The Issue The issue is whether Section 11B(3) of the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2004 Second Edition, is an invalid exercise of delegated legislative authority.
Findings Of Fact The petitions filed by FFVA and TIC challenge the validity of Section 11B(3) of the 2004 Manual,4/ which prior to October 1, 2007, was adopted by reference as part of Florida Administrative Code Rule 69L-7.501(1). Florida Administrative Code Rule 69L-7.501(1) was amended effective October 1, 2007, to adopt by reference the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2006 Edition ("the 2006 Manual"). Florida Administrative Code Rule 69L-7.501(1), as it existed when the petitions were filed and as it currently exists, adopts by reference the 2006 Manual, not the 2004 Manual. The 2004 Manual is no longer adopted by reference as part of Florida Administrative Code Rule 69L-7.501, or any other rule. AHCA applied the 2004 Manual in the reimbursement dispute initiated by HRMC against FFVA under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on October 24, 2007, which was attached to FFVA's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 07-5414. AHCA applied the 2004 Manual in a reimbursement dispute involving TIC under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on January 9, 2008, which was attached to TIC's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 08-0703.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following facts relevant to the issues in dispute are found: On March 8, 1981, the petitioner provided notice of the administrative hearing which commenced on March 25, 1981, by placing a notice on the doorknob of each resident of Century Village. Customers not residing within Century Village and commercial customers were mailed notice of the hearing on the same date. A newspaper notice of the March 25, 1981 hearing appeared on March 18, 1981. Quality of Service There are approximately 7,700 utility meters in Century Village and there has been minimal growth within the utility since the 1979 test year. Sixteen customers of the petitioner testified at the hearing. Their testimony included objections to the sufficiency of the notice they received of this rate case proceeding, the requested rate increases, the taste and smell of the water, the mineral deposits in the water, the odor from the sewage treatment plant, the billing procedures employed by the petitioner and the manner of petitioner's responses to customer inquiries and complaints. The petitioner's billing cycle is not constant. On some occasions, the bill covers a period of twenty-eight days and, on other occasions, a billing cycle of thirty-five days is used. Many customers have installed, at their own cost, water filters to alleviate the objectionable smell, taste and mineral deposits in their water. Some customers testified that their cooking pots and pans had become blackened and pitted from the mineral deposits and sediments in the water. Several customers also complained of low water pressure in their homes. None of the testifying witnesses had consulted the local health department as to the quality of the water received from petitioner. At the time of the hearing, there were no outstanding complaints against petitioner filed with the Public Service Commission's Consumer Affairs Department. Previous complaints had been resolved in a timely fashion. The petitioner's water and sewer operations presently comply with all applicable State regulatory standards for water and sewer service. There are no citations or corrective orders pending against the petitioner's water and sewer systems. Petitioner is operating under a negotiated consent order which requires it to connect its sewer system to the regional system when said system becomes available. There was evidence that this connection to the County system will result in an increased sewer charge. The County will send one monthly bill to the petitioner and the petitioner will then bill the individual customers. The bulk rate charge was speculative at the time of the hearing. Pursuant to an agreement between the County and the petitioner, the petitioner will be required to maintain its sewage treatment plant on a standby basis after it connects to the County system. Rate Base. I. Gross Plant in Service This being the petitioner's first rate increase application, no prior amount of utility plant in service for either the petitioner's water or sewer system has been established or approved by the PSC. The petitioner alleges that its utility plant in service is $2,401,436 for water and $2,711,697 for sewer, for a total gross plant in service of $5,113,133. An officer of petitioner who is a certified public accountant testified that this figure is supported by the books and records of the petitioner. The PSC staff engineer, Jim Shoptaw, attempted to verify the petitioner's alleged original cost of plant. Several methods of determining original cost are utilized by the PSC. Though not formalized by rule, the methods used to substantiate the original cost of a utility system, in order of PSC preference, are as follows: an engineer's original cost study, a review of the contracts let for individual utility construction projects and a review of invoices for materials purchased. The invoicing method of establishing original costs is considered least effective because there is no way to verify that the materials purchased were actually placed or used for the water and sewer systems. When these three methods are not available, as built drawings or plans can be utilized to determine the amount and type of materials in the ground and a unit cost study can then be performed. In this case, the petitioner did not have either an engineer's original cost study or copies of the construction contracts. The maps or prints submitted by petitioner to the PSC staff were not accurate or complete. Mr. Shoptaw thus made an on-site inspection, with advanced notice, and was provided several boxes of invoices which were not organized in a systematic manner. A review of invoices allowed Mr. Shoptaw to verify only 39 percent of what petitioner claimed in its application as the amount of plant in service. Petitioner was then requested to supply respondent with a unit cost breakdown and the amount of pipe placed in service each year. A given year was not provided by the petitioner. After calculating the length and cost of pipe utilized, Mr. Shoptaw "trended" the costs and eventually determined that the petitioner's application had overstated the water system plant by approximately $107,000 and the sewer system plant by some $147,000. The unit cost information supplied to Mr. Shoptaw by the petitioner was based upon data collected from water and sewer installations in single- family residential communities. This was a result of a misunderstanding by petitioner's employees as to what information Mr. Shoptaw desired. The "trending" and reasonableness study performed by Mr. Shoptaw was also based primarily upon a comparison with utilities serving single-family areas. There are major differences between the costs of constructing multiple-family and single-family utility distribution systems. High density housing requires larger pipes run for shorter distances and a greater number of valves, manholes, connections and other materials due to the greater number of connections per mile. There are also road and construction problems and expenses in a multifamily complex not found in an area with single-family dwellings. It is considerably more expensive per linear foot to build in a high density area such as Century Village than in an area containing single-family dwellings. Approximately three weeks prior to the commencement of the hearing in this case, the staff of the PSC was provided with additional boxes of invoices to further document the petitioner's gross plant in service. When combined with those already submitted, the additional invoices substantiated 58 percent of the claimed plant in service. Mr. Shoptaw felt that use of the invoices was not compatible with his then completed trending methodology, that the additional invoices arrived too close in time to the hearing to be of assistance and that 58 percent of documented costs was not a large enough sample from which to determine the original cost of the entire system. Mr. Shoptaw expended approximately 500 hours preparing his report in this proceeding. A reasonable amount of time to be spent on a utility of this size with good record-keeping practices would be approximately 200 hours. There is some confusion in the record as to whether the PSC staff twice removed the same items from the petitioner's claimed gross plant in service as a result of the different surveys performed by Mr. Shoptaw and the PSC's accounting staff. (T. 998-1000). This issue was never clarified during the hearing. Rate Base. II. Accumulated Depreciation. Through the end of the 1979 test year, the petitioner utilized an annual depreciation rate of approximately 6 percent on its gross water and sewer plants. During the course of preliminary discussions with the PSC staff, petitioner agreed to adopt a depreciation rate of 2.5 percent per annum for these assets. The 2.5 percent annual depreciation rate is based upon the premise that petitioner's water and sewer facilities have a service life of 40 years rather than the 16.7 year