The Issue The issues to be resolved in this proceeding concern whether the Petitioner corporation's workers' compensation insurance policy was in compliance with the provisions of Chapter 440, Florida Statutes, cited below, despite not having a specific Florida endorsement; whether the Department properly issued a Stop Work Order against the Petitioner and whether the proposed penalty of $240,927.55 was properly assessed.
Findings Of Fact The Petitioner, American Coatings, Inc., is a commercial painting corporation based in Tennessee. It has been in business since 1994 in the State of Tennessee, and through a predecessor entity, since 1985. The Petitioner does business in other states, including the State of Florida, and in fact operates in approximately 14 states. It has done so since the year 2000. It has had no workers' compensation claims from any of its Florida work sites during the entire time it has operated in Florida. On February 19, 2008, the Petitioner was painting portions of the premises at "the Estates of Rockledge" in Rockledge, Florida. It had other operations in Florida in the three years prior to February 28, 2008. When the Petitioner applied for workers' compensation coverage in Tennessee, the Petitioner advised its broker and insurance carrier that it maintained operations in Florida. The workers' compensation carrier and agent provided certificates of workers' compensation insurance for the Petitioner's Florida operations which supported its good faith belief that it had valid workers' compensation insurance in Florida. Respondent presented no evidence that Mr. Carswell and the Petitioner have committed fraud, misrepresentation, or omission concerning the obtaining and maintaining of workers' compensation insurance coverage for its Florida operations. There was no attempt to conceal the fact that the Petitioner had insurable operations in Florida. For the three years prior to February 28, 2008, the Petitioner maintained a policy of workers' compensation insurance for all employees, including those employees that performed operations in Florida. A workers' compensation premium was paid for each employee in question for all periods in the three years preceding February 28, 2008. The Respondent is an Agency of the State of Florida responsible for enforcing the various statutory requirements of Chapter 440, Florida Statutes, including Sections 440.107 and 440.38, Florida Statutes (2007). Its authority includes Section 440.10(1)(a), Florida Statutes, which imposes upon all employers in Florida the obligation to secure the payment of workers' compensation. The Respondent is statutorily charged with the obligation to monitor employers operating in Florida, to ensure that statutory employers maintain appropriate workers' compensation coverage on employees. There is no dispute that the Petitioner, is an "employer" for purposes of Sections 440.02(16)(a) and 440.02(17)(b)2., Florida Statutes (2007). It was operating in the construction industry and regularly employed at least one person. Pursuant to the Division's statutory authority, Investigator Eugene Wyatt of the Department's Division of Workers' Compensation, Bureau of Compliance, visited the subject worksite in Brevard County, Florida, where an apartment complex was under construction. Mr. Wyatt inquired at the general contractor's headquarters trailer and was told that a painting subcontractor known as American Coatings was employing workers on the site. Using the Federal Employer Identification Number, Mr. Wyatt checked with the Department's Coverage and Compliance Automated System (CCAS) data base and learned that American Coatings, Inc. the Petitioner, which did business in Florida as A.C. Painting, Inc., did not have a record of a Florida workers' compensation coverage policy since December of 2003. Upon inquiry of the general contractor's supervisor at the job site, Mr. Wyatt learned that American Coatings, Inc., had furnished proof of insurance to the general contractor. It was shown as a certificate of liability insurance from American Coatings, in evidence as Department's Exhibit 17. Investigator Wyatt contacted the agent who had produced the Certificate of Insurance and asked if a Florida endorsement had been procured for that policy. He was told that the policy had a "an all states" endorsement. Mr. Wyatt then contacted the underwriter and was told that it was a policy for Tennessee and not for Florida (apparently Tennessee rates and codes applied). The investigator then contacted Benjamin Carswell, the President of the Petitioner. He informed him that in his view the company was not in compliance with the Florida requirement that workers' compensation policies covering Florida work and Florida employees be specifically endorsed for the State of Florida. He stated that he would issue a Stop Work Order, which he did on February 19, 2008. (SWO). The SWO was posted at the worksite and served personally on Mr. Carswell on February 21, 2008. After the Petitioner entered into an installment payment plan as to the penalty, the SWO was ended with an Order of Conditional Release, on February 28, 2008. The Petitioner sent a copy of consolidated insurance policy number WC8263193, by fax to Terrence Phillips, the chief of the Respondent's Orlando compliance office. The information page of this policy showed that only Tennessee was listed in item 3A of the policy. Item 3C stated that the policy was in effect in all other states, however, except for North Dakota, Ohio, Washington, West Virginia, and the states listed in item 3A. Item 4 listed various occupational classifications with their codes and the premium rates for each. The codes were for the State of Tennessee. The effect of these terms was that Florida was included in the category for "all other states." Florida Law requires that Florida be listed as a state in item 3A, and requires a policy to utilize Florida class codes, rates, rules, and manuals, in order for an employer to be compliant with workers' compensation coverage requirements of Chapter 440, Florida Statutes. Investigator Wyatt determined that compliance was deficient and that a penalty should be calculated and assessed. He therefore served a request for production of business records on Mr. Carswell on February 21, 2008. The business records were necessary to construct the payroll amounts and number of employees at issue, so that the penalty, based upon the Petitioner's Florida Payroll, could be calculated. Mr. Carswell believed in good faith, throughout all times pertinent to this matter that his company was compliant with Florida workers' compensation coverage requirements. After compliance was called into question, however, he also obtained an additional workers' compensation insurance policy, apparently obtained on or about February 20, 2008. It showed that coverage was effective, related back to May 1, 2007. Based upon this additional policy, the Petitioner provided Investigator Wyatt with an additional certificate of insurance for this policy. On March 6, 2008, Investigator Wyatt learned that the SWO was a duplicate and had to be substituted. A new SWO was issued as an amended SWO. A Second Amended Order of Penalty Assessment and an Amended Order of Conditional Release from SWO, under the second SWO number of 08-092-D4, was issued. Investigator Wyatt calculated the penalty by reviewing the business records supplied by the Petitioner and determining what each employee had been paid between February 23 and December 31, 2005; during all of 2006; during all of 2007 and between January 1, and February 22, 2008. Each employee's payroll, for each year or portion thereof, was divided by 100 and multiplied by an actuarial figure known as the "approved manual rate," which is related to the job duties the employee performed. In the case at hand, all the employees were engaged