Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: In early January, 1987, the petitioners filed with the respondent their application for authority to organize a state-chartered bank to be located in Sarasota. Notice of receipt of this application was published in the Florida Administrative Weekly on January 16, 1987. The application was deemed complete in March or April of 1987. By an "Administrative Notice for Public Formal Hearing" dated September 18, 1987, and received by the Division Of Administrative Hearings on September 22, 1987, the respondent Department of Banking and Finance, Division of Banking, noticed its intent to initiate a formal hearing concerning the issue of whether to grant or deny the application. That proceeding was assigned to the undersigned as the designated Hearing Officer as Case No. 87-4417. As a result of various preliminary motions filed in Case No. 87-4417, the Department was ordered to file a more definite statement of the issues and/or statutory criteria in dispute between the parties and the final hearing was scheduled for December 16 and 17, 1987. In response, the Department filed an "Amended Administrative Notice for Public Formal Hearing," citing as authority therefore, Rule 3C-9.004, Florida Administrative Code. Due to appellate court proceedings, the December 16 and 17, 1987, final hearing was cancelled and rescheduled for the week commencing February 29, 1988. On January 6, 1988, the petitioners filed with the Division of Administrative Hearings its petition for a determination of the invalidity of Rule 3C-9.004(3), Florida Administrative Code, and the final hearing was held on February 5, 1988. The parties agreed that the final hearing in Case No. 87-4417, regarding the merits of the petitioners' application for a bank charter, should be continued pending a resolution of the instant rule-challenge proceeding. While the State of Florida has enjoyed a period of relative economic health in comparison to other regions of the country, in the past three years there have been a growing number of financial institutions experiencing difficulties related primarily to their financial condition and solvency. During this time period, the Department has found it necessary to close seven commercial banks and six savings and loan associations. Accordingly, when applications for new financial institutions are filed, the Department attempts, during the application process, to ensure the probability of success of the proposed institution. This is done through a period of investigation by the Department's trained financial investigators of all the material submitted by applicants, particularly with respect to the individuals who are named as proposed directors and officers. During the course of the Department's investigation, information frequently is discovered which is at some variance with the information contained in the application. To the extent that it is possible to do so, the Department attempts to reconcile any discrepancies between the application contents and the products of its investigation through informal dialogue or correspondence with the applicant. In instances where there may be questions of credibility on the part of the applicant, that type of informal resolution may not be feasible. The procedural processing of bank charter applications is specifically governed by Section 120.60(5), Florida Statutes, and Chapter 3C-9, Florida Administrative Code. As pertinent to the issues in this proceeding, those statutory and regulatory provisions require the Department to have published in the Florida Administrative Weekly notice of an application within 21 days of its receipt. Section 120.60(5)(a)1; Florida Statutes; Rule 3C-9.003(1), Florida Administrative Code. Within 21 days of publication of notice, "any person may request a hearing.... however, the failure to request a hearing within 21 days of publication of notice shall constitute waiver of any right to a hearing." Section 120.60(5)(a)2, Florida Statutes. Any petition for hearing filed before an application is received or more than 21 days after the publication of notice is void. Rule 3C-9.003, Florida Administrative Code. While all information in support of an application is required to be submitted with the original filing, the Department has the authority to request additional information and ask for the correction of errors or omissions within 30 days of its receipt of the original application. Thereafter, the applicant has 60 days to respond to the Department's request. Rule 3C-9.002(3), Florida Administrative Code. Every application, except for those involving foreign nationals, is required to be approved or denied within 180 days after receipt of either the original application or the timely requested additional information or correction of errors or omissions. Applications not approved or denied within that 180- day period or within 30 days after the conclusion of a public hearing on the application, whichever date is latest, are deemed approved. Section 120.60(5)(c), Florida Statutes. Rule 3C- 9.012(i), Florida Administrative Code. The procedures with regard to financial institutions involving foreign nationals differ in that the Department is required to request that a public hearing be conducted and the 180-day period for approval or denial is extended to a period of one (1) year. Section 120.60(5)(d), Florida Statutes. The statute is silent with respect to the time period within which the Department must request a hearing on applications involving foreign