life originally applied. The issue in dispute regarding this stipulated change in the annual rate of depreciation is whether the 2.5 percent rate should be applied retroactively to the year of inception or whether it should be applied to the future only. The construction of the petitioner's water and sewer systems began in 1969. Neither the petitioner's original decision to fix the useful life of the water and sewer systems at 16.7 years nor the PSC staff's decision to fix their lives at 40 years was based upon an engineer's expert opinion after a physical inspection of the assets. There have been no significant physical changes in the assets since their installation. Under generally accepted accounting principles, different treatment is prescribed for the "correction of an error in previously issued financial statements" and a "change in accounting estimate." The "correction of an error" treatment requires a restatement or a retroactive application. This treatment is accorded errors resulting from "mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time the financial state- ments were prepared." A "change in accounting estimate" does not require a restatement or retroactive treatment and results from "new information or subsequent developments and accordingly from better insight or improved judgment." APB Opinion No. 20, paragraph .13. The service life or salvage value of a depreciable asset is an example of the estimate required in the preparation of a financial statement. APB Opinion No. 20, paragraph .10. Were petitioner permitted to retroactively apply the new 2.5 percent depreciation rate to 1969, the date construction of the water and sewer systems began, a possible result would be the utility's double recovery of depreciation expense through its rates. The impact upon the utility of not making a retroactive adjustment of the 2.5 percent depreciation rate would be to reduce rate base by some one million dollars per year and thus substantially reduce the petitioner's cash flow. Rate Base. III. Contributions-in-aid-of-construction (CIAC) Petitioner's water and sewer tariffs on file with and approved by the PSC in 1970 include copies of a schedule of tapping fees and three developer agreements. The developer agreement between petitioner and Century Village, Inc. entered into on November 1, 1968, defines CIAC and denotes the developer's responsibility to pay CIAC for the petitioner's water and sewer systems. Other developer agreements between Century Village, Inc. and secondary developers were also discovered which make reference to the agreement between petitioner and Century Village, Inc. The PSC staff seeks to impute as CIAC over two million dollars as a result of the developer agreements and the tapping fee schedule. If this amount were imputed as CIAC, the petitioner would have a zero rate base and recover through its rates only operation and maintenance expenses and taxes. According to petitioner's president, neither the tapping fees on file with the PSC nor CIAC pursuant to the developer agreements were collected by the petitioner since he assumed the presidency in 1970. The amounts which are claimed as CIAC by the petitioner were collected prior to the time Mr. Christopher became the petitioner's president. Those portions of the developer agreements regarding CIAC were not carried out because petitioner desired to build a rate base. The petitioner's overall policy of not accepting CIAC was reflected in a letter dated May 8, 1972 by petitioner to the PSC in response to PSC Order No. 5403 which required petitioner and other regulated utilities to file a service availability policy with the PSC. Other than this May 8, 1972 letter, petitioner has made no other attempt to revise the tariffs filed with the PSC with respect to the developer agreements or the tapping fees. Auditors from the PSC staff were unable to find any evidence from the books, records or tax returns of the petitioner that tapping fees or other CIAC were ever collected by petitioner other than as reported by petitioner in this case. No significant investments were written off as cost of goods sold for tax purposes. Capital Structure and Rate of Return During the test year, petitioner's actual capital structure was comprised of 85 percent debt due to outstanding loans held by affiliated companies. The capital structure of the parent company, Cenvill Communities, Inc., during the test year was approximately 41 percent common equity, 55 percent long-term debt and 4 percent deferred taxes. For this rate application, the respondent PSC used the capital structure of the parent company in its cost of capital calculations. Subsequent to filing the rate increase application, the petitioner recapitalized its capital structure so that its debt-equity ratio approximately matched the debt-equity ratio of the parent company. Utilizing various methodologies, including an analysis of average bond yields, a discounted cash flow study, a trend line analysis and an added risk premium, petitioner has computed a range of fair return on equity at between 18.96 percent and 21.13 percent, for an average fair return of 20 percent. Using a ten-year time period, a discounted cash flow methodology and a regression analysis, the PSC staff computed a cost of equity of 16.25 percent, with a range of between 15.25 percent and 17.25 percent. Petitioner originally requested an overall rate of return of 12.83 percent. This figure was changed during the hearing to 10.38 percent. The PSC staff has computed an overall rate of return of 12.11 percent. Income Taxes Petitioner has elected to participate in the consolidated income tax return filed by its parent, Cenvill Communities, Inc. The parent routinely assesses a 46 percent rate on all its subsidiaries having a positive taxable income for the tax year. The petitioner and the PSC staff are in agreement that an appropriate federal income tax rate for petitioner is 46 percent, and an appropriate state income tax rate is 2.7 percent. The Office of Public Counsel presented testimony to the effect that a 46 percent federal income tax rate is excessive because it reflects a greater percentage tax rate than the actual consolidated tax rate. It was argued that the effective tax rate for petitioner during the 1979 test year was 21.06 percent. Unusual capital gain transactions did occur during the test year. Other Operating Expenses and Undisputed Items Petitioner had a contract which called for a meter-reading payment of 25 or 30 cents per meter. The average meter reading expense, including transportation, for the South Florida area is 17 cents per meter. Meters may be read very quickly in Century Village because of its high population density. With each building having approximately 25 meters, one could easily read 75 to 100 meters an hour. A witness presented by the intervenor Ruchlis examined petitioner's books and concluded that there was insufficient data and supporting documents to validate some of the salary and operating expenses claimed by the petitioner. The PSC staff apparently recognized this deficiency and interviewed some of the employees to determine how much of their time was actually allocated to the petitioner. It was agreed between petitioner and the PSC staff that $25,000 should be deducted from petitioner's claimed salary expenses. For the purposes of this proceeding, petitioner's working capital needs are zero. The total amount of rate case expenses for this proceeding is $35,000, to be amortized over a five year period and allocated on a 50-50 basis between the water and sewer operations. The base facility charge concept is fair to all customers and should be employed as petitioner's rate structure.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is RECOMMENDED that the issues in dispute in this proceeding be resolved as follows: that the quality of water and sewer service provided by petitioner to its customers be found satisfactory; that the trending methodology utilized by Mr. Shoptaw in determining the petitioner's original cost investment in plant in service be approved, with the condition that a determination first be made as to whether certain items were deducted twice from petitioner's claimed amount of gross plant in service; that the 6 percent accumulated depreciation rate be applied from 1969 through the 1979 test year and the 2.5 percent rate be applied from that date forward; that the claimed amounts of $111,612 for the water system and $554,813 for the sewer system be approved as the appropriate amounts of contributions-in- aid-of-construction; that the appropriate capital structure for petitioner include a 40 percent equity ratio; that a fair rate of return on equity capital is 16.25 percent; that an appropriate federal income tax rate for petitioner is 46 percent; that a meter reading expense of 17 cents per meter is reasonable and appropriate; by petitioner be reduced by $25,000; that petitioner's working capital needs are zero; that an appropriate amount of rate case expense is $35,000 to be amortized over a five-year period and allocated equally between the water and sewer operations; and that petitioner's rate structure utilize the base facility charge concept. Respectfully submitted and entered this 16th day of November, 1981. DIANE D. TREMOR 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 16th day of November, 1981.