in commercial painting and, therefore, their classification codes were all 5474. Each trade, occupation or profession has a particular code assigned to it by the National Council on Compensation Insurance (NCCI) and each code has its own rate, the codes and rates being adopted in the Respondent Agency's Rules. The product of one one-hundredth of the gross payroll, and the approved manual rate, constitutes the "evaded premium." In effect this is the insurance premium the employer should have paid during the years it did not actually secure the appropriate payment of workers' compensation for its Florida Employees (proper Florida or Florida-endorsed coverage). Each employee's premium added together was then multiplied by the statutory factor of 1.5 in order to determine the total penalty amount the Respondent seeks to assess. The penalty amount herein was calculated using the correct Florida Approved Manual Rate and class codes. The Respondent established that its calculations indicated that, for the Florida employees of the Petitioner, based upon its Florida payrolls for the three year period in question, the total workers' compensation premium, under the Florida rate, would be in the amount of $160,618.15. Based upon that Florida workers' compensation premium amount, when multiplied by the statutory factor of 1.5 times that amount, the Respondent arrived at a total proposed assessed penalty of $240,927.55. The Petitioner established, through the testimony of Mr. Carswell that, for the time period at issue, for the Florida employees and payroll, the Petitioner had paid workers' compensation premiums of $111,682.21 for the coverage it had in effect. It acknowledges that this was not paid pursuant to Florida rates, rather it was based upon Tennessee rates. It is the position of the Petitioner that the difference in premiums. between the above Florida premium amount, and the premium that the Petitioner actually paid, was $48,935.94. The Petitioner maintains that this differential is what really should be determined to be the unpaid or "evaded" premium, based upon Florida rates, and, if that amount was multiplied by 1.5 then the total penalty actually due should be $73,403.91. An initial penalty payment of $24,092.76 has already been made by the Petitioner. Periodic penalty payments, assessed beginning March 2008, and continuing, have been paid in the amount of $36,139.40. The total penalty already paid by the Petitioner, as of the hearing date, is thus $60,232.16. The Petitioner contends that the actual penalty to be paid should be based upon the differential between the correct total premium due, when using the correct Florida manual rate, and the total premium actually paid by the Petitioner, which, when applied in the above-referenced calculation results in the penalty due of $73,402.91. This would then be reduced by $60,232.17, the amount already paid, for a total remaining amount due of $13,171.75, as of the hearing date.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, finding that the Petitioner failed to fully secure the payment of workers' compensation for its employees in the manner prescribed by the above-referenced authority and that a penalty in the amount of $73,402.91 is due, less a credit of $60,232.16 already paid, and with credit applied to the above amount for penalty payments made since January 28, 2009. DONE AND ENTERED this 5th day of May, 2009, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of May, 2009. COPIES FURNISHED: Robert L. Dietz, Esquire Zimmerman, Kiser & Sutcliffe, P.A. Post Office Box 3000 Orlando, Florida 32802 Thomas H. Duffy, Esquire Douglas D. Dolan, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Tracey Beal, Agency Clerk Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Honorable Alex Sink Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The Principal issues in this matter are whether the Department of Financial Services, Division of Workers’ Compensation acted appropriately and within its’ statutory authority when it entered the Second Amended Order of Penalty Assessment and Stop-Work Order against the Petitioner for failing to secure workers’ compensation insurance for their employees when 4 tequired by Florida law, and whether any provisions of the Florida Workers’ Compensation Law provide for the mitigation or rescission of penalties against the Petitioner. 1 PRELIMINARY STATEMENT. This proceeding arose out of the requirement in Florida workers’ compensation law that employers must secure the payment of workers’ compensation insurance for the protection of their employees. The Petitioner in this matter is a Florida corporation currently doing business as a neighborhood food and convenience store in Fort Walton Beach, Florida. On April 26, 2011, Larry Eaton, a Compliance Investigator for the Florida Department of Financial Services, Division of Workers’ Compensation conducted a random job site workers’ compensation compliance investigation at the Petitioner’s place of business. After concluding the Petitioner had four (4) employees and did not maintain workers’ compensation insurance, the Department issued a Stop-Work Order and delivered a request for the production of business records. The Petitioner and their accountant cooperated with the Department’s investigation and provided records that were used to determine the mandated statutory monetary penalty for failing to maintain workers’ compensation insurance. The Petitioner then executed a penalty payment plan with the Department and also came into compliance with Florida’s Workers’ Compensation Law. The Petitioner has consistently objected to the Departments mandated statutory penalty as excessive, in violation of both the Florida and Federal Constitution, and contrary to the “principle of proportionality”. The Department originally referred this matter to this Hearing Officer for a F.S. 120.57(2) informal hearing, but that matter was closed when the Parties agreed a disputed issue of fact existed. This matter was then forwarded to the Florida Division of Administrative Hearings to hold a formal hearing pursuant to F.S. 120.57(1), and after discovery, the Administrative Law Judge closed his file after a finding there were no disputed issues of material fact. This matter was again assigned to this Hearing Officer to hold a telephonic informal hearing pursuant to Section 120.57(2), Florida Statutes, which occurred on November 1, 2011. Both Parties timely submitted Proposed Recommended Orders. EXHIBITS AND WITNESSES The Department submitted Eleven (11) Exhibits that are admitted into evidence without objection and include the following: Respondents Exhibit |: A copy of the Petitioner’s corporate status as contained within the Florida Secretary of State Records, dated April 26, 2010, the same day as the Departments random workers’ compliance Investigation. Respondent’s Exhibit 2: A two (2) page April 26, 2010, printout from the Department’s Financial Services Coverage and Compliance Automated System (“CCAS”) database for Mubarak Trading Corporation, Inc. teflecting no evidence of workers’ compensation insurance coverage and no exemptions from coverage. Respondent’s Exhibit 3: A copy of the Department’s hand delivered April 26, 2010 Stop- Work Order. Respondents Exhibit 4: A copy of the Department’s hand delivered April 26, 2011, Request for Production of Business Records for Penalty Assessment Calculation. Respondents Exhibit 5: A twenty six (26) page composite exhibit of the Petitioner’s payroll and -business records provided to the Department’s workers’ compensation compliance investigator. Respondent’s Exhibit 6: A copy of the Department’s May 12, 2010 Amended Order of Penalty Assessment hand delivered to the Petitioner on May 13, 2010. Respondent’s Exhibit 7: A copy of the Department’s’ Payment Agreement Schedule for Periodic Payment of Penalty