nationals. More often that not, the Department does request additional information from an applicant subsequent to the filing of the initial application. Since the Department has 30 days within which to request this information and the applicant has another 60 days to supply it, the additional information typically is received by the Department long after it has published notice of the application and long after the 21-day point of entry to request a hearing. The challenged rule is contained as a subsection of the rule entitled "Petition for Public Hearing." After providing that petitions for public hearing must be filed within 21 days of publication of notice and that petitions not received within that time are void, subsections (1) and (2) of Rule 3C- 9.004, subsection (3) provides that "The department may initiate a hearing on its own motion, at any time regardless of whether there has been a petition." It was the opinion of the Director of the Division of Banking that the purpose of the challenged rule was to afford the Department the opportunity for a hearing in those instances where information is discovered during the investigation process or where additional information is supplied subsequent to 21 days after publication of notice of the initial application. Generally, the character, credit worthiness and financial responsibility of the organizers, officers or directors of a proposed financial institution is determined toward the end of the application and investigation process, and not within the 21- day period after publication of notice of the initial application. According to the Director, if the Department were unable to request a hearing subsequent to that 21-day period, it would be compelled to request a hearing within that 21-day period every time an application is filed. An employee from the Division of Banking for approximately ten years could recall only one occasion when the Department had requested a hearing after the passage of 21 days from the publication of notice. In that one instance, a foreign national was involved in the application.
The Issue Whether the Respondent, BankAtlantic, committed an act of discrimination in violation of Chapter 760, Florida Statutes, in relation to its treatment of the Petitioner, Ethel Rials.
Findings Of Fact At all times material to allegations of this case, the Petitioner, Ethel Rials, was an employee of BankAtlantic. The Petitioner worked in the Loan Servicing Department and was responsible for monitoring outstanding loans. She is black. The Loan Servicing Department was comprised of two divisions: standard loans and complex loans. Alice Moore supervised the standard loan division. Barbara Halprin was the Senior Vice President and Manager of the entire Loan Servicing Department. She evaluated the employees and, in August 2000, gave the Petitioner an excellent evaluation. At that time, the Petitioner exceeded the performance expectations of her employer. Subsequently, the Petitioner was promoted to the position of lead complex loan servicing specialist. Again, when the Petitioner was evaluated, her work exceeded the performance expectations of the employer. The Petitioner continued to perform her work responsibilities in an excellent fashion through September 2001. Sometime in 2002 it was announced that Alice Moore intended to retire at the end of the year. Although Ms. Moore did not recommend the Petitioner to assume her role as the supervisor in standard loan servicing, other BankAtlantic employees did. In fact, Ms. Halprin determined the Petitioner to be the most qualified and intended to promote the Petitioner to the Moore position. She advised the Petitioner accordingly. Petitioner acknowledged that she would be interested in the promotion and, until the fall of 2002, Ms. Halprin presumed the promotion would follow as planned. In November 2002, the Petitioner took sick days on November 20-21. She was scheduled for vacation days and was off November 22 and 25. When the Petitioner returned to work November 26, 2002, she alleged she had been the victim of racial discrimination and hostilities. On November 26, 2002, the Petitioner told Ms. Halprin of incidents that she claimed evidenced a hostile work environment. For example, the Petitioner claimed that on one occasion someone had spilled coffee in front of her desk (a large volume) such that the mess made her work area difficult to use. Second, the Petitioner claimed that on one occasion someone had left a note for her with "KKK" written on it. Third, the Petitioner claimed that someone had spit on her desk. And, fourth, the Petitioner claimed that an employee (Ms. Cass) had attempted to publicly humiliate and harass the Petitioner by implying work errors were attributable to the Petitioner. It is undisputed a large quantity of coffee was spilled in front of the Petitioner's desk on one occasion. Who spilled the coffee is unknown. The alleged "KKK" note was not produced or offered into evidence. If written, it is unknown who wrote the "KKK," when it was written, or what it was intended to mean. There is no evidence that anyone spit on the Petitioner's desk. There is no evidence that Ms. Cass intended to humiliate or embarrass the Petitioner when errors were identified. Unknown persons in the Loan Department committed errors that the Loan Servicing Department was required to identify and correct. Although generally found and corrected without issue, Ms. Cass did not like to deal with errors. The Petitioner misapprehended her comments. The comments complained of occurred on one occasion. On November 27, 2002, the Petitioner resigned her position with BankAtlantic and claimed she could not continue in the hostile work environment. The Respondent timely submitted all of the Petitioner's claims to its personnel office for investigation, but the Petitioner terminated employment without waiting for the conclusion of the review.