Findings Of Fact Respondent James Seay, who had worked as a teacher in Suwannee County for many years, was out sick first with a stomach virus and then with recurring head pain for the entire school week of March 4-8, 1991. He visited physicians on March 5, 7 and 8, and took three prescribed medicines. Mr. Seay telephoned the morning of March 4, 1992, and told Sonja Suber, a secretary who was "the designated person at the school," (T.48) responsible for obtaining substitute teachers and maintaining sick leave records, that he was ill and would not be in that day. The parties agree that respondent was on sick leave through March 8, 1991. On the evening of March 4, 1991, he telephoned Nancy Roberts, director of elementary education for the Suwanee County School District and principal of Douglass Center. When Mr.Seay told her he would not be in the following day, she cancelled an observation she had scheduled for his benefit. The next day or the day after Sonya Suber telephoned respondent to relay Ms. Roberts' advice that a meeting scheduled for March 11, 1991, had been cancelled. On Saturday, March 9, 1991, Mr. Seay telephoned Ms. Suber and said "that he would be coming Monday to the school but he would not report to the classroom." T. 29. He had earlier expressed to Ms. Roberts discomfort "with the students that were assigned" (T. 46) to him. On Monday, March 11, 1991, at 7:53 o'clock in the morning, he appeared as promised and signed in at Suwanee County School District's Douglass Center. After greeting Sonya Suber, he went to the teachers' lounge. He did not give any indication that he was unwell or make any request for leave. Ms. Roberts saw Mr. Seay reading a newspaper in the lounge. She asked him to accompany her to her office, where she "let him know that he was a teacher assigned to the Alternative Program at the Douglass Center and what his responsibilities were . . . working with the students there." T.50. Respondent handed Ms. Roberts one of his attorney's cards, and told her "that there was nothing [she] could do to make him go in that classroom and that he was not going to that classroom," (T.50) and asked her "to stop harassing him." Id. After Mr. Seay's return to the teachers' lounge, Ms. Roberts gave an account of events to Mr. Charles F. Blalock, Jr., petitioner here. Petitioner's Exhibit No. 2. The following morning Mr. Seay signed in at the Douglass Center at ten before eight, Petitioner's Exhibit No. 1, but he again went to the teachers' lounge rather than to his assigned classroom. Again he told nobody he was ill, and asked nobody for sick leave. Ms. Roberts twice asked him to go to his classroom. When she told him his failure to teach the class he had been assigned "could be construed as insubordination on his part," (T.53) he asked her to clarify what she meant by insubordination and, with her permission, made a tape recording of her answer. Petitioner's Exhibit No. 3. He refused to go to his classroom. On Wednesday, March 13, 1991, Mr. Blalock wrote a letter to Mr. Seay advising him that he was suspended with pay, and that, as superintendent, he would recommend suspension without pay and ultimately dismissal at the next regular meeting of the School Board. Petitioner's Exhibit No. 4. When Ms. Roberts telephoned Thursday morning with word that Mr. Seay was at Douglass Center, Mr. Blalock went himself to speak to Mr. Seay. Twice he personally directed Mr. Seay to go to his classroom and get to work. Confronted with Mr. Seay's silent refusal, Mr. Blalock handed him the letter of suspension, dated the day before. When the School Board met, heard what had transpired, and listened to a presentation by Mr. Seay's lawyer, it decided that Mr. Seay should have a physical examination and be examined by a psychiatrist. At the school board meeting, nobody suggested that respondent was on sick leave at any time after March 8, 1991. In keeping with the collectively bargained agreement between the School Board and teachers like Mr. Seay under continuing contract with the School Board, Petitioner's Exhibit No. 6, petitioner demanded that respondent go for medical and psychiatric examinations, by letter dated April 10, 1991. Petitioner's Exhibit No. 7. A second, follow-up letter reiterating the demand, dated April 29, 1991, Petitioner's Exhibit No. 9, reached Mr. Seay by registered mail. As of the time of the hearing, Mr. Seay had not complied with the Board's demand that he submit to a physical examination and be examined by a psychiatrist.
Recommendation It is, therefore, RECOMMENDED: That petitioner terminate respondent's employment. DONE and ENTERED this 3rd day of December, 1992, at Tallahassee, Florida. ROBERT T. BENTON, II, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of December, 1992. APPENDIX FOR NO. 91-6046 Petitioner's proposed findings of fact Nos. 1-11 and 13-20 have been adopted, in substance, insofar as material. Petitioner's proposed finding of fact No. 12 pertains to immaterial matters. With respect to petitioner's proposed finding of fact No. 21, respondent apparently also took the position that he had been on sick leave in the unemployment compensation case. Petitioner's proposed findings of fact Nos. 22 and 23 pertain to subordinate matters. Respondent's proposed findings of fact Nos. 1-3, 5-8 and 19 have been adopted in substance, insofar as material. Respondent's proposed findings of fact Nos. 4, 9-12, 21 and 24 pertain to subordinate matters. Respondent's proposed findings of fact Nos. 13 and 15 are immaterial since respondent never requested sick leave. Respondent's proposed findings of fact Nos. 14, 16, 17 and 18 have been rejected as unsupported by the weight of the evidence. With respect to respondent's proposed finding of fact No. 20, Ms. Roberts' testimony in that regard is unrebutted. With respect to respondent's proposed finding of fact No. 22, there is no disagreement. Respondent's proposed finding of fact No. 23 pertains to an immaterial matter. COPIES FURNISHED: Honorable Betty Castor Commissioner of Education The Capitol Tallahassee, FL 32399-0400 Charles Blalock, Superintendent Suwanee County School Board 224 W. Parshley Street Live Oak, FL 32060 J. Victor Africano, Esquire Post Office Box 1450 Live Oak, FL 32060 Linsey Moore, Esquire 50 East 2nd Street Jacksonville, FL 32206
The Issue The issues in this case are whether Respondent, Raul A. Correa, M.D. (Dr. Correa), failed to provide workers' compensation coverage, and if so, what penalty should be imposed.