executed by the Petitioner on May 13, Respondent's Exhibit 8: Respondent’s Exhibit 9: Respondent’s Exhibit 10: Respondent’s Exhibit 11: 2010, wherein the Petitioner paid Eighteen Hundred ($1,800.00) dollars as a ten percent (10%) down-payment on the Department’s Administrative Penalty. A copy of the Department’s Order of Conditional Release From Stop-Work Order dated May 13, 2010, that was entered after the execution and payment reflected in Respondent's Exhibit 7. A copy of the Department’s Second Amended Order of Penalty Assessinent dated February 2, 2011. A five (5) page excerpt from the National Council on Compensation Insurance, Inc. (“NCCI”) Scopes Manual description of Classification Code 8017 (Retail Store). A forty-nine (49) page excerpt of NCCI approved Manual Rates for Classification Code 8017, used in the calculation of the Department’s May 12, 2010, Amended Order for Penalty Assessment and February 2, 2011, Second Amended Order of Penalty Assessment. The Petitioner submitted two (2) exhibits that were admitted into evidence and consist of the following: Petitioner’s Exhibit 1: Petitioner’s Exhibit 2. A two (2) page copy of the Petitioner’s timely filed request for an informal proceeding to contest his administrative penalty, pursuant to Section 120.57(2), Florida Statutes, A four (4) page May 5, 2011, letter of tax representation from Mr. Chris Marsh and Mr. James Marsh, who provide accounting and tax services for and on behalf of Mubarak ‘Trading Corporation, Inc. The Department called two (2) witnesses to testify at the telephonic informal hearing, including Mr. Larry Eaton, a workers’ compensation compliance investigator for the Department, and Mrs. Michelle Newcomer, a workers’ compensation penalty calculator for the Department. The Petitioner offered the testimony of its’ President Ziad (“Mike”) Mubarak, as well as their tax advisors, Mr. Christopher Marsh, and Mr. James Marsh. Both Parties submitted Proposed Recommended Orders. FINDINGS OF FACT. Pursuant to Section 440.107, Florida Statutes, the Respondent is the state agency tesponsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. The Petitioner is a Florida corporation that first registered with the Florida Department of State on July 15, 1993, and was in good-standing on April 26, 2010, the date on which the Department conducted their random workers’ compensation compliance investigation. (Respondent’s Exhibit 1.) On April 26, 2011, the Respondents Workers’ Compensation Compliance Investigator, Mr. Larry Eaton, conducted a random compliance investigation at the Principal Business Address of Mubarak Trading Corporation, Inc., in Fort Walton Beach, Florida. (Respondent’s Exhibit’s 2, 3, and 4.) Upon entering the Petitioner’s work-place on April 26, 2011, the Department’s compliance investigator conducted a field interview, as well as a database search to confirm the existence of four (4) employees of Mubarak Trading Corporation, Inc., and the lack of either workers’ compensation insurance or exemptions from workers? compensation insurance coverage. (Respondent’s Exhibits 2, 3, and 4.) Upon finding four (4) employees and no workers’ compensation insurance coverage for those employees, the Department’s compliance investigator hand delivered an April 26, 2010, Stop Work Order, as well as a Request for Production of Business Records for Penalty Assessment Calculation seeking payroll information for the past three (3) years. (Respondent’s Exhibits 3 and 4.) The Petitioner provided business records to the Department in response to their Request, and based on those records, an Amended Order of Penalty Assessment was hand delivered to the Petitioner on May 13, 2010, in the amount of Seventeen Thousand Seven Hundred Ninety One and 76/100 Dollars ($17,791.76). (Respondent’s Exhibits 5 and 6.) Under protest, and in the effort to remove the Department’s April 26, 2010, Stop Work Order, the Petitioner executed a Payment Agreement Schedule for Periodic Payment of Penalty on May 13, 2010, paying Eighteen Hundred Dollars ($1,800.00) to the Department as a ten percent (10%) down-payment of the administrative penalty. (Respondent’s Exhibit 7.) The Petitioner did not purchase a policy of workers’ compensation insurance, but instead the Corporation’s President obtained an exemption from the requirement of being covered by workers’ compensation insurance. With only three (3) remaining non- exempt employees, Florida law does not require an underlying worker’s compensation insurance policy, and Mubarak Trading Corporation, Inc., was no longer in violation of Florida Workers’ Compensation Law. , Mrs. Michelle Newcomb, Penalty Calculator for the Florida Department of Financial Services, Division of Workers’ Compensation, Bureau of Compliance, was assigned the task of calculating the statutory penalty to be assessed against Mubarak Trading Corporation, Inc., for failing to secure workers’ compensation insurance. Utilizing NCCI Class Code 8017 for retail stores, the appropriate NCCI premium pages for Class Code 8017, and the documentation provided by the Petitioner, the Department calculated the mandated statutory penalty of Seventeen Thousand Seven Hundred Ninety One and 76/100 ($17,791.76) in their May 12, 2010, Amended Order for Penalty Assessment (Respondent’s Exhibit 6, 10 and 11.) The Department’s administrative penalty was ultimately adjusted downward to Sixteen Thousand, Four Hundred Twenty Nine and 44/100 Dollars ($16,429.76), as reflected in the Department’s February 2, 2011, Second Amended Order of Penalty Assessment. (Respondents Exhibit 9.) There are no disputed issues of material fact in this matter. The Petitioner’s Proposed Recommended Order acknowledges “[t]he calculation of the Section 440.107(7)(d) penalty is not in question...” The Petitioner has consistently objected to the “excessive” amount of the Department’s penalty, challenged the Department’s authority to assess unconstitutional penalties, and argues the penalty assessed violates the “principle of proportionality.”
Conclusions Christopher O. Marsh, Econotax 139 Beal Parkway SE, Ste. 102 ne Fort Walton Beach, Florida 32548 f Representative for Mubarak Trading Corp, Inc. Jamila Georgette Gooden, Esq. Florida Department of Financial Services Division of Legal Services Tallahassee, Florida 32399-4429 Attorney for the Florida Department of Financial Services, Division of Workers’ Compensation
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that a Final Order be entered affirming the Division of Workers’ Compensation Second Amended Order of Penalty Assessment in the amount of Sixteen Thousand Four Hundred Twenty Nine and 44/100 Dollars ($16, 429.44). Respectfully submitted this 19" day of December, 2011. Department of Financial Services 3700 Lifford Circle Tallahassee, Florida 32309 Phone: (850)668-9820 Fax: (850)668-9825 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the above and foregoing Recommended Order has been provided by US Mail to: Mr. Christopher Marsh, Econotax, on behalf of Mubarak Trading Corporation, Inc., 139 Deal Parkway, SE, Suite 102, Fort Walton Beach, Florida 32548 and via hand delivery in the interests of judicial economy to Alexander Brick, Esq. Department of Financial Services, Division of Legal Services, 200 East Gaines Street, Tallahassee, FL 32399-4429 this 19" day of December, 2011. Alan J. ~ 2h -13-
The Issue Whether Petitioner, Brian’s Painting and Wall Papering, Inc., conducted operations in the State of Florida without obtaining workers’ compensation coverage, meeting the requirements of Chapter 440, Florida Statutes (2007),1 in violation of Subsection 440.107(2), Florida Statutes. If so, what penalty should be assessed by Respondent, Department of Financial Services, Division of Workers’ Compensation, pursuant to Section 440.107, Florida Statutes, and Florida Administrative Code Chapter 69L.