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing the Petitioner's claim. DONE AND ENTERED this 27th day of August 2004, in Tallahassee, Leon County, Florida. COPIES FURNISHED: J. D. PARRISH 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 27th day of August, 2004. Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Angelo M. Filippi, Esquire Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P. A. 200 East Broward Boulevard, Suite 1900 Fort Lauderdale, Florida 33301 Ethel Rials 3832 Baymeadows Road, No. 211 Jacksonville, Florida 32217 Victoria Bloomenfeld Bankatlantic 1750 East Sunrise Boulevard Fort Lauderdale, Florida 33304
The Issue Whether Respondent Corporation, Southern Insight, Inc., failed to secure payment of workers' compensation coverage as required by Chapter 440, Florida Statutes, and the Florida Insurance Code, and if so, whether the Department of Financial Services, Division of Workers' Compensation (Department) has lawfully assessed the penalty against Respondent in the amount of $27,805.11.
Findings Of Fact The Department is the state agency responsible for enforcing Section 440.107, Florida Statutes, which requires that employers secure the payment of workers' compensation coverage for their employees and otherwise comply with the workers' compensation coverage requirements under Chapter 440, Florida Statutes. Respondent has been a Florida corporation, actively involved in the construction industry providing framing services, during the period of February 16, 2006, through August 17, 2007 (assessed penalty period). At all times material, Respondent has been an "employer," as defined by Chapter 440, Florida Statutes. At all times material, John Cauley has been Respondent's president and sole employee. At no time material did Respondent obtain workers' compensation insurance coverage for John Cauley. On August 17, 2007, Department Investigator Lynise Beckstrom conducted a random workers' compensation compliance check of a new home construction site in Palm Coast, Florida. At that time, Ms. Beckstrom observed four men, including John Cauley, framing a new home. Utilizing the Department's Compliance and Coverage Automated System (CCAS) database, which contains all workers' compensation insurance policy information from the carrier to an insured and which further lists all the workers' compensation exemptions in the State of Florida, Ms. Beckstrom determined that for the assessed penalty period, Respondent did not have in effect either a State of Florida workers' compensation insurance policy or a valid, current exemption for its employee, John Cauley. During the assessed penalty period, Respondent paid remuneration to its employee, John Cauley. John Cauley admitted that during the assessed penalty period he was not an independent contractor, as that term is defined in Section 440.02(15)(d)(1), Florida Statutes. Section 440.05, Florida Statutes, allows a corporate officer to apply for a construction certificate of exemption from workers' compensation benefits. Only the named individual on the application is exempt from workers' compensation insurance coverage. On or about April 15, 2006, John Cauley, as Respondent's President, applied for such an exemption. That application was denied. Mr. Cauley received neither an exemption card nor a denial of exemption from the Department. During the assessed penalty period, Respondent was a subcontractor of the contractor, Mass Builders, Inc. 9. Sections 440.107(3) and 440.107(7)(a), Florida Statutes, authorize the Department to issue stop-work orders to employers unable to provide proof of workers' compensation coverage, including proof of a current, valid workers' compensation exemption. Based on the lack of workers' compensation coverage and lack of a current, valid workers' compensation exemption for Respondent corporation's employee, John Cauley, the Department served on Respondent a stop-work order on August 17, 2007. The stop-work order ordered Respondent to cease all business operation for all worksites in the State of Florida. Immediately upon notification by Investigator Beckstrom of his lack of valid exemption, Mr. Cauley submitted a new exemption application, which was granted, bringing Respondent corporation into compliance. However, in order to have the stop-work order lifted so that he can work as a corporation again, Mr. Cauley must pay a percentage of the penalty assessment and enter into a payment plan with the Agency. In the meantime, Mr. Cauley cannot pay the percentage required by the Department if he cannot find work as someone else's employee, which he had been unable to do as of the date of the hearing. Herein, it is not disputed that Respondent was inadvertently out of compliance. Mr. Cauley seeks merely to reduce the amount of the penalty assessment so that removal of the stop-work order against Respondent corporation can be negotiated. On the day the stop-work order was issued, Investigator Beckstrom also served Respondent with a "Request for Production of Business Records for Penalty Assessment Calculation," in order to determine a penalty under Section 440.107(7), Florida Statutes. Pursuant to Florida