Findings Of Fact The Department is the state agency responsible for enforcing section 440.107, Florida Statutes (2013). That section mandates, in relevant part, that employers in Florida secure workers’ compensation insurance coverage for their employees. § 440.107(3), Fla. Stat. At all times relevant, Dr. Correa was a Florida small business engaged in the practice of medicine, with his principal office located at 2505 Manatee Avenue West, Bradenton, Florida. Dr. Correa is not incorporated. On February 12, 2014, Ms. Green conducted an on-site workers’ compensation compliance investigation (compliance investigation) of Dr. Correa’s office. After identifying herself to the receptionist, Ms. Green met Dr. Correa and explained the reason for her presence, a compliance investigation. Dr. Correa telephoned his wife who handles his office management from their residence. Mrs. Correa immediately faxed a copy of the liability insurance policy to the office. However, that liability policy did not include workers’ compensation coverage. After a telephonic consultation with her supervisor, Ms. Green served a Request for Production of Business Records (Request) on Dr. Correa at 11:50 a.m. on February 12, 2014. This Request encompassed records from October 1, 2013, through February 12, 2014, for all of Dr. Correa’s payroll documents, account documents, disbursements, and workers’ compensation coverage policies. Ms. Green consulted the Department’s Coverage and Compliance Automated System (CCAS) database to determine whether Dr. Correa had secured workers’ compensation coverage or an exemption from the requirements for coverage for his employees. CCAS is a database Ms. Green consults during the course of her investigations. Ms. Green determined from CCAS that Dr. Correa did not have any current workers’ compensation coverage for his employees and he did not have an exemption from such coverage from the Department. The records reflected that Dr. Correa’s last active workers’ compensation coverage was in 2004. Dr. Correa obtained workers’ compensation coverage on February 20, 2014. Approximately one month later, Ms. Green served a Request for Production of Business Records for Penalty Assessment Calculation on Dr. Correa. Dr. Correa produced the requested records. These records were given to Lynne Murcia, one of the Department’s penalty auditors, to calculate the penalty. Ms. Murcia determined that the appropriate classification code for Dr. Correa’s employees was 8832, which incorporates physicians and clerical workers. This code was derived from the Scopes Manual, which lists all of the various jobs that may be performed in the context of workers’ compensation. The manual is produced by the National Council on Compensation Insurance, Inc., the nation’s most authoritative data collecting and disseminating organization for workers’ compensation. Dr. Correa listed seven employees on the Florida Department of Revenue Unemployment Compensation Tax (UCT-6) form for the time period of the non-compliance. The UCT-6 form lists those employees who are subject to Florida’s Unemployment Compensation Law. Ms. Murcia reasonably relied upon the UCT-6 filings for the relevant time period to calculate Dr. Correa’s gross payroll in Florida. Using Dr. Correa’s payroll chart, the UCT reports, and the classification codes for each employee, Ms. Murcia calculated the penalty assessment for the three-year penalty period preceding the investigation. This three-year period is the allocated time for reviewing coverage for those who do not have the appropriate workers’ compensation coverage. On April 9, 2014, Ms. Murcia determined the penalty to be $4,287.12. However, upon receipt of additional information regarding a former employee of Dr. Correa, an Amended Order of Penalty Assessment of $3,898.77 was issued on July 28, 2014. Dr. Correa’s position is that his practice is a small “mom and pop” operation. He employs members of his family to run the business side of his practice. His daughter, Antonia, works as Dr. Correa’s “doctor’s assistant.” She works at the various nursing homes that Dr. Correa services. Antonia believed that the nursing homes’ liability insurance would cover her, and she was not subject to workers’ compensation coverage. However, she was, in fact, paid by Dr. Correa. Dr. Correa’s daughter-in-law, Valeria, works from her home computer completing the medical billing for her father-in- law. She has been working in this capacity for approximately 14- 16 years, and it never occurred to her that she needed workers’ compensation coverage. She was paid by Dr. Correa. Dr. Correa’s brother-in-law, Mr. Collado, runs all the errands for the practice. He may go to the bank, take care of car maintenance, buy office supplies or fix things, all in support of Dr. Correa’s practice. Mr. Collado receives regular pay checks from Dr. Correa. Dr. Correa testified that his wife is his office manager and has been since he opened the practice in 1978. Mrs. Correa works from their home, in a small home office. She does all the paper work related to the practice. Dr. Correa firmly believed that he did not require workers’ compensation coverage because some of his employees were “independent contractors” or never worked in his office, but at other locations (individual homes, nursing homes, or just outside the office). Dr. Correa believed his insurance agent who did not think Dr. Correa needed the workers’ compensation coverage. Based upon the testimony and exhibits, the amended penalty assessment in the amount of $3,898.77 is accurate.
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, issue a final order upholding the Amended Order of Penalty Assessment, and assessing a penalty in the amount of $3,898.77. DONE AND ENTERED this 24th day of September, 2014, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK 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 24th day of September, 2014.
The Issue The issues are whether Respondent was required to obtain workers' compensation coverage for himself pursuant to Section 440.107, Florida Statutes (2002), during the penalty period designated in the Amended Order of Penalty Assessment; and, if so, whether Petitioner should impose a penalty against Respondent in the amount of $120,467.88.