Findings Of Fact Respondent is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. § 440.107, Fla. Stat. Petitioner is a corporation domiciled in Florida and engaged in the construction industry, providing painting and wallpapering services to private residences in Florida. On December 4, 2007, Investigator Ira Bender conducted a random workers’ compensation compliance check of a new home construction site located at 4009 Twenty-second Street, Southwest, in Lehigh Acres, Florida. Investigator Bender observed two men painting. He later identified the two men as Larry Zoelner and Brian Zack, who were later determined to be Petitioner’s employees. Investigator Bender continued the investigation of Petitioner, utilizing the Respondent’s Compliance and Coverage Automated System (“CCAS”) database that contained all workers’ compensation insurance policy information from the carrier to an insured and lists all the workers’ compensation exemptions in the State of Florida. Based on his search of CCAS, Investigator Bender determined that for the period, December 3, 2004, through December 4, 2007 (“assessed penalty period”), Petitioner did not have a State of Florida workers’ compensation insurance policy or a valid, current exemption for any of Petitioner’s employees, including Zoelner and Zack. Based on his search of CCAS, he also determined that Petitioner did not have a State of Florida workers’ compensation insurance policy or a valid, current exemption for Brian Galvin, Petitioner’s owner and operator, for the assessed penalty period. Galvin admitted that he did not have an exemption prior to December 4, 2007. Section 440.05, Florida Statutes, allows a corporate officer to apply for a construction certificate exemption from workers’ compensation benefits or compensation. Only the named individual on the application is exempt from carrying workers’ compensation insurance coverage. Petitioner was not in possession of a current, valid construction industry exemption for its corporate officer, Galvin, during the three-year search period. To be eligible for the exemption in the construction industry, an employer must pay a $50 processing fee and file a “notice of election to be exempt” application with Respondent for each corporate officer and have that application processed and approved by it. 7. Subsections 440.107(3) and 440.107(7)(a), Florida Statutes, authorized Respondent to issue SWOs to employers unable to provide proof of workers’ compensation coverage, including proof of a current, valid workers’ compensation exemption. Failure to provide such proof is deemed “an immediate serious danger to public health, safety, or welfare . . .” § 440.107(7)(a), Fla. Stat. Based on the lack of worker’s compensation coverage and a current, valid workers’ compensation exemption for its employees, including Galvin, Respondent issued a SWO on Petitioner on December 4, 2007. The SWO ordered Petitioner to cease all business operations for all worksites in the State of Florida. On the day the SWO was issued, Investigator Bender also served Petitioner with a “Request for Production of Business Records for Penalty Assessment Calculation,” for the purpose of enabling Respondent to determine a penalty under Subsection 440.107(7), Florida Statutes. Pursuant to Florida Administrative Code Rule 69L-6.015, Investigator Bender requested business records from Petitioner for the assessed penalty period. The requested records included payroll documents, copies of certificates of exemptions, employee leasing records, and other business records. Investigator Bender was satisfied that the records produced by Petitioner were an adequate response to the business records request. Based on Investigator Bender’s review of the business records, he determined that Galvin was dually-employed during the assessed period. Dual employment occurs when an employee is paid remuneration by two different employers. Galvin was simultaneously employed by SouthEast Personnel Leasing, Inc., as a painter and by Petitioner as its chief operating officer. In calculating the assessed penalty, Investigator Bender only took into account Petitioner’s payroll. It was determined that the payroll from the leasing company demonstrated secured payment of workers’ compensation coverage for the two painters and for Galvin, when he was operating as a painter. Pursuant to Florida Administrative Code Rule 69L- 6.035, Investigator Bender included “dividends” paid by Petitioner to Galvin during the assessed penalty period, in calculating Petitioner’s total payroll amount used in the calculation of the assessed penalty. Galvin argued that dividends paid to him by Petitioner should be excluded from the calculation. However, the dividends that Petitioner paid to Galvin constituted unsecured payment for workers’ compensation coverage, in violation of Chapter 440, Florida Statutes, and the Florida Insurance Code. Through the use of the produced records, Respondent calculated a penalty for the assessed period. The Amended Order, which assessed a penalty of $45,363.76, was issued and served to Petitioner on December 13, 2007. Based on business records Investigator Bender received from SouthEast Personnel Leasing, Inc., on December 17, 2007, Investigator Bender determined that the classification code assigned for Galvin should be changed from 5474 to 5606. Classification code 5474 represented the designation for a painter while classification code 5606 represented the designation for a manager. In the course of his investigation, Investigator Bender also deleted Charlie Galvin after he determined Charlie Galvin was not Petitioner’s employee. Investigator Bender assigned the new class code to the type of work performed by Galvin while working as a manger for Petitioner, utilizing the SCOPES Manual. He multiplied the class code’s assigned approved manual rate with the payroll per $100, and then multiplied all by 1.5. Consequently, the 2nd Amended Order, which was issued and served to Petitioner on December 18, 2007, assessed a penalty in the amount of $19,943.08. The recalculated penalty, as calculated, was consistent with the method in which the investigator had calculated the previous penalties.
Recommendation Based on the Findings of Fact and Conclusions of Law, it RECOMMENDED that Petitioner enter a final order, as follows: Petitioner failed to secure workers’ compensation coverage for its employees, including its corporate officer, as required by statute; and Petitioner be assessed a penalty of $19,943.08. DONE AND ENTERED this 22nd day of May, 2008 in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE 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 22nd day of May, 2008
Findings Of Fact Petitioner retired from employment with the State of Florida effective January 1, 1976, and began drawing retirement benefits on that date. During 1979, she worked for the South Florida State Hospital, her former employer, on a temporary basis while continuing to receive retirement compensation of $235.46 monthly. At the request of the South Florida State Hospital, Petitioner worked from June 7 through August 10, and September 7 through December 6, 1979. On September 28, she reached five hundred hours of employment for the calendar year. Therefore, Petitioner exceeded five hundred hours of state employment during the months of September, October, November, and December, 1979. Respondent seeks return of retirement compensation for the last three days of September and for all of the months of October, November and December, plus ten percent annual interest. This amounts to $729.93 in retirement compensation plus $36.04 interest through April 30, 1980.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That Petitioner be ordered to repay the State of Florida retirement compensation in the amount of $729.93 plus ten percent interest compounded annually. RECOMMENDED this 12th day of August, 1980, in Tallahassee, Florida. R. T. CARPENTER Hearing Officer Division of Administrative Hearings Department of Administration Room 101 Collins Building Tallahassee, Florida 32301 (904) 488-1777 Filed with the Clerk of the Division of Administrative Hearings this 12th day of August, 1980. COPIES FURNISHED: Mrs. Sarah H. Hoyle 1201 S.W. 17th Street Fort Lauderdale, Florida 33315 Augustus D. Aikens, Esquire Division Attorney Division of Retirement Cedars Executive Center 2639 North Monroe Street Suite 207C - Box 81 Tallahassee, Florida 32303 Christopher M. Rundle, Esquire South Florida State Hospital 1000 S.W. 84th Avenue Hollywood, Florida Mr. A. J. McMullian, III State Retirement Director Cedars Executive Center 2639 North Monroe Street Tallahassee, Florida 32303
The Issue The issue in this case is whether Respondent, Eric Kachnycz, LLC d/b/a Done Right Irrigation and Lighting (“Done Right”), should have a penalty assessed against it by Petitioner, Department of Financial Services, Division of Workers’ Compensation (the “Department”), and, if so, the amount of such penalty or assessment.