Administrative Code Rule 69L-6.015, the Department may request business records for the three years preceding the date of the stop-work order. Logically, however, Ms. Beckstrom only requested business records dating back to February 14, 2006, Respondent's date of incorporation in Florida. The requested records included payroll, bank records, check stubs, invoices, and other related business records. Ms. Beckworth testified that, "Business records requests usually consist of payroll, bank records, taxes, check stubs, invoices, anything relating to that business." This is a fair summation of a much more detailed listing of records required to be kept pursuant to Rule 69L-6.015, Florida Administrative Code, which was in effect at all times material. In response to the Request for Production, Respondent provided Southern Insight Inc.'s corporate bank statements for the assessed penalty period, detailing corporate income and expenses through deposits and bank/debit card purchases. However, Investigator Beckworth did not deem the corporate bank statements produced by Respondent to be an adequate response, and she did not base her calculations for penalty purposes thereon. Mr. Cauley expected that the Department would, and has argued herein that the Department should, have subtracted from the total deposits to Respondent's corporate account (the minuend) the total corporate business expenses (the subtrahend) in order to determine the Respondent's payroll to Mr. Cauley (the difference), upon which difference the Department should have calculated his workers' compensation penalty. In fact, the Department, through its investigator, did not utilize the total amount deposited to Respondent's corporate account, because some deposits "could" have come from a family member of Mr.Cauley. That said, there are no individual names on the account; the account is clearly in the name of the Respondent corporation; and there is no proof herein that any deposits to Respondent's corporate bank account were derived from anyone other than Mr. Cauley, as Respondent's President. Ms. Beckstrom testified that if the Agency had accepted the total of the deposits to this corporate account for the assessed penalty period as Respondent's payroll, the result would have been more than the total amount actually determined by her to constitute Mr. Cauley's payroll, but that statement was not demonstrated with any specificity. The Department also did not use any of the subtracted amounts shown on the corporate bank statements, even though the bank statements listed the same information as would normally be found on a corporate check, including the transaction number, recipient of the money, the date, and the amount for each bank/debit card transaction. All that might be missing is the self-serving declaration of the check writer on the check stub as to what object or service was purchased from the recipient named on the bank statement. Ms. Beckstrom testified that if Mr. Cauley had provided separate receipts for the transactions recorded on the bank statements as bank/debit card entries, she could have deducted those amounts for business expenses from the corporation's income, to arrive at a lesser payroll for Mr. Cauley. In other words, if Mr. Cauley had provided separate receipts as back-up for the transactions memorialized on the corporate bank statements, the Department might have utilized the bank/debit card transactions itemized on Respondent's corporate bank statements as the amount deducted for Respondent corporation's business expenses, so as to obtain the payroll (difference) paid to Mr. Cauley. It is the amount paid to Mr. Cauley as payroll, upon which the Department must calculate the workers' compensation penalty. The reason Ms. Beckworth gave for not using Respondent's bank statements was that without more, the transactions thereon might not be business expenses of the corporation. However, she also suggested that if, instead of submitting bank/debit card statements, Mr. Cauley had submitted checks payable to third parties and if those corporate checks showed an expenditure for a deductible business expense, like motor vehicle fuel, she might have accepted the same expenditures in check form (rather than the statements) in calculating Respondent's payroll. Ultimately, Ms. Beckworth's only reasons for not accepting the bank statements showing recipients, such as fuel companies like Amoco, was "agency policy," and her speculation that Amoco gas could have been put into a non-company truck or car. She also speculated that a prohibition against using bank statements showing deductions might possibly be found in the basic manual of the National Council on Compensation Insurance (NCCI) or in a rule on payrolls (Rule 69L-6.035) which became effective October 10, 2007, after the assessed penalty period. However, the NCCI manual was not offered in evidence; a rule in effect after all times material cannot be utilized here; and no non-rule policy to this effect was proven-up. In addition to not using Respondent's bank statements to calculate a penalty, the Department also did not "impute" the statewide average weekly wage to Respondent for Mr. Cauley. Ms. Beckworth testified that to impute the statewide average weekly wage would have resulted in a higher penalty to Respondent. As to the amount of the statewide average weekly wage, she could only say she thought the statewide average weekly wage was "about $1,000.00". Instead of using Respondent's corporate bank statements or imputing the statewide average