Findings Of Fact The Department 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. (2002). On February 9, 2004, while conducting a random site inspection, Department investigator, Eric Duncan, observed three men performing construction work in the form of carpentry and house-framing at 720 Southwest 10th Street, Cape Coral, Florida. One of the workers on the site was Respondent, Jeremy Butzler, a sole proprietor who had employed the other two workers. Mr. Duncan interviewed Mr. Butzler at the site and requested proof of workers' compensation coverage, which Mr. Butzler was unable to provide. Mr. Duncan then issued the first Stop Work and Penalty Assessment Order, directing Mr. Butzler to cease work and pay a civil penalty of $1000.00. Also on February 9, 2004, Mr. Duncan served Mr. Butzler with a "Request for Production of Business Records," seeking copies of business records to determine whether Mr. Butzler had secured workers' compensation coverage, whether he had a current valid workers' compensation exemption, and to determine any civil penalties that may be owed for failing to secure workers' compensation coverage. Mr. Butzler complied in a very limited way. Mr. Duncan testified that most of the documents provided by Mr. Butzler were records of electronic transfer of funds that did not identify their recipients. No company checkbook or ledger was produced. After the penalty was calculated, the Department issued the First Amended Stop Work and Penalty Assessment Order, which increased the assessed penalty to $132,027.64. This assessment was later reduced to $120,467.88 after the Department corrected the workers' compensation premium rate it employed to calculate the penalty. At the time the Stop Work Order was issued and pursuant to Subsection 440.107(5), Florida Statutes (2002), the Department had adopted Florida Administrative Code Rule 4L-6.015,1/ which stated, in relevant part: In order for the Division to determine that an employer is in compliance with the provisions of Chapter 440, F.S., every business entity conducting business within the state of Florida shall maintain for the immediately preceding three year period true and accurate records. Such business records shall include original documentation of the following, or copies, when originals are not in the possession of or under the control of the business entity: All workers’ compensation insurance policies of the business entity, and all endorsements, notices of cancellation, nonrenewal, or reinstatement of such policies. * * * Records indicating for every pay period a description of work performed and amount of pay or description of other remuneration paid or owed to each person by the business entity, such as time sheets, time cards, attendance records, earnings records, payroll summaries, payroll journals, ledgers or registers, daily logs or schedules, time and materials listings. All contracts entered into with a professional employer organization (PEO) or employee leasing company, temporary labor company, payroll or business record keeping company. If such services are not pursuant to a written contract, written documentation including the name, business address, telephone number, and FEIN or social security number of all principals if an FEIN is not held, of each such PEO, temporary labor company, payroll or business record keeping company; and For every contract with a PEO: a payroll ledger for each pay period during the contract period identifying each worker by name, address, home telephone number, and social security number or documentation showing that the worker was eligible for employment in the United States during the contract for his/her services, and a description of work performed during each pay period by each worker, and the amount paid each pay period to each worker. A business entity may maintain such records or contract for their maintenance by the PEO to which the records pertain. * * * All check ledgers and bank statements for checking, savings, credit union, or any other bank accounts established by the business entity or on its behalf; and All federal income tax forms prepared by or on behalf of the business and all State of Florida, Division of Unemployment Compensation UCT-6 forms and any other forms or reports prepared by the business or on its behalf for filing with the Florida Division of Unemployment Compensation. During the period in question, Respondent was a "sole proprietor," as that term was defined in Subsection 440.02(25), Florida Statutes (2002): "Sole proprietor" means a natural person who owns a form of business in which that person owns all the assets of the business and is solely liable for all the debts of the business. Subsection 440.02(15)(c)1., Florida Statutes (2002), in effect during the penalty assessment period, stated, in relevant part: "Employee" includes a sole proprietor . . . Partners or sole proprietors actively engaged in the construction industry are considered employees unless they elect to be excluded from the definition of employee by filing written notice of the election with the department as provided in s. 440.05 . . . A sole proprietor or partner who is actively engaged in the construction industry and who elects to be exempt from this chapter by filing a written notice of the election with the department as provided in s. 440.05 is not an employee. (Emphasis added). Section 440.05, Florida Statutes (2002), allowed an individual to apply for election to be exempt from workers' compensation benefits. Only the named individual on the application was exempt from carrying workers' compensation insurance coverage. The Department maintains a database of all workers' compensation exemptions in the State of Florida. Mr. Duncan's review of this database revealed that, although Respondent had a valid workers' compensation exemption from November 18, 1999, to November 15, 2001, there were no exemptions for Respondent for 2002, the year constituting the penalty period in this case. At the hearing, Respondent admitted that he did not obtain an exemption for the year 2002. Mr. Duncan's investigation also revealed that Respondent did not have workers compensation insurance coverage during the year 2002. During the investigation, Respondent informed Mr. Duncan that he had contracted with an employee leasing company, Southeast Personnel Services, Inc., that was responsible for paying the salaries of and providing workers' compensation insurance coverage for Respondent and his workers. Pursuant to Subsection 468.520(5), Florida Statutes (2002),2/ an employee leasing company is a business entity engaged in employee leasing. "Employee leasing" is an arrangement whereby a leasing company assigns its employees to a client and allocates the direction of, and control over, the leased employees between the leasing company and the client. § 68.520(4), Fla. Stat. (2002). When the employee leasing company accepts a client, the client becomes an employee of the leasing company. An employee leasing company is the employer of the leased employees and is responsible for providing workers' compensation pursuant to Chapter 440, Florida Statutes (2002). § 468.529(1), Fla. Stat. (2002). Additionally, an employee leasing company assumes responsibility for the payment of wages to the leased employees without regard to payments by the client and for the payment of payroll taxes and collection of taxes from the payroll of leased employees. § 468.525(4)(b) and (c), Fla. Stat. (2002). At the hearing, Respondent demonstrated that he had workers' compensation coverage as an employee of the employee leasing company. However, the Department did not utilize any payments made through the leasing company in its penalty calculation. The evidence demonstrated that Respondent received compensation directly from Holiday Builders, Inc., in the amount of $185,006.50, and Gatco Construction, in the amount of $10,590.00. These amounts, totaling $195,596.50, were utilized by the Department to calculate Respondent's penalty. Mr. Duncan explained that in order for workers' compensation coverage to apply through the employee leasing company, companies such as Gatco Construction would have to make payments to the leasing company, not directly to Respondent. The leasing company would then pay a salary to Respondent, as its employee, and Respondent would be covered by the employee leasing company's workers' compensation insurance. Payments made directly to Respondent would not be secured by the workers' compensation coverage obtained through the employee leasing company. Respondent claimed that the Division utilized the incorrect gross income amount in calculating the penalty. To support this claim, Respondent attempted to introduce what he claimed was his personal income tax return for the year 2002. Respondent claimed this return had been prepared and filed by his bookkeeper some time in February 2004, subsequent to the Department's investigation. However, the return produced at hearing was unsigned and indicated that it had been self- prepared by Respondent. Respondent could not recall the bookkeeper's name without prodding from his counsel. Respondent offered no proof that this return had ever been completed or filed with the Internal Revenue Service. The purported 2002 tax return was not admitted into evidence, and Respondent's testimony as to the information contained on the return is not reliable. The Department correctly calculated the penalty assessment based on the money paid to Respondent as a sole proprietor "employee" who failed to file for a workers' compensation exemption for the year 2002. The Department calculated the total penalty based on Respondent's gross payroll, the class code assigned to Respondent utilizing the SCOPES Manual (a standard classification tool published by the National Council on Compensation Insurance), and the statutory guidelines in Subsection 440.107(7), Florida Statutes (2002). Based on that calculation, the correct penalty assessment in this case is $120,467.88.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order confirming the Amended Stop Work Order and imposing a penalty in the amount of $120,467.88. DONE AND ENTERED this 5th day of May, 2005, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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, 2005.