The Issue Whether the University can require that Mr. Haywood repay $7,487.52?
Findings Of Fact Jim C. Haywood is a Certified Public Accountant and has several years experience in financial and administrative positions. Mr. Haywood has earned a Masters in Accounting Degree. From 1959 through April, 1968, Mr. Haywood served as the Director of Financing and Accounting for the Florida Board of Regents. From April, 1968, through September, 1969, Mr. Haywood served as the Associate Director of Planning and Evaluation and the Budget Administrator for the State University System under the Florida Board of Regents. From September, 1969, through August, 1970, Mr. Haywood served as Comptroller of the University. From August, 1969, through January, 1986, Mr. Haywood served as Dean, Associate Vice President or Vice President and as head of administrative affairs at the University. Mr. Haywood was employed by the University from September 1, 1969, through August 30, 1987. Mr. Haywood is familiar with the policies of the Florida Board of Regents concerning accrued annual leave and the payment therefore upon retirement. In August and September of 1987, Mr. Haywood refamiliarized himself with these policies. Mr. Haywood retired from the University in August of 1987. Prior to his retirement, Mr. Haywood met with Art Cozart, University Classification and Pay Coordinator. Mr. Cozart provided Mr. Haywood with a certificate (hereinafter referred to as the "Certificate") which described the amount of accrued annual and sick leave Mr. Haywood was entitled to payment for upon his retirement. The Certificate provided, in pertinent part, the following: This is to certify that Mr. Jim C. Haywood, S.S.#252-52-7270, has a leave balance with the University of North Florida as follows: Annual Leave: 352.0 hours $7,458.96 Sick Leave: 2,328.50 hours $14,599.62 The stated amount will be laid upon termination of service with the University. [Emphasis added]. The total amount to "be paid upon termination of service" according to the certificate is $22,058.58. This is the gross amount of pay attributable to Mr. Haywood's accrued leave. The actual amount Mr. Haywood was entitled to receive, the net amount payable, was $22,058.58 less twenty percent federal income tax withholding. The Certificate does not, however, distinguish between the gross amount of pay and the net amount which Mr. Haywood was to receive. Nor did Mr. Haywood and Mr. Cozart discuss whether the amounts on the Certificate were gross amounts or net amounts to be paid to Mr. Haywood. Mr. Haywood was provided a Leave Payment Clearance Form dated September 14, 1987, indicating that Mr. Haywood was entitled to payment for only 240 hours of annual leave. Mr. Haywood used the Certificate to obtain a thirty-day loan of $22,893.00 from a private institution. Mr. Haywood borrowed this amount because of the amount listed on the Certificate. Mr. Haywood intended to use the money he received for his accrued leave to repay this loan. Mr. Haywood intended to use this money for living expenses between his retirement and the time when his retirement benefits were to begin. On September 25, 1987, Mr. Haywood received two checks from the Florida Office of Comptroller. One check was in the amount of $5,939.15 and the other was in the amount of $5,990.02. There was no indication on the checks as to what they were in payment for. On October 8, 1987, Mr. Haywood received a check from the Florida Office of Comptroller in the amount of $11,831.00. There was no indication on the check indicating what the payment was for. The total amount of the three checks received by Mr. Haywood on September 25, 1987, and October 8, 1987, was $23,760.17. The total amount Mr. Haywood received was consistent with what Mr. Haywood expected to receive because it was similar to the amount listed on the Certificate. What Mr. Haywood expected, however, was the gross amount he was entitled to before federal income tax withholding. The amount of the three checks Mr. Haywood received, however, was the net amount payable on a gross amount of $29,764.00. One of the two checks received by Mr. Haywood on September 25, 1987, constituted the net amount owed to Mr. Haywood for annual leave. The other check received on September 25, 1987, was an overpayment of accrued annual leave. This overpayment was made in error by the University. Mr. Haywood was paid twice for annual leave. The evidence failed to prove why there was a discrepancy in the amounts of the two checks or which check constituted the overpayment. The W-2 form provided to Mr. Haywood for the 1987 tax year included the amount of gross income for which Mr. Haywood received an overpayment. Mr. Haywood therefore, included $7,487.52 in his gross taxable income for federal income tax purposes for 1987, attributable to the overpayment of accrued annual leave he received. As a result of the inclusion of the overpayment in Mr. Haywood's taxable income, approximately $2,665.00 of federal income taxes attributable to the $7,487.52 of gross income and its effect on taxable income were paid by Mr. Haywood. Mr. Haywood has not filed an amended federal income tax return for 1987. Nor has Mr. Haywood communicated with the Internal Revenue Service concerning this matter. Mr. Haywood has not been provided with an amended W-2. In April of 1988, the University determined that Mr. Haywood had been overpaid for accrued annual leave. On May 3, 1988, the University notified Mr. Haywood of the overpayment of accrued annual leave and demanded reimbursement. On May 12, 1988, Mr. Haywood disputed the amount of the overpayment and requested an administrative hearing pursuant to Section 120.57, Florida Statutes. Mr. Haywood has not repaid any amount of the overpayment.