weekly wage, Investigator Beckstrom determined that Mass Builders, Inc., was the prime contractor on the jobsite being worked by Respondent, and that Mass Builders, Inc., had not produced proof of securing workers' compensation coverage for Respondent, its sub- contractor. Therefore, she sought, and received, Mass Builders, Inc.'s "payroll records" of amounts paid by the prime contractor, Mass Builders, Inc., to Respondent Southern Insight, Inc., via a separate site-specific stop-work order and business records request directed to Mass Builders, Inc. The only "payroll records" that Mass Builders, Inc., offered in evidence were Mass Builders, Inc.'s check stubs, which Ms. Beckstrom utilized to come up with an income/payroll amount for Respondent Southern Insight, Inc. Mr. Cauley did not know until the hearing that Mass Builders, Inc.'s check stubs had been utilized in this fashion by the Department. However, he ultimately did not dispute the accuracy of the check stubs and did not object to their admission in evidence. In calculating Respondent's total payroll for the assessed penalty period, Investigator Beckstrom considered only the total of the check stubs from Mass Builders, Inc. It is unclear whether or not she reviewed Mass Builders, Inc.'s actual cancelled checks. No one from Mass Builders, Inc., appeared to testify that the stubs represented actual cancelled checks to Respondent or Mr. Cauley. The Department also did not deduct from the total of Mass Builders, Inc.'s check stubs any of the bankcard deductions made by John Cauley from Respondent's corporate bank account, for the same reasons set out above. Mr. Cauley testified, without refutation, that some of the expenses noted on Respondent's bank statements, paid by bank/debit card, most notably expenses for gasoline for his truck, constituted legitimate business expenses of Respondent corporation, which should have been deducted from either the bank statement's total income figure or from the amounts paid by Mass Builders, Inc., to Respondent corporation, before any attempt was made by the Department to calculate the amount paid by Respondent corporation to Mr. Cauley as payroll. Utilizing the SCOPES Manual, which has been adopted by Department rule, Ms. Beckstrom assigned the appropriate class code, 5645, to the type of work (framing) performed by Respondent. In completing the penalty calculation, Ms. Beckstrom multiplied the class code's assigned approved manual rate by the payroll (as she determined it) per one hundred dollars, and then multiplied all by 1.5, arriving at an Amended Order of Penalty Assessment of $27,805.11, served on Respondent on August 22, 2007. Subsequent to the filing of its request for a disputed-fact hearing, in an effort to have the penalty reduced, Respondent provided the Department with additional business records in the form of portions of Southern Insight, Inc.'s 2006 and 2007 U.S. Income Tax Returns for an S Corporation (2006 and 2007 income tax returns). However, neither itemized deductions nor original receipts for Respondent's business expenses were provided to Ms. Beckworth at the same time, and she determined that without itemized deductions, there was no way to calculate Respondent's legitimate business deductions so that they could be deducted from the total of Mass Builders, Inc.'s, check stubs to determine a lesser payroll applicable to Mr. Cauley. Investigator Beckstrom testified that the tax returns, as she received them, did not justify reducing Respondent's payroll used in calculating the penalty. The vague basis for this refusal was to the effect that, "The Internal Revenue Service permits different business deductions than does the Department." Itemization pages (schedules) of Respondent's income tax returns were not provided until the de novo disputed-fact hearing. Confronted with these items at hearing, Ms. Beckworth testified that ordinary business income is not used by the Department to determine payroll, but that automobile and truck expense and legitimate business expenses could be deducted, and that she would probably accept some of the deductions on Respondent's 1020-S returns. Also, if Respondent's bank statement corresponded to the amount on the tax form, she could possibly deduct some items on the bank statements as business expenses before reaching a payroll amount. However, she made no such calculations at hearing. Ms. Beckworth testified that if she had Respondent's checks or "something more" she could possibly deduct the motor fuel amounts. Although Respondent's 2006, and 2007, income tax returns reflected Respondent corporation's income minus several types of business deductions, Ms. Beckstrom testified that the tax deductions were not conclusive of the workers' compensation deductions, because the Internal Revenue Service allows certain deductions not permissible for workers' compensation purposes, but she did not further elaborate upon which tax deductions were, or were not, allowable under any Department rule. She did not "prove up" which deductions were not valid for workers' compensation purposes. Respondent's 2006, tax deductions for "automobile and truck expense" were $2,898.00, and for 2007, were $4,010.00. There was no further itemization by Respondent within these categories for fuel. Other business deductions on the tax returns were also listed in categories, but without any further itemization. The only supporting documentation for the tax returns admitted in evidence was Respondent's bank statements. Respondent believed that