Findings Of Fact The Department is the State agency responsible for, inter alia, ensuring that all businesses operating in this State have workers’ compensation insurance coverage. Done Right is a duly-formed and validly-existing limited liability company in the State of Florida. It was formed on July 27, 2004, for the purpose of conducting any and all lawful business. At the time of its formation, Eric Kachnycz was the only listed manager or managing member of the company. His address was listed as 9 Twin River Drive, Ormond Beach, Florida. The registered agent for the company was listed as Betty C. Kachnycz, at the same address. In 2011, Daniel Dupuis was added as a managing member of the company. His address was listed as a post office box in Ormond Beach, Florida. By way of a document filed with the Secretary of State, Division of Corporations, on March 1, 2016, Daniel Dupuis was withdrawn as a managing member of the company. On January 14, 2016, Kent Howe, a compliance investigator with the Department, conducted an investigation at 316 Ocean Dunes Road in Daytona Beach, Florida. Upon arrival at the site at around 11:00 a.m., Mr. Howe noted the presence of a large white truck and work trailer parked in front of the residence. The truck and trailer were imprinted with the name and contact information for Done Right. Mr. Howe saw a person (later identified as Daniel Dupuis) engaged in repair work on a sprinkler or irrigation system in the front yard of the residence. After about ten minutes observing Mr. Dupuis, Mr. Howe approached and asked him for whom he worked. Mr. Dupuis responded that he worked for Done Right and that Mr. Kachnycz owned and operated the business. There was another person at the job site who Mr. Dupuis identified as the owner of the residence. That person, with whom Mr. Howe did not converse, was observed walking into and out of the house and, just before Mr. Howe left the site at 1:00 p.m., was seen using a shovel to back-fill some of the irrigation ditches that had been dug.1/ Mr. Howe tracked down and called Mr. Kachnycz to inquire as to the existence of workers’ compensation insurance for his employees, including Mr. Dupuis. Mr. Kachnycz said that the only two persons associated with Done Right, he and Mr. Dupuis, had existing exemptions from workers’ compensation coverage. Further, Mr. Kachnycz said the he had personally applied for the exemptions himself. Mr. Howe checked the Department’s compliance and coverage automated system (CCAS) to verify the exemptions. He found that Mr. Kachnycz had a current exemption, but Mr. Dupuis’ exemption had expired on April 26, 2015, approximately nine months previous. Exemptions have a two-year term once granted, but may be renewed on-line prior to their expiration. Mr. Kachnycz obtained an exemption in 2004 and has renewed it every two years thereafter. Mr. Dupuis obtained his first exemption in February 2011, but did not timely renew it before it expired two years later. He then obtained an exemption in April 2013, but it expired in 2015. He did not have an exemption in place on January 14, 2016, while working at the job site. He did, however, apply for an exemption just two days later, i.e., on January 16, 2016. After verifying the corporate information for Done Right and checking CCAS to see if any other insurance coverage was in place, Mr. Howe determined that Done Right was not in compliance with workers’ compensation insurance requirements. The information gathered by Mr. Howe was presented to his area district manager, who approved the issuance of a stop work order. Mr. Howe prepared the SWO (along with a request for business records) and hand-delivered the documents to Mr. Dupuis at the job site. Mr. Howe attempted to serve the registered agent of Done Right, Betty C. Kachnycz, at her residence but Mr. Kachnycz said she was working out of town at her job as a registered nurse. So, instead of hand-delivery, Mr. Howe sent a copy of the SWO and request for business records to Mrs. Kachnycz via certified mail. The documents were delivered and signed as accepted by Mrs. Kachnycz on January 23, 2016. Subsequently, Mr. Howe had a conversation with Mr. Kachnycz concerning the possibility of Mr. Kachnycz signing a Conditional Agreed Release from the SWO. A blank copy of that agreement was provided for Mr. Kachnycz’ review, but he never signed the agreement. Mr. Howe later had another conversation with Mr. Kachnycz during which the latter inquired about the “criminal” charges against him related to the SWO. Mr. Howe knew nothing of any criminal charges and no evidence of such was offered at final hearing. Mr. Howe had no further contact with Mr. Kachnycz. Mr. Kachnycz ultimately asked for a formal administrative hearing to contest the SWO and penalty assessment, resulting in the instant case. During the preparation phase prior to final hearing, the Department continued to attempt to obtain the business records for Done Right. The Department served interlocking discovery on Done Right to obtain the business records along with other information. Mr. Kachnycz, however, steadfastly refused to provide the records unless, in his words, “[the records are] not used against me in a court of law.” During his deposition in this matter, Mr. Kachnycz reiterated his demand that his business records not be used against him in this proceeding, a clear indication of Mr. Kachnycz’ lack of understanding of the administrative process. There is no basis in law for such a demand by a party to an administrative proceeding. Mr. Kachnycz also invoked his Fifth Amendment rights and otherwise refused to answer questions posed to him during the deposition.2/ Review of an entity’s business records by the Department allows it to assess the amount of workers’ compensation insurance coverage for the business. A review also allows the Department to determine whether a penalty should be imposed at all. Had Done Right provided its business records in the instant case, it may have resolved the dispute without the necessity of a final administrative hearing. We shall never know. Based upon the absence of business records for Done Right, the Department used its existing rule constructs to formulate the amount of the penalty to be assessed. Anita Proano, an employee in the Department’s bureau of compliance, established a penalty using standard guidelines. Since Done Right did not provide business records for review, the imputed method was employed.3/ First, the payroll was calculated by using the average weekly wage in effect at the time of the issuance of the SWO and, per statute, multiplying by two. Class Code 5183-–under the construction umbrella, but specifically including irrigation and lawn sprinkler systems-– was assigned to the work being done by Done Right. The period of non-compliance was set at September 3, 2015, through December 31, 2015, and January 1, 2016, through January 14, 2016. Those are the dates within the Department’s two-year audit period that Done Right was deemed to be out of compliance. The imputed gross payroll amount was $29,571.77 for the first period of non-compliance and $3,450.04 for the second period. Those figures, divided by 100, resulted in the amounts of $295.72 and $34.50, respectively. The approved manual rate set for the two periods was $5.46 and $5.11, reflecting the rates for Class Code 5183. The premium owed by the employer for the first period was calculated at $1,614.62 and the premium it should have paid for the second period was $176.30. Those amounts, multiplied by two, resulted in assessed penalties of $3,229.24 and $352.60, for a total penalty of $3,581.84. Done Right presented no evidence to contest the amount of the penalty or the calculation thereof. Instead, Mr. Kachnycz inquired of the Department’s witnesses whether they had signed loyalty oaths and, if so, if they remembered what was in the oath. He expressed his displeasure at the process for penalizing small businesses and invoked his Constitutional rights (State and Federal), but provided no evidence germane to the issues of this case.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered assessing a penalty of $3,581.84 against Respondent, Eric Kachnycz, LLC, d/b/a Done Right Irrigation and Lighting. DONE AND ENTERED this 18th day of May, 2016, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of May, 2016
The Issue The issue is whether Petitioner timely filed his request for claim form requesting reimbursement for certain covered expenses under the Florida Flexible Benefits Program--Reimbursement Plan.