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the University's demand for repayment of $7,487.52, from Mr. Haywood be denied until the University determines from the Department of Banking and Finance the amount of the gross overpayment which should be refunded by Mr. Haywood. It is further RECOMMENDED that, once the University determines from the Department of Banking and Finance what amount of the gross overpayment should be refunded, the University should demand payment of the refund from Mr. Haywood and Mr. Haywood should pay the refund to the University. DONE and ENTERED this 3rd day of February, 1989, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of February, 1989. COPIES FURNISHED: Norman R. Haltiwanger Director, Office of Human Resources University of North Florida 4567 St. Johns Bluff Road South Jacksonville, Florida 32216 John E. Duvall, Esquire Post Office Box 41566 Jacksonville, Florida 32203 Stephen K. Moonly, Esquire Suite 2501, Independent Square Jacksonville, Florida 32202 APPENDIX The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The University's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 4-6 and 8. 2-3 Hereby accepted. 4 11. 5 16. 6 See 23. 7 21. 8 22. 9 17. 10 See 18. 11-12 19. Irrelevant. Speculative. Argument and not totally correct. 15 23. Hereby accepted. 1-7. The eighth, ninth and tenth sentences are irrelevant. The last sentence is not supported by the weight of the evidence. Mr. Haywood's testimony did not lack credibility. 19 9. 20 Not supported by the weight of the evidence. The Certificate did not indicate that Mr. Haywood was entitled to payment for only 240 hours of annual leave. 21-22 12. Not supported by the weight of the evidence. See 11. Not supported by the weight of the evidence. Irrelevant and not supported by the weight of the evidence. Irrelevant. 27-28 Hereby accepted. 29-31 Not supported by the weight of the evidence. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection See 6. See 9. 3-4 16. 5 21. 6 22. 7 23. 8 8. 9 20.
Findings Of Fact The following findings of fact were stipulated to be the relevant facts in this case by the parties and are hereby adopted: Mr. Joseph E. Hill owns and controls Hill Milling, Hill Marking, Inc., and J. E. Hill Contractor, Inc. These three companies were certified as disadvantaged business enterprises (hereinafter referred to as "DBE") for the years 1985, 1986 and 1987. The only issue to be determined in this proceeding is whether the [Department] properly revoked [Hill Milling's] DBE certification based on the determination that [Hill Milling] had graduated from the program. Hill Milling is classified in the DBE program as a special trade contractor. J. E. Hill Contractor, Inc., is classified as a heavy construction contractor. Hill Marking, Inc., is classified as a special trade contractor. The gross receipts of Hill Milling for the three previous fiscal years are as follows: Fiscal year ending 12/30/85 $ 3,365.268.00 Fiscal year ending 12/30/86 2,564,577.00 Fiscal year ending 12/30/87 2,825,340.00 The gross receipts of J. E. Hill Contractor, Inc., for the three previous fiscal years are as follows: Fiscal year ending 12/30/85 $ 5,534,741.00 Fiscal year ending 12/30/86 6,155,063.00 Fiscal year ending 12/30/87 5,723,331.00 The gross receipts for Hill Marking, Inc., for the previous three fiscal years are as follows: Fiscal year ending 12/30/85 $ 1,258,381.00 Fiscal year ending 12/30/86 1,011,951.00 Fiscal year ending 12/30/87 865,583.00
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Department declaring that Hill Milling, Inc., has graduated from the DBE program and revoking its DBE certification. DONE and ENTERED this 26th day of July, 1989, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of July, 1989. COPIES FURNISHED: Ruth B. Dillard Attorney Department of Transportation Haydon Burns Building, M.S. 58 605 Suwannee Street Tallahassee, Florida 32399-0450 Mary M. Piccard, Esquire Albert C. Penson, Esquire Cummings, Lawrence & Vezina, P.A. Post Office Box 589 Tallahassee, Florida 32302-0589 Kaye N. Henderson, Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450 Thomas H. Bateman, III Department of Transportation General Counsel 562 Haydon Burns Building Tallahassee, Florida 32399-0450
The Issue The issues for determination are: (1) whether Respondent violated Section 112.313(6), Florida Statutes, by manipulating fiscal practices of the City of Hialeah Gardens in an effort to afford himself a tax benefit; (2) whether the Respondent violated Section 112.313(6), Florida Statutes, by removing from the Mayor's Office furniture that had been donated to the City of Hialeah Gardens; (3) whether the Respondent violated Section 112.313(7), Florida Statutes, by having a contractual or employment relationship with a company doing business with the City of Hialeah Gardens; and (4) if so, what penalty is appropriate.