the tax returns and possibly other documentation had been submitted before hearing by his accountant. It had not been submitted. The Department never credibly explained why it considered a third party's check stubs (not even the third party's cancelled checks) more reliable than Respondent's bank statements or federal tax returns. Even so, at hearing, the Department declined to utilize the business deductions itemized on Respondent's tax forms or any bank/debit card deductions on its bank statements so as to diminish the amount arrived-at via the Mass Builders, Inc.'s check stubs, and ultimately to arrive at a difference which would show a lesser payroll to Mr. Cauley. Although Mr. Cauley's questions to Ms. Beckstrom suggested that he would like at least all of the fuel company deductions on his bank statements to be considered as business deductions of Respondent Southern Insight, Inc., and for those fuel company expenditures to be subtracted from either the total deposits to the corporate bank account or deducted from the payroll total as calculated by Ms. Beckstrom from Mass Builders, Inc.'s check stub total, he did not testify with clarity as to which particular debits/charges on the bank statements fell in this category. Nor did he relate, with any accuracy, the debits/charges on the bank statements to the corporate tax returns. Upon review by the undersigned of Respondent's bank statements admitted in evidence, it is found that the bulk of Respondent's bank/debit card deductions during the assessed penalty period were cash withdrawals or ATM debits which cannot be identified as being paid to fuel companies or purveyors of construction material. As Investigator Beckstrom legitimately observed, "Big Al's Bait" is not a likely source of motor fuel. "Publix" and "Outback Steak House" are likewise unlikely sources of fuel or construction material, and cannot stand alone, without some other receipt to support them, as a legitimate corporate business entertainment expense. Other debits/charges on the bank statements are similarly non-complying, ambiguous, or defy categorization. However, the undersigned has been able to isolate on the corporate bank statements purchases from the known fuel distributors "Amoco" and "Chevron" on the following dates: 7/09/07, 7/10/07, 6/04/07, 6/04/07, 6/11/07, 5/03/07/ 4/09/07, 4/10/07, 4/13/07, 4/16/07, 3/02/07, 3/05/07, 3/13/07, 3/15/07, 3/20/07, 1/29/07, 5/01/06, 6/02/06, 8/02/06, 11/03/06, totaling $556.98.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, that affirms the stop-work order and concludes that a penalty is owed; that provides for a recalculation of penalty to be completed, on the basis set out herein, within 30 days of the final order; and that guarantees the Respondent Southern Insight, Inc., a window of opportunity to request a Section 120.57 (1) disputed-fact hearing solely upon the recalculation. DONE AND ENTERED this 1st day of July, 2008, in Tallahassee, Leon County, Florida. S ELLA JANE P. DAVIS 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 1st day of July, 2008. COPIES FURNISHED: Anthony B. Miller, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 John Cauley, President Southern Insight, Inc. Post Office Box 2592 Bunnell, Florida 32110 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue is whether the Stop Work Order issued on July 27, 2007, and the Amended Order of Penalty Assessment were lawful.
Findings Of Fact The Division is a component of the Department of Financial Services. The Department is charged with the administration of portions of the "Workers' Compensation Law." Versa-Tile is a corporation headquartered in Mary Esther, Florida. Versa-Tile is engaged in flooring, which is a construction activity. Michelle Newcomer is an Insurance Analyst II with the working title of Workers' Compensation Compliance Investigator. She maintains an office in Pensacola, Florida. It is her job to travel to work sites and to verify compliance with the Workers' Compensation Law. She is authorized by the Division to issue an SWO and to calculate and assess penalties. On July 24, 2007, Ms. Newcomer was conducting compliance investigations at random sites in the Alys Beach area of Walton County, Florida. While doing so she noticed three individuals in the garage at the rear of a house at 23 Whitby. They were removing tools from a toolbox and "working." Ms. Newcomer identified the men as Adrian Womack and Kent Degallerie. The third man on the site was named "Barker." Barker asserted that he was not doing any work, but was there just to give the men a ride. He was deemed not involved in the work being accomplished at the site. Ms. Newcomer interviewed Adrian Womack and Kent Degallerie. They both told her that they were exempt officers of Versa-Tile. It is found as a fact that the 2006 For Profit Corporate Annual Report of Versa-Tile signed on April 26, 2006, and filed with the Department of State on May 1, 2006, listed Adrian Womack and Kent Degallerie as corporate officers of Versa-Tile. They were not corporate officers of Versa-Tile prior to April 26, 2006. Adrian Womack worked for Versa-Tile from July 29, 2005, until April 25, 2006, as an employee. He was not an officer and was not, and could not be, exempt. Kent Degallerie worked for Versa-Tile from May 6, 2005, until April 25, 2006, as an employee. He was not an officer and was not, and could not be, exempt. Nicholas Womack, who was not present at the Alys Beach site, is listed therein as president of Versa-Tile and has been exempt during all times