The Issue Whether Respondent failed to secure the payment of workers’ compensation in violation of Sections 440.10(1), 440.38(1) and 440.107(2), Florida Statutes, by materially misrepresenting and concealing employee duties as to avoid proper classification for premium calculation, and if so, what is the appropriate penalty?
Findings Of Fact The Department is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. Respondent is a commercial welding corporation based in Putnam County, Florida. It has been in business as an active Florida corporation since the early 1950s. Its principal office is located at 1301 Madison Street, Palatka, Florida 32177. Petitioner is an “employer” for purposes of Chapter 440, Florida Statutes. Respondent is in the business of welding, fabrication and erection of structural steel, fabrication and installation of metal handrails and fire escapes to existing buildings, and various other metal fabrication and welding operations. Respondent is engaged in the construction industry. At all material times, Respondent maintained a policy of workers’ compensation insurance for all of its employees. Respondent’s workers’ compensation insurance at issue in this case was obtained through the Florida Retail Federation Insurance Fund, and was in place since February 1, 2002. Pursuant to the Department's statutory authority, after receiving a referral based on a fatal accident at a site where Respondent was providing work, Investigator Daniel Pfaff of the Department's Division of Workers' Compensation, Bureau of Compliance, conducted an investigation into Respondent’s workers’ compensation coverage. The investigator reviewed payroll records as well as certificates of insurance. Respondent cooperated with the Department’s investigation, providing all requested documents and responding to the questions of Petitioner’s investigation. Investigator Pfaff determined that Respondent had not secured workers’ compensation coverage consistent with the job descriptions of its employees. At the final hearing it was shown that, indeed, the job classification code2/ listed on Respondent's workers' compensation policy for Respondent's non-clerical work used to determine premiums paid by Respondent was not appropriate for much of the work Respondent was performing. The job classification code on Respondent’s workers’ compensation policy for the non-clerical work performed by Respondent was 3822. Classification code 3822 encompasses manufacturing or assembling automobile, bus, truck, or trailer bodies made of die pressed steel. Classification code 3822 does not encompass fabrication of iron or steel outside of a welding shop, erection of iron or steel structures, fabrication and installation of metal handrails and fire escapes to existing buildings, or operation of machinery to lift materials used to erect buildings (collectively "off-site erection work"). Based upon contracts provided by Respondent to the Department, the Department determined that the proper classification codes for the off-site erection work performed by Respondent’s employees were 5040 and 5057. Classification code 5040 encompasses the erection of iron or steel frame structures, the assembly and fabrication of iron or steel frame structures at the erection site, welding operations incidental to steel erection work, and the installation of iron or steel balconies, fire escapes, and staircases to existing buildings. Classification code 5057 encompasses iron or steel erection not otherwise classified in the Scopes® Manual. After it was determined that Respondent did not have the proper workers’ compensation insurance, Investigator Pfaff issued a Stop Work Order and Order of Penalty Assessment against Respondent on behalf of the Department on February 12, 2010. The Stop-Work Order is on a form with supporting allegations that may be selected by checking the box next to the allegation. The boxes checked on the Stop-Work Order comprise the following allegation: “Failure to secure the payment of workers’ compensation in violation of sections 440.10(1), 440.38(1) and 440.107(2) Florida Statutes by: materially misrepresenting and concealing employee duties as to avoid proper classification for premium calculation.” The allegation selected in the Amended Order of Penalty Assessment refines the allegation of the Stop-Work Order by alleging “Failure to secure the payment of workers’ compensation within the meaning of section 440.107(2), F.S., by: materially misrepresenting or concealing employee duties so as to avoid proper classification for premium calculations.” The Second Amended Order of Penalty Assessment contains no separate allegation, but rather references the original Stop-Work Order and Order of Penalty Assessment and the Amended Order of Penalty Assessment. No other charging documents were provided by Petitioner in support of the proposed penalty. At the final hearing, Petitioner presented evidence demonstrating that the appropriate job classification code for the majority of Respondent’s work was 5040. It also provided evidence that $60,873.60 was the amount of penalty that would be due if a violation had occurred. The penalty amount was calculated by using payroll amounts provided by Respondent and the approved rates for the proper job classification codes to determine the amount of premium that should have been paid and then, after giving Respondent credit for previous premiums paid, multiplying the result by 1.5 in accordance with applicable rules. Petitioner, however, did not provide sufficient evidence that Respondent failed “to secure the payment of workers’ compensation in violation of sections 440.10(1), 440.38(1) and 440.107(2) Florida Statutes by materially misrepresenting and concealing employee duties as to avoid proper classification for premium calculation” as alleged in the Stop-Work Order. Rather than showing that Respondent misrepresented or concealed employee duties to avoid proper classification, the evidence indicated that Respondent believed that its company was compliant with Florida workers’ compensation coverage requirements. While the Scopes® Manual explains the various job classification codes, there was no evidence that the Scopes® Manual has ever been provided to Respondent or that Respondent was the one who selected the job classification codes that were on its workers’ compensation policy. The job classification description for classification code 3822 provided on premium summaries and statements from the insurance agent and carrier to Respondent were different at different times. One description was “auto, bus, truck body, MFG/steel” and another was “auto, bus, truck, trailer manufacturing, die press.” The self-audit reports abbreviate job classification 3822 as “Auto bus truck body mfg/steel.” These abbreviations do not give notice that Respondent’s job classification was wrong. In addition, the evidence showed that Respondent’s workers’ compensation insurance carrier conducted regular audits of Respondent's operations. Respondent cooperated with the audits. During the course of the audits, the insurance auditor would go to Respondent’s premises where the auditor was able to observe the types of machinery, equipment, and operations used by Respondent. Despite evidence on the premises indicating that Respondent was engaged in work beyond the scope of job classification code 3822 established at the final hearing, there is no evidence that the auditors, carriers, or agents ever questioned the workers’ compensation insurance