Findings Of Fact George Hameeton (Respondent) was elected Mayor of the City of Hialeah Gardens (City or Hialeah Gardens) in March 1993 and served through March 9, 1995. As Mayor of Hialeah Gardens, Respondent was subject to the requirements of Part III, Chapter 112, Florida Statutes, the Code of Ethics for Public Officers and Employees (Code of Ethics). Gilda Oliveros, formerly known as Gilda Cabrera de Corzo, was Respondent's immediate predecessor as Mayor. Oliveros served as mayor of Hialeah Gardens from 1989 until 1993, when she was defeated by Respondent. In 1995, Oliveros ran against Respondent again and was elected Mayor on March 7, 1995. Oliveros was sworn into office on March 9, 1995. The City Charter of the City of Hialeah Gardens, Florida, provides for a strong mayor form of government. According to the City Charter, "The Mayor is the executive head of the city, with all the necessary powers and authority to enforce all laws, ordinances, and resolutions of the City Council." Consistent with his role as "executive head," the mayor supervises, hires and fires, and has total supervisory powers over all departments. In addition, the Mayor has a fiduciary duty to the City. Transactions Involving Mayor's Expense Reimbursement Respondent's salary in 1994 and 1995 was $20,000 per year. In Hialeah Gardens, salary increases for the mayor must be voted on in a referendum. On November 1, 1994, the Hialeah Gardens City Council (City Council) took up the matter of an expense allowance for Respondent. Respondent was in attendance, but neither August Torres, the City's accountant; Lourdes Diez, the City's bookkeeper; nor James Warmus, the City's auditor, were in attendance. During City Council's discussion, the Acting City Attorney stated that the expense allowance would be a discretionary, nonreporting expense account. With this type of expense account, the amount paid would be static, no matter what expenses were incurred. Moreover, with this type of account, no receipts or other proof of expenses would have to be submitted. On November 1, 1994, the City Council adopted Resolution No. 1453 which authorized Respondent to receive a monthly expense allowance of $1,000 and a monthly automobile allowance of $800.00 retroactive to the date of his taking office in March 1993. No supporting documentation was required to substantiate these expense allowances. Resolution No. 1453 also provided that the City Council members and Respondent had the option to either participate in the City's health plan or to receive a sum equivalent to the City's contribution to the health plan on their behalf. Resolution No. 1453 provided that the $1,000 expense reimbursement was a nonreporting reimbursement. However, the resolution did not indicate how the automobile allowance should be categorized. Resolution No. 1453 provided in relevant part the following: Section 1. The Mayor shall receive the sum of one thousand dollars a month as reimbursement for expenses such as late meals, dry cleaning, cellular telephone, and other related expenses resulting from his fulltime employment with the City in an administrative position. Said reimbursement shall be nonreporting. Section 2. The Mayor shall receive the sum of eight hundred dollars a month for an automobile allowance which includes reimbursement for insurance, maintenance, and gasoline. The expense allowances authorized by Resolution No. 1453 totaled $1,800 per month, an amount which exceeded the Respondent's salary by $1,600 per year. "Nonreporting" or "nonaccountable" expense reimbursements as described above are treated as wages by the Internal Revenue Service. As such, the employer is responsible for withholding social security and Medicare taxes, and also for making a matching contribution. Failure of an employer to do so can result in the employer's having to pay a penalty of up to 100 percent of the amount which should have been withheld. After Resolution No. 1453 was adopted, Respondent told Diez to calculate the amount he and City Council members should receive pursuant to the terms of the Resolution No. 1453. Diez was not aware the insurance contributions and expense reimbursements were subject to taxation; neither was she familiar with the distinction between accountable or reporting expense and nonaccountable or nonreporting expenses. Therefore, she calculated the gross amount to which Respondent and City Council members were entitled. She did not withhold taxes or social security or make the employer's contribution as to any of the payments including those made to the City Council members. Respondent was Diez' immediate supervisor and usually checked her work. Consistent with this practice, Respondent, too, calculated the amounts owed to him and the City Council members and double-checked Diez' figures. Once the calculations were completed, Respondent instructed Diez to cut his expense reimbursement check and the health plan contribution checks for him and eligible City council members. In response to Diez' inquiry about where the money should come from, Respondent told her that the payments should come out of the City's general fund. Diez then called Torres to request the appropriate account number for the "expense" reimbursement. Because Diez did not mention that the expense reimbursement or any part thereof was nonreporting, Torres gave Diez the account number that allowed the funds to be paid as an operating expense. At the time Diez contacted Torres to get the account number, Torres had not seen a copy of Resolution No. 1453 and was unaware of its contents. The nonaccountable expense reimbursement check should have been issued from the City's payroll account. The payroll account or fund is set up with CompuPay, an outside third-party administrator, which is the City's payroll servicing company. Checks cut from the City's payroll fund or account, unlike those cut from the City's general operating fund, have payroll taxes and the employee's contribution automatically calculated and withheld by CompuPay. On the other hand, payments coming from the City's general fund are not normally subject to withholding. While it is possible to manually do the calculations on payments made from the City's general fund, because Diez was not aware the money was subject to taxes, it never occurred to her to do so. The transaction involving Respondent's expense reimbursement was a non-routine transaction and one that Diez had not previously seen or processed. On December 23, 1994, Respondent was issued a check for $43,685.93, which represented the total retroactive payment for the car allowance, the expense allowance, and the health plan contribution. No social security or Medicare taxes were withheld from this check and no employer's contribution was made. Respondent deposited the $43,685.93 check into his bank account on December 23, 1994, the day it was issued. Respondent's personal bank account was at the same bank as the City's account and the $43,685.93 was posted to Respondent's account the day the check was deposited. Shortly after the $43,685.93 check was issued to Respondent, Torres became aware that the check was for a nonaccountable or nonreporting expense reimbursement and that no social security or Medicare taxes had been withheld. While it is unclear who initiated the call, within one week after Respondent's $43,685.93 check was deposited into his bank account, Respondent and Torres had a telephone conversation regarding the check. Torres explained to Respondent that the expense reimbursement check "was of a nonreporting nature" and, therefore, payroll taxes had to be withheld. Respondent then told Torres that the check had already been deposited into Respondent's bank account. During the aforementioned telephone conversation, Respondent expressed concern about the tax consequences of receiving such a large sum at the end of 1994. Because Respondent believed the lump sum payment of $43,685.93 would adversely affect his income tax obligation for 1994, he asked Torres if he could defer taking the check until 1995. In response to Respondent's inquiry concerning