pertinent. As corporate officers, Adrian Womack and Kent Degallerie could be exempt from the usual requirement that workers be covered by workers' compensation insurance even though they were also employees of Versa-Tile who were paid wages. Ms. Newcomer obtained their full names and social security numbers so that she could verify their claimed exemption. She determined from the Department's Coverage and Compliance Automated System that there were no records of exemption being obtained for them. Ms. Newcomer confirmed with an examiner in the Pensacola office that Adrian Womack and Kent Degallerie were not on the list of exempt persons. She issued a Request for Production of Business Records dated July 24, 2007. She personally served these documents on Adrian Womack and Kent Degallerie. She issued an SWO, dated July 27, 2007, and personally served it on Nicholas Womack. If a person is a ten percent owner of a corporation or limited liability company they are entitled to obtain an exemption from the Department. An exemption is obtained by completing the "Notice of Election to be Exempt" form. This form when properly completed and accompanied by certain required documents, a $50 application fee, and submitted to the Division, will cause the Division to grant an exemption. If the Department determines that a person is exempt upon receiving a properly submitted form and payment, the Department will issue a card reflecting exemption. Neither Adrian Womack nor Kent Degallerie had such a card on July 24, 2007. During all times pertinent, the Department had no record indicating it had received any payment from Nicholas Womack, Adrian Womack, or Kent Degallerie that would have been tendered on behalf of Adrian Womack or Kent Degallerie. On July 27, 2007, Ms. Newcomer met with Nicholas Womack, president of Versa-Tile in her office in Pensacola and personally served him a Request for Production of Business Records. Later, Nicholas Womack provided employment records to Ms. Newcomer. On July 30, 2007, the Department and Versa-Tile entered into an agreement that permitted Versa-Tile to go back to work. Using workers' compensation class code 5348 for employees Adrian Womack and Kent Degallerie, Ms. Newcomer correctly calculated the premium that should have been paid, if they were mere employees, as $8,455.56, and multiplied that figure by the statutory penalty of 1.5. She correctly determined the total to be $12,683.35. The parties stipulated that to the extent the figure applies, it is correct. Nicholas Womack at all times pertinent had an exemption. Adrian Womack and Kent Degallerie were granted exemptions by the Department on July 30, 2007. These were the first exemptions from workers' compensation coverage that they had ever received while in a business relationship with Versa- Tile. The Division receives from 90,000 to 96,000 construction exemption applications yearly. They also receive between 30,000 to 35,000 non-construction exemption applications annually. The applications may be provided by applicants to the Department by hand-delivery at a field office or to the Department headquarters in Tallahassee, or by mail to a field office or to the Department headquarters in Tallahassee. Errors may occur in this process because of mistakes or omissions in the applications filed by the applicant or because of data entry errors by personnel in the Department. However, the process is sufficiently simple and automated that usually, when a complete application is filed, the exemption issues, and the applicant is, thereafter, provided a card reflecting the exemption via mail. There are ten field offices in the state to which applicants may file applications for exemptions. The field office in Panama City, Florida, at least the portion that accepted exemption applications, closed in 2005. However, the forms still listed Panama City as an address to which one might mail an application for exemption. The president of Versa-Tile, Nicholas Womack, has filed for and obtained three exemptions since he created Versa- Tile. Prior to incorporating Versa-Tile, he owned another business by the name of Nicholas Womack Flooring, Inc. He previously had two officers, Michael Smith and Mitchell Smedley, working with him at Versa-Tile, but he removed them as corporate officers so that Adrian Womack and Kent Degallerie could be corporate officers. Mr. Smith's exemption was revoked April 27, 2006, by the filing of a Notice of Revocation of Election to be Exempt with the Department. This roughly coincided with the naming of Adrian Womack and Kent Degallerie as corporate officers. Department of State corporate records, as of May 1, 2006, reflected that Versa-Tile had three officers: Nicholas Womack, Adrian Womack, and Kent Degallerie. In order to obtain a certificate of exemption, Nicholas Womack filed the appropriate form with the Department, along with proof that he held a contractor's license, stock certificates, and $50.00. He followed this process on three occasions while president of Versa-Tile. The evidence of record reveals exemptions granted to Nicholas Womack on January 25, 2005, and May 18, 2006, while president of Versa-Tile. He claims not to ever have received a certificate evidencing exemption from the Department while president of Versa-Tile. Nicholas Womack testified that on only one of the occasions, when he was operating Nicholas Womack Flooring, Inc., did the Department mail him a card reflecting his exemption and stated that occurred in 2001 or 2002. Nicholas Womack understands that by