Findings Of Fact Petitioner is a member of the faculty of the University of South Florida. He participates in the Florida Flexible Benefits Program--Reimbursement Program (Program). The Plan allows participants to pay certain eligible medical or dependent day care expenses with pretax earnings. Each year, during an open enrollment period, an employee may elect to participate in the Program and select an amount of salary to be deducted from his or her pay. The amount of salary so deducted is not subject to federal income tax, but is available to reimburse the employee for covered expenses. In order for the Program to continue to enjoy preferential treatment under the federal income tax law, Respondent, which administers the Program, must adhere to certain rules. Most relevant to this case is that that the deducted salary must be at risk. Specifically, an employee is not entitled to a refund of all or part of the deduction if he or she does not timely submit sufficient reimbursable expenses to exhaust his or her account. The Program brochure clearly warns participants of this "use it or lose it" rule. The plan year for the Program is the calendar year. In 1997, Petitioner was a participant in the Program. He and his wife chose not to submit claims for covered expenses, as they paid them during the year. Instead, they accumulated the receipts with the intent of submitting a single claim for their account balance at the end of the plan year. The Program sets a claims filing deadline of April 15 for filing claims arising out of the expenses paid in the preceding calendar year. The Program brochure warns that this deadline means all claims for expenses incurred during a plan year must be postmarked by midnight, April 15 of the following year to be considered for processing. Any claims received after this date will be returned to the participant unprocessed, regardless of the account balances. Participants should file claims as soon as the required documentation is obtained. This case involves only one issue: whether Petitioner timely submitted his claims for reimbursement under the Program. There is no issue concerning Petitioner's payment of these expenses or his account balance. There is no issue whether these expenses are eligible for reimbursement. In early March 1998, Petitioner and his wife collected their receipts for covered expenses from 1997. Petitioner completed a reimbursement form and addressed the envelope to Respondent at the correct address. Wanting to make copies of the materials, Petitioner did not immediately mail the package to Respondent. A few days later, prior to copying the materials or mailing the package, Petitioner's father became ill in the Mideast, where he lives. Petitioner and his wife agreed that she would copy the materials and mail the package to Respondent. On March 21, which marks the birthday of Petitioner's wife and a cultural holiday for Petitioner and his wife, Petitioner's wife telephoned her husband, who was still visiting his sick father. In the ensuing discussion, Petitioner learned that she had not yet mailed the package. They discussed the matter and again agreed that she would copy the materials and mail the package without further delay. Without further delay, Petitioner's wife copied the materials and mailed the package to Respondent at the correct address. She placed the package with sufficient postage in a mailbox across from her home. The package consisted of a claims reimbursement form and receipts for eligible expenses. It appears that she may have written an old return address on the envelope. Respondent never received the package. Respondent's procedures are carefully designed and executed to ensure that it will not lose a claim form. Repeated searches for the missing form never uncovered it. The package was lost after its mailing by Petitioner's wife and prior to its delivery to Respondent. Possibly, the incorrect address precluded notification to Petitioner of problems with delivery. Possibly, the package was just lost. Unfortunately, Petitioner learned only after the April 15 deadline that Respondent had never received the package.
Recommendation It is RECOMMENDED that the Department of Management Services, Division of State Group Insurance, enter a final order determining that Petitioner timely submitted the claim and eligible expenses that were the subject of this case. DONE AND ENTERED this 8th day of March, 2000, in Tallahassee, Leon County, Florida. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of March, 2000. COPIES FURNISHED: Paul A. Rowell, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Thomas D. McGurk, Secretary Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950 Mohsen M. Milani 15927 Ellsworth Drive Tampa, Florida 33647 Julia Forrester Assistant General Counsel Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399
The Issue The issues are whether Respondent conducted business operations in Florida without obtaining workers’ compensation coverage that met the requirements of Chapter 440, Florida Statutes (2009), for its employees, and if so, what penalty should be assessed.