whether he could defer taking the check until 1995, Torres told Respondent that taxes must be paid for the year in which the money is received. Nevertheless, Torres advised Respondent that if he redeposited funds to correct an error and if the reissued check did not get to him until 1995, he arguably would not have "received" the money until 1995. Based on his familiarity with the City's payroll processing schedule, Torres knew that the subject expense reimbursement check would not be reissued until 1995. Respondent and Torres never discussed whether it was permissible to make a deferred compensation contribution from the expense reimbursement funds. On December 30, 1994, Respondent contacted the bank and had the December 23, 1994, deposit of the $43,685.93 reversed. As a result of this action, the funds were deducted from Respondent's account and redeposited in the City's account. Respondent notified Diez that the $43,685.93 had been returned to the City's account and asked that a new expense reimbursement check be issued, minus a $9,624.00 contribution to Respondent's deferred compensation plan. However, Respondent did not tell Diez to withhold any social security or Medicare taxes or to make any employer's contributions. Diez took the funds from the City's general fund as she had done for the check issued December 23, 1994. It did not occur to Diez to withhold taxes from Respondent's reissued expense reimbursement check and she did not. When Respondent directed Diez to cut and reissue the expense reimbursement check, he knew that social security and Medicare taxes were to be withheld from the check. Nevertheless, he deliberately did not tell Diez to withhold these taxes. During the aforementioned telephone conversation, Torres explained to Respondent that the only way the expense reimbursement could be attributable to Respondent as income to Respondent in 1995 instead of 1994 was if the December 23, 1994, deposit were reversed to correct a "mistake" and the check was then reissued in 1995. The "mistake" to which Torres referred was the error in not withholding payroll taxes from the $43,685.93 reimbursement check. As a result of Torres' explanation, Respondent clearly understood that social security and Medicare taxes should have been withheld from the check. Moreover, Respondent understood that reversal of the December 23, 1994, deposit could be done only to correct the mistake involving withholding of social security and Medicare taxes. A new check was issued to Respondent on January 10, 1995. The original $43.685.93 had been reduced by $9,624.00, the deferred compensation contribution, and the check issued to Respondent was for $34,061.93. No social security or Medicare taxes were withheld and no employer's contribution was made. When Mayor Oliveros was elected and took office in March 1995, she asked the City auditor to conduct a complete audit. Ultimately, the auditor instead conducted an "agreed-upon procedure" which addressed Mayor's Oliveros' concerns without the scope and expense of a complete audit. The procedure covered the period October 1, 1994, to March 9, 1995, and the auditor's findings were summarized in a report dated May 1995. The agreed-upon procedure identified the handling of Respondent's reimbursement check as problematic. Specifically, the auditor discovered that no social security, or Medicare, or other taxes had been withheld from either of Respondent's expense reimbursement checks. Furthermore, the auditor found that the employer's contribution was never made by the City with regard to Respondent's expense reimbursement. In an effort to protect the City from exposure to IRS penalties, Torres suggested that the City pay Respondent's share of the taxes, as well as its own employer's contribution. To calculate the amount of taxes due and for purposes of calculating Respondent's salary for his 1995 W-2, Torres engaged in a calculation known as "grossing up." "Grossing up" is used when an employee mistakenly or otherwise improperly receives as net an amount he should have received as gross. Respondent should have received $43,685.93 gross, had taxes withheld, and then taken home some lesser "net" amount. Instead he took home $43,685.93. To "gross up," one would have to calculate what gross income would have resulted in a net income of $43,685.93. Respondent's "grossed up" income was $47,304.74. The City paid the Respondent's share and employer's matching contribution. In fact, due to an error in calculating the amounts, it overpaid taxes that should have been deducted from Respondent's check. Based on Respondent's "grossed up" income, the correct amount of social security and Medicare taxes was $3,618.81. As of the date of the hearing, Respondent had not reimbursed the City for his share of the social security and Medicare taxes. Removal and Replacement of Furniture in Mayor's Office In April 1994, during Respondent's term as Mayor, a sofa and loveseat were donated to the City. Respondent accepted the donated sofa and loveseat to replace the old stain-covered furniture in the Mayor's office. Respondent directed City workers to move the old furniture from the Mayor's office to the City's storage warehouse. Between March 7, 1995, the day Mayor Oliveros was elected, and March 9, 1995, the day she took the oath of office, Respondent had City employees remove the donated sofa and loveseat from the Mayor's Office and take it to the City's storage warehouse. Respondent then had the City workers to retrieve the old furniture from the City's storage warehouse and put it in the Mayor's office. Respondent returned the old furniture to the Mayor's office in retaliation against Mayor Oliveros. Respondent admitted that his action was "childish" and was done because he wanted to "gig" Mayor Oliveros, that is to get back at her, for leaving the old stain-covered furniture in the Mayor's office when he defeated her in 1993. Respondent never took personal possession of the "donated" furniture. Since taking office, Mayor Oliveros has been unsuccessful in her efforts to locate the "donated" furniture. Mayor's Relationship With Company Doing Business work for City In August 1992, Hurricane Andrew struck South Florida. As a result of this hurricane, Hialeah Gardens sustained some damage. However, the damage was not extensive and consisted primarily of fallen trees and debris from damage to some smaller structures. Oliveros was Mayor of Hialeah Gardens during Hurricane Andrew. During the period after Hurricane Andrew, at Mayor Oliveros' direction, City maintenance personnel removed debris that may have created a dangerous situation caused by the storm. Immediately after Hurricane Andrew, Mayor Oliveros had fallen debris removed from various sites in Hialeah Gardens. Among the sites where debris had fallen was Bernie Wilson Park. A gazebo in the park had been damaged by the hurricane and debris from that structure was picked up by a City maintenance crew. After the storm, a portion of the gazebo including its roof remained standing. However, the remaining portion of the gazebo was not structurally sound. Mayor Oliveros applied for funds from the Federal Emergency Management Agency (FEMA) before leaving office. FEMA funds were requested to cover overtime payments for the trash removal and a significant amount of the funds were specifically earmarked for removal of debris. Mayor Oliveros' understanding of the expenditures of FEMA funds was that bids were not necessary in emergency cleanup situations. According to Mayor Oliveros, because of the emergency situation, the County authorized the City to use contractors who had been approved by the County. However, once the debris was cleaned up and the emergency situation no longer existed, any further services were to be purchased in accordance with the City's purchasing procedures. A few weeks after Respondent was elected, he received complaints that Bernie Wilson Park was in disrepair. In response to these complaints, Respondent went out to the park to inspect the damage. Based on his assessment, in March 1993, Respondent had a fence built around