job classification codes that were on Respondent’s policy, summaries, and audit forms that they transmitted to Respondent. Aside from cooperating with regular audits and allowing inspection of its premises, Respondent also provided additional information to its agent and carrier regarding its operations through Respondent’s requests for certificates of insurance for various off-site jobs. Investigator Pfaff has substantial experience in the insurance industry as an adjustor, special investigator and supervisor in property and casualty for over 30 years. As part of the investigation, investigator Pfaff obtained a number of Respondent’s certificates of insurance. The certificates of insurance were introduced as Petitioner’s Exhibit 21. Investigator Pfaff provided credible testimony that there was no real reason to send out a certificate of insurance unless a company was planning to perform work for another company. The certificates of insurance were issued by Respondent’s insurance agent at Respondent’s request for off- site erection work for a variety of different companies located in a variety of counties, and contain information showing that Respondent was performing work outside its premises. Respondent’s representative testified that Respondent informed its insurance agent of the location of the work each time a certificate of insurance was issued. The Department demonstrated that the off-site erection work being performed by Respondent was not consistent with the workers’ compensation classification code in place for Respondent. The certificates of insurance, however, were approved by the insurance agent or carrier, and neither expressed any concern that the workers’ compensation insurance coverage was insufficient in any respect. In addition, the carrier was made aware of the type of work performed by Respondent by prior claims. Respondent had previously reported two other workers’ compensation incidents which arose from work performed off of the premises. One previous off-site erection work incident involved an injury resulting from an employee falling from a crane, and the other involved an employee’s fall through a roof skylight. The insurance carrier was made aware that off-site erection and construction work was being performed by Respondent in each of these incidents. Even though it was established at the final hearing that job classification code 3822 utilized for Respondent’s workers’ compensations insurance for those incidents should not have covered the off-the-premises incidents, Respondent’s insurance carrier and insurance agent never suggested that Respondent’s workers’ compensation coverage was deficient or erroneous. In sum, Petitioner did not show that Respondent materially misrepresented or concealed employee duties in order to avoid proper classification for premium calculation of its workers’ compensation policy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered dismissing the Stop-Work Order, Order of Penalty Assessment, Amended Order of Penalty Assessment, and Second Amended Order of Penalty Assessment issued against Respondent, and ordering the return of any penalty paid by Respondent under the Periodic Payment Agreement. DONE AND ENTERED this 24th day of November, 2010, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III 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 24th day of November, 2010.
The Issue Whether Respondent, Randall Lee Southerland, conducted operations in the construction industry 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 Petitioner, Department of Financial Services, Division of Workers’ Compensation, pursuant to Section 440.107, Florida Statutes (2007), and Florida Administrative Code Chapter 69L.
Findings Of Fact Petitioner 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. Respondent is a sole proprietor, allegedly engaged in the construction industry, providing tile and grouting services and carpet removal to private residences in Florida. On November 30, 2007, Eric Duncan and Alison Pasternak, both of whom are workers’ compensation investigators for Petitioner, were conducting random compliance checks in Lee County. Investigator Duncan noticed two men working outside of a residence in Cape Coral, one using a power saw and the other mixing a substance in a bucket. Investigators Duncan and Pasternak decided to conduct a compliance check of these two men to ensure they were workers’ compensation coverage compliant. The two men identified themselves as Randall Lee Southerland and Tim Weaver. Weaver produced his Exemption Certificate for workers’ compensation coverage. No further action was taken in regards to that investigation. Southerland was observed mixing the substance, which was later determined to be tiling grout. Southerland did not have a workers’ compensation insurance policy, a coverage exemption certificate, nor was he employed via a leasing agency. After consulting with his supervisor, Investigator Duncan issued SWO No. 07-364-D7 to Respondent along with a Business Records Request for the time-period of December 1, 2004, through November 30, 2007. Respondent provided records to Petitioner shortly thereafter, and, subsequently, a penalty assessment was calculated. The calculations of Respondent’s gross payroll was necessary since it was alleged that he worked in the construction field of tiling. Respondent disputes this classification and argues that grouting is separate from the installation of tiles and is not a classification within the construction field. Therefore, neither a workers’ compensation insurance policy, nor an exception is required. The National Counsel on Compensation Insurance (NCCI) established a codification of construction employment activities; all of which have been adopted by Petitioner and are commonly referred to as “class codes.” The NCCI class code for tiling is “5348.” It is undisputed that Respondent was doing the grout- work for the newly installed tiles. It is further undisputed that the definition of tiling, per the NCCI class code “5348,” included the finishing, setting, and installation of tiles. It was also established that loose tiles, merely laying on the floor, are not finished, nor set, until the grout is laid. Pursuant to Section 440.107, Florida Statutes, the calculation of the penalty was completed on a penalty calculation worksheet. The worksheet was completed by examining the records received from Respondent and calculating the gross payroll that was paid to him. The penalty was later amended to reflect additional records provided through discovery, the evidence of the payment for the November 30, 2007, job consisting of a $500.00 check from the real estate agent. The Amended Order assessed a penalty of $1,168.68, which is the applicable amount of the premium evaded and includes the 50 percent penalty for the time period of December 1, 2004, through November 30, 2007.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order: Finding that Respondent failed to secure the payment of workers’ compensation coverage for the sole proprietor, Randall Lee Southerland, in violation of Subsections 440.10(1)(a) and 440.38(1), Florida Statutes; and Assessing a penalty against Respondent, in the amount of $1,168.68, which is equal to 1.5 times the evaded premium based on the payroll records provided by Respondent and the applicable approved manual rate and classification code. DONE AND ENTERED this 3rd day of June, 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 3rd day of June, 2008.