Findings Of Fact Petitioner is the state agency that is responsible for enforcing Chapter 440, Florida Statutes, which requires employers to secure the payment of workers’ compensation for the benefit of their employees. Respondent is a Louisville, Kentucky-based corporation that is engaged in the construction, maintenance, and painting of elevated water tanks. Respondent has a second fabrication facility located in Newnan, Georgia. Respondent’s work constitutes construction. On March 4, 2010, Petitioner’s investigator, Lawrence F. Eaton, observed Respondent’s employees working on a water tower in Pace, Florida. While visiting the worksite, one of Respondent’s employees stated that he did not have any information regarding if and how the men were covered by workers’ compensation. The employee gave Mr. Eaton a telephone number for Respondent. Next, Mr. Eaton consulted the Kentucky Secretary of State website to find information concerning the corporate status of Respondent. The website indicated that Respondent was incorporated in 1892 and that it had three corporate officers. Mr. Eaton then consulted Petitioner’s Coverage and Compliance Automated System (CCAS) database. CCAS contains workers’ compensation policy information for each employer that has a Florida policy and information relative to workers’ compensation exemptions that have been applied for and issued to individuals by Petitioner. Mr. Eaton was unable to find any indication on CCAS that Respondent had secured workers’ compensation coverage by purchasing a Florida policy. CCAS also provided no evidence that Respondent had entered into an arrangement with an employee leasing company to provide workers’ compensation coverage to its employees. Additionally, CCAS did not show that Respondent had obtained exemptions for its corporate officers. Mr. Eaton subsequently spoke with one of Respondent’s representatives. Mr. Eaton was informed that Respondent was self-insured for workers’ compensation in Kentucky. Mr. Eaton also learned that Respondent had another workers’ compensation policy. Respondent’s representative indicated that she would send Mr. Eaton the policy paperwork. When he received the paperwork from Petitioner, Mr. Eaton determined that the insurance coverage did not comply with the requirements of Florida’s workers’ compensation law. The paperwork included an excess policy of workers’ compensation and a Georgia workers’ compensation policy. On March 5, 2010, Mr. Eaton issued a Stop-Work Order and Order of Penalty Assessment against Respondent. Specifically, the Stop-Work Order states that Respondent was not in compliance with Chapter 440, Florida Statutes, because Respondent failed to obtain workers’ compensation coverage for its employees. On March 5, 2010, Mr. Eaton issued a Request for Production of Business Records for Penalty Assessment Calculation to Respondent. On March 8, 2010, Respondent provided Mr. Eaton with additional workers’ compensation policy information. The information included the declarations page for Chartis Company Policy No. WC 005-73-7942. The Chartis policy is a Workers’ Compensation and Employers Liability Policy. In Item 3A, the policy lists the states that are covered, in Part One of the policy, pursuant to each state’s workers’ compensation law. Georgia is named as a covered state in Item 3A. In Item 3C, the Chartis policy lists the states that are covered, in Part Three of the policy, as "other states insurance." Florida is listed only in Item 3C. Item 4 of the Chartis policy states that "[t]he premium of this policy will be determined by our Manuals of Rules, Classifications, Rates and Rating Plans. All information required below is subject to verification and change by audit." In response to the request for business records, Respondent provided Petitioner with payroll information for work it had performed in Florida between September 2007 and February 2010. After receiving this information, Respondent’s Penalty Calculator, Robert McAullife, calculated a penalty. Because Respondent had not provided all of the requested business records, Mr. McAullife imputed Respondent’s payroll for a portion of the relevant time period. In calculating the penalty, Mr. McAullife first sought to determine the amount of premium that Respondent would have paid had it been properly insured for the relevant three-year period. Mr. McAullife assigned a class code for each of Respondent’s employees, reflecting the work they performed. Mr. McAullife then took 1/100th of the payroll and multiplied that figure by the approved manual rate applicable to each class code. Mr. McAullife then took the previously obtained product and multiplied it by 1.5 to find a penalty in the amount of $122,242.23. This penalty is based on Respondent having $382,146.90 in Florida payroll that would have required $81,494.66 in workers’ compensation premium. There are no errors in Mr. McAullife’s penalty calculation. Mr. Eaton issued an Amended Order of Penalty Assessment on March 23, 2010. On March 24, 2010, Respondent and Petitioner entered into a Payment Agreement Schedule for Periodic Payment of Penalty that required ten percent of the penalty to be paid in advance and the remainder to be paid in 60 interest-free monthly payments. Respondent also produced a policy that provided coverage in compliance with Florida law with an effective date of March 12, 2010. As a result, Petitioner issued an Order of Conditional Release, permitting Respondent to return to work. During the hearing, Respondent presented evidence that it is a registered self-insured company in Kentucky for the first $500,000.00 of workers’ compensation. Additionally, Respondent has excess insurance for any workers’ compensation claims that exceed the $500,000.00 threshold. Because it is self-insured in Kentucky, Respondent must purchase letters of credit on an annual basis. Respondent paid the following for its recent letters of credit: (a) 2007, $26,755.54; (b) 2008, $32,438.48; (c) 2009, $33,626.38; and (d) 2010 to date, $8,931.39. The State of Kentucky assesses qualified self-insureds a six and one half percent tax based on an annual simulated premium. The amount of the simulated premium represents what a qualified self-insured would pay for a "first dollar" policy of workers’ compensation insurance. Respondent’s recent simulated premiums are as follows: (a) 2007, $453.440.00; (b) 2008, $480,637.00; (c) 2009, $623,940.00; and (d) 2010, $1,006,243.00. Respondent also maintains a "high dollar" deductible policy of insurance that provides workers’ compensation coverage for its Georgia employees. Respondent’s Georgia policy, Chartis Company Policy No. WC 005-73-7942, which includes Florida as part of "all other states" in Item 3C of the declarations page, also requires the payment of premiums. Respondent recently paid the following premiums for this insurance: (a) 2007, $124,736.78; (b) 2008, $125,950.08; and (c) 2009, $64,465.28. The premiums paid by Respondent for the Chartis Company Policy No. WC 005-73-7942 are not based on Florida rates. From 2007 to 2010, Respondent provided workers’ compensation benefits for at least four different workers that were injured while performing work for Respondent in Florida. The workers’ compensation benefits paid by Respondent on these claims totaled $147,958.25.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Financial Services, Division of Workers’ Compensation, enter a final order, finding that Caldwell Tanks, Inc., failed to comply with Chapter 440, Florida Statutes, and imposing a penalty in the amount of $122,224.22. DONE AND ENTERED this 8th day of December, 2010, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD 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 8th day of December, 2010. COPIES FURNISHED: Claude M. Harden, III, Esquire Carr Allison 305 South Gadsden Street Tallahassee, Florida 32301 Jamila Georgette Gooden, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 Julie Jones, Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0390 Honorable Alex Sink Chief Financial Officer The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0390
The Issue The issue in the case is whether David Bumgarner (Respondent) should be assessed a penalty for an alleged failure to obtain workers' compensation coverage for his employees.