the park and had the gate padlocked. Respondent also had signs posted indicating that the park was closed. In September 1993, Respondent hired Perfect Building, Inc., to repair the gazebo in Bernie Wilson Park that had been damaged as a result of Hurricane Andrew. Respondent took this action more than one year after Hurricane Andrew struck South Florida and approximately six months after he first inspected and assessed the damage at Bernie Wilson Park. The City paid Perfect Builders $13,000 for this work. Respondent's justification for using Perfect Builders was that repair or reconstruction of the gazebo was necessary because the damaged gazebo constituted an emergency situation. According to Respondent the cost of the project could be covered by FEMA only if the project were completed by a certain date. In an effort to meet this deadline, Respondent used Perfect Builders only after other contractors he telephoned indicated they were too busy to work on the project. The gazebo at Bernie Wilson Park did not constitute an emergency situation that would preclude Respondent's adhering to the City's prescribed purchasing procedures. In December 1993, Respondent again hired Perfect Builders to renovate the dispatch office in the Police Department at a cost of $1,900. Because the cost of this project did not exceed $4,000.00, Respondent was not required to follow bid requirements specified in the City's purchasing procedures. At the times Respondent hired Perfect Builders to perform work for the City, he had a contractual relationship with the company to serve as its qualifier. As qualifier for Perfect Builders, Respondent contractor's license was used to pull permits for the firm. For serving as its qualifier, Respondent was paid a monthly fee of $350 by Perfect Builders. Respondent had a contractual relationship with Perfect Builders which violated Section 112.313(7), Florida Statutes.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby, RECOMMENDED that a final order and public report be entered finding that Respondent, George Hameetman, violated Sections 112.313(6) and 112.313(7)(a), Florida Statutes; imposing a civil penalty of $3,000.00 and restitution of $3,618.81; and issuing a public censure and reprimand. DONE AND ENTERED this 20th day of January, 2000, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD 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 20th day of January, 2000. COPIES FURNISHED: Virlindia Doss, Esquire Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Charles Toledo, Esquire 8201 Peters Road, Suite 400 Fort Lauderdale, Florida 33324 Sheri L. Gerety, Complaint Coordinator Florida Commission on Ethics Post Office Drawer 15709 Tallahassee, Florida 32317-5709 Phil Claypool, General Counsel Florida Commission on Ethics Post Office Drawer 15709 Tallahassee, Florida 32317-5709
Findings Of Fact Petitioner, Richard Shambo, is the legal guardian for Linda Shambo. Linda Shambo is a "client" as defined in Section 402.33(1)(b), Florida Statutes, and has been assessed a fee in the amount of $286.00 per month by the Department. Such fee is paid by the Petitioner as the client's guardian. Petitioner manages the client's financial resources. The client resides in a group home, an intensive care level 3 facility, for which the monthly charge is $633.00. No dispute was made as to the appropriateness of that charge. The fee which has been assessed in this case is equal to the monthly charge less the client's reimbursements from other sources (e.g. Social Security benefits). The Department's Fee Collection Review Committee met on January 8, 1993 to review the fee assessed for this client. Such committee denied Petitioner's request for a reduction in fee and advised him of his right to an administrative review of that decision. The client's income over the last few years has declined due to lower interest rates. According to Petitioner, if the assessed fee is not reduced from $286 to $250 per month, the client will have insufficient income to cover the assessment. As a result, the client's principal will be reduced to cover the difference. Such testimony has been deemed credible and has not been challenged by the Department. No argument as to the appropriateness of other expenditures made on behalf of this client has been raised. Accordingly, it is found that the client's income less such appropriate expenses is insufficient to yield a disposable income sufficient to cover the fee assessed by the Department.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Department of Health and Rehabilitative Services enter a final order granting Petitioner's request for a reduced fee. DONE AND RECOMMENDED this 29th day of March, 1994, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of March, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4617 Neither party submitted a proposed recommended order. COPIES FURNISHED: Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Kim Tucker, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Richard E. Shambo 125 Cooper Drive Santee, South Carolina 29142 Karen M. Miller District Legal Counsel Department of Health and Rehabilitative Services 111 Georgia Avenue West Palm Beach, Florida 33401
The Issue The issues in this case are whether Respondent violated chapter 440, Florida Statutes, and Florida Administrative Code Chapter 69L-6, by failing to maintain workers' compensation coverage for its employees, and if so, the penalty that should be imposed.
Findings Of Fact The Parties Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondent, Door Depot of Palm Beach, Inc., is a Florida for-profit corporation engaged in the sale and installation of doors, which is encompassed within the construction industry.2/ Ms. Morris is Respondent's owner and sole corporate officer. Failure to Secure Workers' Compensation Coverage As a result of a public referral, Petitioner initiated an investigation to determine whether Respondent had the required workers' compensation coverage for its employees. Michelle Jimerson, a Compliance Investigator employed by Petitioner, researched Petitioner's Coverage and Compliance Automated System ("CCAS") internal database regarding workers' compensation coverage and compliance, and determined that Respondent did not have current workers' compensation coverage and had not previously secured coverage. Ms. Jimerson's research further revealed that Ms. Morris, as Respondent's sole corporate officer, had a current workers' compensation exemption covering herself, and that she had maintained such exemptions since August 2002. On May 11, 2011, Ms. Jimerson conducted an on-site visit to Respondent's place of business. At that time, Petitioner issued a Request for Business Records to Respondent, seeking copies of payroll documents; bank statements; business tax receipts; check stubs and check ledgers; names of subcontractors; records of payments or disbursements to subcontractors; contracts; and proof of workers' compensation coverage for, or exemptions held by, the subcontractors. Respondent produced the requested records. From a review of the records, Ms. Jimerson determined that Respondent had contracted with three subcontractors, Breeze Image, Inc.,3/ Mike Jacobs, and Ross Whitehouse, to provide construction industry services (specifically, door repair and installation work), between April 22, 2011, and May 10, 2011. Ms. Jimerson's review of Petitioner's CCAS database revealed that none of these subcontractors was exempt from the workers' compensation coverage requirement during the period in which they contracted with Respondent to provide construction industry services, that none had secured workers' compensation coverage for themselves, and that Respondent had not secured workers' compensation coverage for them during this period. Because Respondent came into compliance with chapter 440 during Petitioner's investigation and before initiation of this enforcement action, Petitioner did not issue a Stop-Work Order.4/ Nancy Morris testified on Respondent's behalf. She admitted that Respondent had not secured workers' compensation