The Issue Whether this cause is barred by a release of all claims.
Recommendation Based on the foregoing Undisputed Facts and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Florida Commission on Human Relations dismissing Maurice G. Hargrove, Sr.’s, Petition for Relief from employment discrimination due to a lack of jurisdiction. DONE AND ENTERED this 28th day of September, 2016, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of September, 2016
The Issue At issue in this proceeding is whether the Respondent, Klenk Roofing, Inc. ("Klenk Roofing"), failed to abide by the coverage requirements of the Workers' Compensation Law, chapter 440, Florida Statutes, by not obtaining workers' compensation insurance for its employees and, if so, whether the Petitioner properly assessed a penalty against the Respondent pursuant to section 440.107.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following findings of fact are made: The Department is the state agency responsible for enforcing the requirement of the workers' compensation law that employers secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. Klenk Roofing is a corporation based in Daytona Beach. The Division of Corporations’ “Sunbiz” website indicates that Klenk Roofing was first incorporated on February 23, 2005, and remained an active corporation up to the date of the hearing. Klenk Roofing’s principal office is at 829 Pinewood Street in Daytona Beach. As the name indicates, Klenk Roofing’s primary business is the installation of new roofs and the repair of existing roofs. Klenk Roofing was actively engaged in roofing operations during the two-year audit period from July 24, 2012, through July 23, 2014. Kent Howe is a Department compliance investigator assigned to Volusia County. Mr. Howe testified that his job includes driving around the county conducting random compliance investigations of any construction sites he happens to see. On July 23, 2014, Mr. Howe was driving through a residential neighborhood when he saw a house under construction at 2027 Peninsula Drive in Daytona Beach. He saw a dumpster in the driveway with the name “Klenk Roofing” written on its side. Mr. Howe also saw a gray van with the name “Klenk Roofing” on the door. Mr. Howe saw three men working on the house. He spoke first with Vincent Ashton, who was collecting debris and placing it in the dumpster. Mr. Howe later spoke with Jonny Wheeler and Craig Saimes, both of whom were laying down adhesive tarpaper on the roof when Mr. Howe approached the site. All three men told Mr. Howe that they worked for Klenk Roofing and that the owner was Ronald Klenk. Mr. Ashton and Mr. Wheeler told Mr. Howe that they were each being paid $10 per hour. Mr. Saimes would not say how much he was being paid. After speaking with the three Klenk Roofing employees, Mr. Howe returned to his vehicle to perform computer research on Klenk Roofing. He first consulted the Sunbiz website for information about the company and its officers. His search confirmed that Klenk Roofing was an active Florida corporation and that Ronald Klenk was its registered agent. Ronald Klenk was listed as the president of the corporation and Kyle Klenk was listed as the vice president. Mr. Howe next checked the Department's Coverage and Compliance Automated System ("CCAS") database to determine whether Klenk Roofing had secured the payment of workers' compensation insurance coverage or had obtained an exemption from the requirements of chapter 440. CCAS is a database that Department investigators routinely consult during their investigations to check for compliance, exemptions, and other workers' compensation related items. CCAS revealed that Klenk Roofing had no active workers' compensation insurance coverage for its employees and that Ronald and Kyle Klenk had elected exemptions as officers of the corporation pursuant to section 440.05 and Florida Administrative Code Rule 69L-6.012. Mr. Howe’s next step was to telephone Ronald Klenk to verify the employment of the three workers at the jobsite and to inquire as to the status of Klenk Roofing's workers' compensation insurance coverage. Mr. Klenk verified that Klenk Roofing employed Mr. Wheeler, Mr. Ashton, and Mr. Saimes. Mr. Klenk also informed Mr. Howe that Klenk Roofing did not have workers' compensation insurance coverage for the three employees. Based on his jobsite interviews with the employees, his interview with Mr. Klenk, and his Sunbiz and CCAS computer searches, Mr. Howe concluded that as of July 23, 2014, Klenk Roofing had three employees working in the construction industry and that the company had failed to procure workers’ compensation coverage for these employees in violation of chapter 440. Mr. Howe consequently issued a Stop-Work Order that he personally served on Mr. Klenk on July 23, 2014. Also on July 23, 2014, Mr. Howe served Klenk Roofing with a Request for Production of Business Records for Penalty Assessment Calculation, asking for documents pertaining to the identification of the employer, the employer's payroll, business accounts, disbursements, workers' compensation insurance coverage records, professional employer organization records, temporary labor service records, documentation of exemptions, documents relating to subcontractors, documents of subcontractors' workers compensation insurance coverage, and other business records to enable the Department to determine the appropriate penalty owed by Klenk Roofing. Anita Proano, penalty audit supervisor for the Department, was assigned to calculate the appropriate penalty to be assessed on Klenk Roofing. Penalties for workers' compensation insurance violations are based on doubling the amount of evaded insurance premiums over the two-year period preceding the Stop-Work Order, which, in this case was the period from July 24, 2012, through July 23, 2014. § 440.107(7)(d), Fla. Stat. At the time Ms. Proano was assigned, Klenk Roofing had not provided the Department with sufficient business records to enable Ms. Proano to determine the company’s actual gross payroll. Section 440.107(7)(e) provides that where an employer fails to provide business records sufficient to enable the Department to determine the employer’s actual payroll for the penalty period, the Department will impute the weekly payroll at the statewide average weekly wage as defined in section 440.12(2), multiplied by two.1/ In the penalty assessment calculation, the Department consulted the classification codes and definitions set forth in the SCOPES of Basic Manual Classifications (“Scopes Manual”) published by the National Council on Compensation Insurance (“NCCI”). The Scopes Manual has been adopted by reference in Florida Administrative Code Rule 69L-6.021. Classification codes are four-digit codes assigned to occupations by the NCCI to assist in the calculation of workers' compensation