Findings Of Fact The Petitioner is the state agency designated to enforce the provisions of Chapter 440, Florida Statutes (2008),1 which requires that employers in Florida obtain workers' compensation coverage for their employees. The Respondent is a sole proprietor based in North Carolina and doing business as "Builders and Assemblers." On February 25, 2009, Ira Bender, an investigator employed by the Petitioner, observed ten men assembling the iron-and-steel frame for a single story storage building being constructed at 7253 Gasparilla Road, Port Charlotte, Florida. The Respondent was present at the time Mr. Bender observed the workers, and Mr. Bender asked the Respondent about the project. The Respondent advised Mr. Bender that he was the owner of the company constructing the building, that the ten men erecting the building frame were his employees, and that they were being paid $10.00 per hour. Mr. Bender, accompanied by the Respondent, then spoke to each of the ten men at the work site and obtained their names and other relevant information. The Respondent provided to Mr. Bender a copy of a certificate of insurance from "Acord" bearing policy number BNUWC0108275. Mr. Bender reviewed the Petitioner's "Coverage and Compliance Automated System" (CCAS) database and information contained on the National Council on Compensation Insurance ("NCCI") website. Both sources are routinely used to monitor and review workers' compensation coverage. Neither the CCAS database nor the NCCI website indicated that the Respondent had workers' compensation coverage valid within Florida for any of the ten employees at the work site or that the Respondent had a valid exemption from coverage for any employee. After discussing the collected information with his supervisor, Mr. Bender issued a Stop Work Order and Order of Penalty Assessment dated February 25, 2009. The Respondent subsequently provided a copy of his workers' compensation policy to the Petitioner. The policy information page attached to the policy is an NCCI-issued form identified as "WC 00 00 01 A." The Respondent's policy's information page provides, in relevant part, as follows: 3.A. Workers Compensation Insurance: Part One of the policy applied to the Workers Compensation Law of the states listed here: NC * * * C. Other States Insurance: Part Three of the policy applies to the states, if any listed here: All states and U.S. territories except North Dakota, Ohio, Washington, Wyoming, Puerto Rico, and the U.S. Virgin islands, and states designated in Item 3.A. of the Information Page. Administrative rules adopted by the Petitioner and referenced elsewhere herein explicitly state that the coverage identified in the Respondent's policy information page is not valid within the State of Florida. Mr. Bender also issued a Request for Production of Business Records on February 25, 2009. Other than the previously referenced insurance certificate and policy, no further business records were provided to the Petitioner by the Respondent. Mr. Bender subsequently forwarded the case to Lynn Murcia, the Petitioner's penalty calculator. Because the Respondent failed to provide business records sufficient to enable computation of a penalty, Ms. Murcia computed the penalty based on an imputed payroll as provided by Florida law. The NCCI publishes the "SCOPES Manual," which contains a commonly-used system of occupational classifications used to determine workers' compensation requirements. In Florida, the SCOPES Manual has been adopted by incorporation into the Florida Administrative Code. The SCOPES Manual identifies the erection of steel or iron frames for buildings not in excess of two stories under classification code 5059. The Respondent's employees were engaged in such activities, and Ms. Murcia therefore properly classified the Respondent's employees under code 5059. Ms. Murcia utilized the SCOPES classification in determining the imputed payroll applicable to this case and, thereafter, computed the penalty according to a worksheet that has been adopted as an administrative rule by the Petitioner. The worksheet is routinely used to calculate penalties applicable to employers who fail to obtain workers' compensation coverage for employees. Based on Ms. Murcia's calculations, the penalty was identified as $1,764,643.98, as was set forth in an Amended Order of Penalty Assessment issued on March 31, 2009. Ms. Murcia's calculation of the applicable penalty, including her reliance on the applicable SCOPES classification codes and the imputation of the Respondent's payroll, was not disputed at the hearing. Her testimony has been fully credited.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner enter a final order assessing a penalty of $1,764,643.98 against the Respondent. DONE AND ENTERED this 9th day of September, 2009, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of September, 2009.
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes (2013)1/, by failing to obtain workers? compensation insurance coverage, as alleged in the Stop-Work Order and Amended Order of Penalty Assessment; and, if so, the appropriate penalty.
Findings Of Fact The Department is the state agency responsible for enforcing the requirement that employers secure the payment of workers? compensation insurance coverage, pursuant to chapter 440, Florida Statutes, for their employees. Respondent is a Florida-limited liability company engaged in business operations for the time period of March 16, 2010, through March 15, 2013. Mark Markisen is the managing member of Respondent listed with the State of Florida, Division of Corporations. On March 15, 2013, Jack Gumph, an investigator with the Department, conducted a random on-site compliance inspection of a construction site for a single family residence. Gumph determined that the general contractor for the job was Gulf Shore Homes and that it had subcontracted with Tradewinds Design for certain work inside the home. As Gumph interviewed the different workers present on the worksite, he spoke with Mark and Brett Markisen, who informed him that they worked for Tradewinds Design. Gumph observed Brett Markisen installing a wine cabinet in the home. Gumph confirmed through the Department?s online records that Gulf Shores Homes and Tradewinds Design had current workers? compensation insurance coverage on March 15, 2013. Based on this initial information, Gumph left the worksite. On March 19, 2013, Gumph subsequently learned from a conversation with Mark Markisen that Mark and Brett Markisen were not employees of Tradewinds Design. Rather, Tradewinds had subcontracted with Respondent, Cabinetry by Design of Collier County, L.L.C., to build and install the wine cabinets. Mark Markisen stated that he was the managing member of Cabinetry by Design of Collier County, L.L.C., and that he had selected to be exempt from workers? compensation insurance coverage. Gumph confirmed that Mark Markisen had selected to be exempt from workers? compensation insurance coverage. However, because Respondent did not have worker?s compensation coverage for Brett Markisen, the Department issued a Stop-Work Order on March 19, 2013, and Request for Production of Business Records for Penalty Assessment Calculation on April 8, 2013. Mark Markisen possessed an exemption from the workers? compensation insurance coverage requirement during the penalty period of March 16, 2010, through March 15, 2013. Brett Markisen did not possess an exemption from the workers? compensation insurance coverage requirement during the penalty period. Brett Markisen was employed by Respondent throughout the penalty period. During the penalty period, Brett Markisen received approximately $187,000.00 from Respondent. The amount of this money attributed to wages is unclear, based on the fact that Mark Markisen indicated that some of the payments reflected loans, not wages. Respondent was an “employer” as defined in chapter 440, Florida Statutes, throughout the penalty period. On March 15, 2013, Brett Markisen was Respondent?s “employee” working on the installation of cabinets in the single family residence.2/ On March 15, 2013, Respondent failed to provide workers? compensation insurance coverage for Brett Markisen. Respondent also failed to provide coverage during the penalty period of March 16, 2010, through March 15, 2013. Therefore, the Department properly entered a Stop-Work Order on March 19, 2013. Respondent failed to provide sufficient business records in order to establish a payroll. Therefore, the Department correctly imputed payroll against Respondent. The Amended Order of Penalty Assessment used the proper class code for the calculation of the penalty, concerning the installation of cabinets, and correctly followed the procedure set out in section 440.107(7)(d)1, Florida Statutes, and Florida Administrative Code Rule 69L-6.028.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order upholding the Stop-Work Order and Amended Order of Penalty Assessment, assessing a penalty against Respondent in the amount of $21,436.61. DONE AND ENTERED this 30th day of December, 2013, in Tallahassee, Leon County, Florida. S THOMAS P. CRAPPS 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 30th day of December, 2013.