coverage for these subcontractors. She credibly testified that she had asked if they were exempt from the workers' compensation coverage requirement, that they had told her they were, and that she had believed them. Penalty Assessment On May 24, 2011, Petitioner issued to Respondent a Request for Production of Business Records for Penalty Assessment Calculation, seeking copies of payroll documents; bank statements; business tax receipts; check stubs and check ledgers; names of subcontractors; records of payments or disbursements to subcontractors; contracts; and proof of workers' compensation coverage for, or exemptions held by, the subcontractors. Respondent produced the requested documents. Using these documents, Petitioner's Penalty Calculator, Teo Morel, calculated the penalty assessment for Respondent. Section 440.107(7)(d)1., establishes a formula for determining the penalty to be assessed against an employer who fails to secure workers' compensation as required by chapter 440. Specifically, the penalty is one and a half (1.5) times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during periods for which it failed to secure the payment of workers' compensation within the preceding three-year period, or $1000, whichever is greater. Petitioner has adopted a penalty worksheet for calculating the penalty prescribed by section 440.107(7)(d)1. See Fla. Admin. Code R. 69L-6.027. Ms. Morel used the worksheet in calculating the penalty to be assessed against Respondent. Specifically, Ms. Morel identified the subcontractors for which Respondent had not secured workers' compensation and identified the applicable construction industry classification NCCI Manual code for each (here, classification code 5102). For each subcontractor, she identified the periods of noncompliance for the preceding three-year period as required by section 440.107(7)(d)1., determined the subcontractor's gross payroll amount and divided that amount by 100, then multiplied this amount by the NCCI Manual rate applicable to the 5102 classification code. This calculation yielded the workers' compensation premium Respondent should have paid for each subcontractor, had Respondent complied with chapter 440. The premium amount was then multiplied by 1.5 to determine the total penalty amount to be assessed. Pursuant to the information Respondent provided, and performing the statutorily prescribed calculation, Petitioner initially calculated the total penalty to be assessed as $20,266.59. Respondent subsequently provided additional business records consisting of raw job worksite notes. These documents showed that the subcontractors were paid a total contract amount for each job. However, the notes did not indicate the cost of materials per contract, and Respondent was unable to provide records containing this information. Because the cost of materials for each contract was indeterminable, pursuant to Florida Administrative Code Rule 69L-6.035(1)(i), Petitioner assumed that the materials cost constituted 20 percent of each contract, deducted this amount from each subcontractor's gross payroll, and recalculated the premium amount. As a result, the total penalty assessment was reduced by 20 percent, to $16,213.30. Respondent disputes the amount of the amended penalty assessment on the basis that materials costs for each contract constituted more than 20 percent of each contract's amount. However, Ms. Morris was unable to provide any evidence substantiating the cost of materials for each contract. Ms. Morris credibly testified that if Respondent is required to pay the assessed penalty of $16,213.30, it likely will be forced to go out of business. Ms. Morris fully cooperated with Petitioner throughout its compliance investigation leading to this enforcement action against Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of law, it is hereby RECOMMENDED that Petitioner enter a Final Order determining that Respondent violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage; imposing a total penalty assessment of $16,213.30; and providing that Petitioner will execute with Respondent a Payment Agreement Schedule for Periodic Payment of Penalty, pursuant to Florida Administrative Code Rule 69L-6.025, under which Respondent shall make a down payment to Petitioner of ten percent of the total assessed penalty amount, which is $1,621.33, and shall repay the remaining penalty in 60 consecutive monthly installments. DONE AND ENTERED this 30th day of January, 2012, in Tallahassee, Leon County, Florida. S Cathy M. Sellers Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of January, 2012.
Findings Of Fact The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on August 14, 2006, and the 2nd Amended Order of Penalty Assessment issued on June 30, 2008, which are fully incorporated herein by reference, are hereby adopted as the Department's Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Jeff Atwater, Chief Financial Officer of the State of Florida, or his designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment and the 2nd Amended Order of Penalty Assessment served in Division of Workers' Compensation Case No. 06-283-Dl, and being otherwise fully advised in the premises, hereby finds that: On August 14, 2006, the Department of Financial Services, Division of Workers' Compensation (hereinafter "Department") issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers' Compensation Case No. 06-283-Dl to CARLTON REID (REID). The Stop-Work Order and Order of Penalty Assessment included a Notice of rights wherein REID was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. On August 15, 2006, the Stop-Work Order and Order of Penalty Assessment was served via personal service on REID. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as "Exhibit A" and incorporated herein by reference. On September 6, 2006, the Department issued an Amended Order of Penalty Assessment to REID in Case No. 06-283-Dl. The Amended Order of Penalty Assessment assessed a total penalty of $183,710.84 against REID. The Amended Order of Penalty Assessment included a Notice of Rights wherein REID was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. The Amended Order of Penalty Assessment was served on REID by personal service on October 26, 2006. A copy of the Amended Order of Penalty Assessment is attached hereto as "Exhibit B" and incorporated herein by reference. On November 17, 2006, REID timely filed a Petition requesting a formal administrative hearing. The matter was referred to the Division of Administrative Hearings, where it was assigned Case No. 06-4937. On February 8, 2007, the Department filed a Stipulated Joint Motion to Close DOAH Case File With Leave to Re-Open, and on February 9, 2007, Administrative Law Judge Barbara J. Staros entered an Order Closing File, relinquishing jurisdiction to the Department. On July 3, 2008, the Department and REID entered into a Settlement Agreement, pursuant to which the Department agreed to issue a 2nd Amended Order of Penalty Assessment in the amount of $14,817.78, and REID agreed to pay a penalty in the amount of $14,817.78 in order to resolve Case No. 06-283-D1. On June 30, 2008, the Department issued a 2nd Amended Order of Penalty Assessment to REID in Case No. 06-283-Dl. The 2nd Amended Order of Penalty Assessment assessed a total penalty of $14,817.75 against REID. The 2nd Amended Order of Penalty Assessment contained a Notice of Rights wherein REID was advised that any request for an administrative proceeding to challenge or contest the 2nd Amended Order of Penalty Assessment must be filed within twenty-one (21) days ofreceipt of the 2nd Amended Order of Penalty Assessment pursuant to Sections 120.569 and 120.57, Florida Statutes. The 2nd Amended Order of Penalty Assessment was served on REID's counsel by certified mail on July 7, 2008. A copy of the 2nd Amended Order of Penalty Assessment is attached hereto as "Exhibit C" and is incorporated herein by reference. REID did not file a Petition requesting an administrative proceeding to challenge or contest the 2nd Amended Order of Penalty Assessment.