insurance premiums. Rule 69L-6.028(3)(d) provides that “[t]he imputed weekly payroll for each employee . . . shall be assigned to the highest rated workers’ compensation classification code for an employee based upon records or the investigator’s physical observation of that employee’s activities.” Ms. Proano applied NCCI Class Code 5551, titled “Roofing — All Kinds and Drivers,” which “applies to the installation of new roofs and the repair of existing roofs.” The corresponding rule provision is rule 69L-6.021(2)(uu). Ms. Proano used the approved manual rates corresponding to Class Code 5551 for the periods of non-compliance to calculate the penalty. On September 17, 2014, the Department issued an Amended Order of Penalty Assessment in the amount of $214,335.58, based upon an imputation of wages for the employees known to the Department at that time. After Klenk Roofing provided further business records, the Department on December 16, 2014, was able to issue a Second Amended Order of Penalty Assessment in the amount of $87,159.20, based on a mixture of actual payroll information and imputation. The Department eventually received records sufficient to determine Klenk Roofing's payroll for the time period of July 24, 2012, through July 23, 2014. The additional records enabled Ms. Proano to calculate a Third Amended Order of Penalty Assessment in the amount of $19.818.04. The evidence produced at the hearing established that Ms. Proano utilized the correct class codes, average weekly wages, and manual rates in her calculation of the Third Amended Order of Penalty Assessment. The Department has demonstrated by clear and convincing evidence that Klenk Roofing was in violation of the workers' compensation coverage requirements of chapter 440. Jonny Wheeler, Vincent Ashton, and Craig Saimes were employees of Klenk Roofing performing services in the construction industry without valid workers' compensation insurance coverage. The Department has also demonstrated by clear and convincing evidence that the penalty was correctly calculated by Ms. Proano, through the use of the approved manual rates, business records provided by Klenk Roofing, and the penalty calculation worksheet adopted by the Department in Florida Administrative Code Rule 69L-6.027. Klenk Roofing could point to no exemption, insurance policy, or employee leasing arrangement that would operate to lessen or extinguish the assessed penalty. At the hearing, Ronald Klenk testified he was unable to obtain workers’ compensation coverage during the penalty period because it was prohibitively expensive to carry coverage for fewer than four employees. He stated that the insurers demanded a minimum of $1,500 per week in premiums, which wiped out his profits when the payroll was low. Mr. Klenk presented a sympathetic picture of a small business squeezed by high premiums, but such equitable considerations have no effect on the operation of chapter 440 or the imposition of the penalty assessed pursuant thereto.
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, assessing a penalty of $19,818.04 against Klenk Roofing, Inc. DONE AND ENTERED this 28th day of April, 2015, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 28th day of April, 2015.
The Issue Whether this matter should be dismissed for lack of disputed issues of fact and law, and because Petitioner has affirmatively stated she no longer wishes to pursue this claim.
Findings Of Fact Respondent is a non-profit corporation geriatric care facility. Petitioner was employed by Respondent as a Certified Nursing Assistant at the time of her termination on August 21, 1998. On or about February 2, 1999, Petitioner filed a Charge of Discrimination (Charge) with FCHR. Petitioner alleged that she was discriminated against on the basis of her marital status in violation of the Florida Civil Rights Act of 1992, Chapter 760, Florida Statutes (FCRA). FCHR assigned Petitioner’s Charge case number 99-1079. The FCHR investigated Petitioner’s allegations of marital status discrimination and, on March 4, 2002, issued a “No Cause Determination.” The FCHR found that “there is no reasonable cause to believe that Respondent discriminated against [Stephenson] on the basis of marital status (married).” In its investigation, FCHR concluded that: Complainant [Stephenson] became very belligerent toward her supervisor after Complainant’s husband tried to deliver a package to her while she was on duty. Complainant’s husband was told that visitor’s [sic] are not permitted when employees are on duty. Complainant was suspended on July 13, 1998 for one day for insubordination and for being disrespectful toward her direct supervisor. . . . Records show that Complainant acknowledged receipt of Respondent’s policy regarding visitors. . . . Respondent provided sworn affidavits from Complainant’s supervisors and from the facility’s Assistant Administrator, that states on August 13, 1998, Complainant refused to take a 100 year old resident to the restroom after the resident requested her assistance several times. The resident needed to be taken to the restroom frequently due to her age and the medication she was taking. Complainant told the resident that she had already taken her ten times in the past five minutes, and she is not taking her again. As a result, Complainant was terminated. Complainant did not take advantage of Respondent’s grievance procedure nor harassment policy to try to resolve any issues or problems that she may have experienced. In regards to Complainant’s allegations that she was denied severance pay, according to Respondent’s policy, employee’s [sic] who are involuntary discharged are not eligible to receive severance pay. Records show that Complainant acknowledged receipt of this policy. Complainant was contacted telephonically to determine whether additional information would be offered to support her allegations. Complainant offered no additional information to rebut Respondent’s position. On or about April 3, 2002, Petitioner filed her Petition with FCHR. FCHR transmitted the Petition to the Division on April 10, 2002. In or about January 1999, while her Charge was pending at the FCHR, Petitioner also filed a worker’s compensation claim pursuant to Chapter 440, Florida Statues, alleging that she suffered a workplace injury on August 21, 1998, the same day she was terminated from employment. While Petitioner’s Charge was pending at FCHR, Petitioner mediated her worker’s compensation claim. Petitioner’s worker’s compensation claim was settled and Petitioner received $10,000.00, as a lump-sum settlement. Petitioner was represented by counsel at the time she settled the claim. A Stipulation was entered into between the parties. Paragraph 11 of the Stipulation states: ALL KNOWN ACCIDENTS, INJURIES AND OCCUPATIONAL DISEASES REVEALED AND ALL PENDING CLAIMS