not obtaining coverage under workers' compensation insurance he and the other two corporate officers of Versa-Tile would not be compensated should they be injured on the job. Nicholas Womack explained to Adrian Womack and Kent Degallerie that they were eligible for an exemption, and if they got an exemption and were injured, they would not be covered by workers' compensation insurance. Nicholas Womack testified that thereafter he helped the two men fill out the appropriate forms and ensured that all necessary attachments, including two money orders in the correct amount, were present and then mailed the applications, one in each envelope, to the Department's Panama City office. As soon as the applications were mailed, Nicholas continued allowing the men to work for Versa-Tile without waiting for the exemptions to be granted. Adrian Womack and Kent Degallerie first received exemption on July 30, 2007. Subsequent to July 30, 2007, Nicholas asked Adrian Womack if he had received an exemption card. Adrian Womack said that he had not. Adrian Womack and Kent Degallerie both stated that they had not received an exemption card after filing for exemption in July 2007. Nicholas Womack's testimony that he only received one certificate of exemption in seven years of enjoying an exempt status lacks credibility. Even considering that the Department is large and it annually processes huge amounts of paperwork, it is quite improbable that on six occasions they would fail to send Nicholas Womack a certificate. That being the case, Nicholas Womack's testimony that he mailed completed applications for Adrian Womack and Kent Degallerie to the Department's Panama City office and never received any type of response, when considered in concert with his other testimony, is not credible. It is a fact that Nicholas Womack, Adrian Womack, and Kent Degallerie were eligible for an exemption subsequent to April 26, 2006. If exempt, they were responsible for their own expenses should they suffer an injury while on the job. If they failed to get an exemption, they were likewise responsible for their own expenses should they suffer an injury while on the job. This situation is very different from that where an employer fails to obtain coverage for workers not having an ownership interest in the employer, as was the case with Versa- Tile prior to April 26, 2006.
Recommendation Based upon the forgoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order requiring Versa-Tile and Marble, Inc., to pay a penalty of $12,683.35. DONE AND ENTERED this 25th day of January, 2008, in Tallahassee, Leon County, Florida. S HARRY L. HOOPER 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 25th day of January, 2008. COPIES FURNISHED: Kristian E. Dunn, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Michael James Rudicell, Esquire Michael J. Rudicell, P.A. 4303 B Spanish Trail Road Pensacola, Florida 32504 Daniel Sumner, General Counsel Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact The Petitioner is a manager of real estate specializing in condominiums. It was incorporated in Florida on August 30, 1978, as Property Management, Inc. at the address of its attorney and registered agent, Mr. Michael L. Hyman, Suite 400, 28 W. Flagler Street, Miami, Florida 33130. The corporation was involuntarily dissolved by the Secretary of State on December 5, 1979, for failure to file its annual report and pay its annual report filing fee. Petitioner admits that it was delinquent in submitting its annual report and filing fee, but contends that it was entitled to notice of delinquency prior to involuntary dissolution and reissuance of its corporate name. Through testimony of Petitioner's president and corporate counsel's secretary, who opens and distributes incoming mail, Petitioner established that it had not received any of the three notices discussed below. Rather, Petitioner learned of the dissolution in February, 1980, when it sought telephone service. It then submitted the annual report and filing fee which were received by the Secretary of State on March 17, 1980. By that time the name Property Management, Inc. had been issued to another corporation and was not available. Petitioner was therefore reinstated as Property Management of South Florida, Inc. The following notices relevant to this proceeding were prepared by the Secretary of State: January, 1979: Notices to all Florida corporations that annual reports and filing fees were due by July 1, 1979. September 1, 1979: Reminder notices to delinquent corporations that dissolution would follow if annual reports and filing fees were not submitted within 90 days. December 5, 1979: Certificates of dissolution issued to corporations which failed to submit the reports and filing fees. The above notices were prepared from computer data and were transmitted by ordinary mail. Respondent produced a computer printout with Petitioner's correct name and address showing dissolution on December 5, 1979. However, no evidence was adduced to establish that this notice or either of the preceding notices were actually mailed to Petitioner.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That Petitioner's request for return of the name Property Management, Inc. be DENIED. DONE and ENTERED this 29th day of July, 1980, in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Michael L. Hyman, Esquire Suite 400 Roberts Building 28 West Flagler Street Miami, Florida 33130 William J. Gladwin, Jr., Esquire Office of the Secretary of State The Capitol Tallahassee, Florida 32301
