office in March 1994.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be issued by the Division of Retirement determining that the Petitioner, Kellie Brown, is not entitled to the payment of the Health Insurance Subsidy for her minor son on the retirement account of Corporal Arthur "Donnie" Brown, deceased, for the period of February 1, 1994, through and including September 1996. RECOMMENDED this 17th day of November, 1997, at Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 17th day of November, 1997. COPIES FURNISHED: Kellie M. Brown, pro se 12868 Downstream Circle Orlando, Florida 32828 Stanley M. Danek, Senior Attorney Department of Management Services Division of Retirement 2639 North Monroe Street, Building C Tallahassee, Florida 32399 Thomas J. Pilacek, Esquire Thomas J. Pilacek & Associates 601 South Lake Destiny Road Maitland, Florida 32751 Paul A. Rowell, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 A. J. McMullian, III, Director Department of Management Services Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560
The Issue The issue is whether Respondent was an employee engaged in the construction industry and required to obtain workers' compensation insurance while working on the roof of the Myakka Animal Clinic and, if so, what penalty should be imposed.
Findings Of Fact On August 24, 1998, Petitioner's investigator observed Respondent working on the roof of the Myakka Animal Clinic in Venice, Florida. At the time, Respondent was regularly employed by Paradise Roofing, Inc., where he had an exemption from workers' compensation insurance coverage. He has never previously been guilty of a violation of the workers' compensation laws. The contract price was $800. However, the evidence is conflicting as to the identity of the party that entered into the contract with the Myakka Animal Clinic. The veterinarian testified that her understanding of the agreement was that Respondent was to do the work, but, if any problems arose, he was not alone, and she could go to Paradise Roofing, Inc., to ensure that the labor and materials were satisfactory. Although there are other indications in the record that Respondent may have been working on his own on this job, there is sufficient conflict in the evidence that Petitioner has failed to prove that Respondent was doing the job as a self- employed person, rather than an exempt employee of Paradise Roofing, Inc. Respondent's understanding of the contractual relationship carries less weight than the veterinarian's understanding of this relationship.
Recommendation It is RECOMMENDED that the Division of Workers' Compensation enter a final order dismissing the Notice and Penalty Assessment Order and any related stop work order. DONE AND ENTERED this 2nd day of April, 1999, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 2nd day of April, 1999. COPIES FURNISHED: Edward A. Dion, General Counsel Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Mary Hooks, Secretary Department of Labor and Employment Security 303 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Louise T. Sadler, Senior Attorney Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Eric Kristiansen 3750 Aba Lane North Port, Florida 34287