WITHDRAWN - The Claimant once again, represents and affirms that all accidents, injuries and occupational diseases known to have occurred or sustained while employed or allegedly employed by the employer have been revealed. All pending or potential claims, and notices of denial pertaining thereto, are hereby voluntarily withdrawn, and are hereby considered dismissed with prejudice, whether previously filed or not. In consideration for the settlement herein the Employee hereby also extinguishes all causes of action or potential of causes of action, against the Employer and Carrier including but not limited to any statutory, common law, State, Federal, and administrative claims, ADA claims, and claims for any other alleged on-the-job accidents with the Employer herein. In Paragraph 12 of the Stipulation, Petitioner also agreed that she would be prospectively estopped from challenging the validity of the Stipulation and documents attached thereto. In Paragraph 2 of the Affidavit attached to the Stipulation, Petitioner acknowledged under oath that she understood that the $10,000.00 lump settlement represented “full and final settlement of all past, present and future benefits of every kind and class whatsoever, including medical treatment under Florida Statue 440 regarding any and all industrial accidents.” In addition to the settlement of benefits under Chapter 440, Florida Statues, Petitioner also acknowledged that she understood that “all other causes of action and claims against the employer and/or carrier are extinguished and forever barred.” The worker’s compensation Judge of Compensation Claims approved the Stipulation on or about January 7, 2000.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that FCHR enter a final order dismissing the Petition for Relief from an Unlawful Employment Practice filed by Petitioner in this proceeding. DONE AND ENTERED this 10th day of June, 2002, in Tallahassee, Leon County, Florida. ____________________________ FLORENCE SNYDER RIVAS 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 10th day of June, 2002. COPIES FURNISHED: Theresa A. Stephenson 7459 Pinedale Drive Boynton Beach, Florida 33462 Robert J. Sniffen, Esquire Moyle, Flanigan, Katz, Kolins, Raymond & Sheehan, P.A. The Perkins House 118 North Gadsden Street Tallahassee, Florida 32301 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway Suite 100 Tallahassee, Florida 32301 Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway Suite 100 Tallahassee, Florida 32301
The Issue The issues in this case are whether Respondent, Customs Logistics Services, Inc., failed to secure the payment of workers' compensation coverage for its employees in violation of chapter 440, Florida Statutes, and if so, the penalty that should be imposed.
Findings Of Fact The Parties Petitioner is the state agency charged with enforcing the requirement in chapter 440 that employers in Florida secure workers' compensation coverage for their employees. At all times relevant to this proceeding, Respondent was a corporation registered to do business in Florida. Respondent is a family-owned-and-operated customs brokerage service with its principal office located at 6940 Northwest 12th Street, Miami, Florida 33126. At the time of the inspection giving rise to this proceeding, Respondent employed seven or eight employees.2/ The Compliance Inspection On September 29, 2014, Petitioner's compliance inspector, Hector Fluriach, conducted an onsite inspection at Respondent's principal office to determine whether Respondent was in compliance with the workers' compensation coverage requirements established in chapter 440. At that time, Respondent's co-owners, Astrid Escalona and Carlos Henoa, told Fluriach that Respondent employed six employees and two corporate officers, and also paid two family members who did not work at the principal office. Upon inquiry, Escalona and Henoa informed Fluriach that Respondent did not have workers' compensation insurance coverage for its employees. Using Petitioner's Coverage and Compliance Automated System ("CCAS") and the National Council for Compensation Insurance ("NCCI") insurance coverage verification system, Fluriach confirmed that Respondent had not obtained workers' compensation insurance coverage for its employees, and that it was not in compliance with chapter 440 during certain periods within the two years preceding the inspection. Under the NCCI basic occupational classification system and Scopes Manual, six of Respondent's employees are classified as clerical (Code 8810), and one is classified as a driver (Code 7380). None of Respondent's employees is classified as employed within the construction industry. As a private entity employing four or more employees in a non-construction industry occupation, Respondent was required under chapter 440 to provide workers' compensation coverage for its employees. Respondent's corporate officers were eligible under section 440.05 to elect to be exempt from the workers' compensation coverage requirements of chapter 440; however, none had elected to be exempt. Fluriach issued Stop-Work Order No. 14-329-D5 ("Stop- Work Order"), personally served it on Respondent, and explained it to Escalona. The Stop-Work Order included an Order of Penalty Assessment, ordering assessment of a penalty against Respondent in an amount equal to two times the amount Respondent would have paid in workers' compensation coverage premiums when applying the approved manual rates to Respondent's payroll during the periods for which it had failed to secure workers' compensation coverage during the preceding two years (for convenience, hereafter referred to as the "look-back period"). Fluriach also served a business records request, requesting Respondent to provide specified business records3/ for Petitioner's use in determining the penalty. In a series of submittals, Respondent provided the requested business records to Petitioner. The evidence showed that during the two-year look- back period, Respondent did not have workers' compensation coverage for its employees during a substantial portion of the period in which it employed four or more employees, and none of its corporate officers were exempt from the workers' compensation coverage requirement. As such, Respondent violated chapter 440 and, therefore, is subject to penalty under that statute. Petitioner's Computation of Penalty Amount To calculate the applicable penalty, Petitioner must determine, from a review of the employer's business records, the employer's gross payroll for the two-year look-back period. For days during the look-back period for which records are not provided, Petitioner imputes the gross payroll based on the average weekly wage for the state of Florida. Here, the look-back period for purposes of calculating the applicable penalty commenced on September 30, 2012, and ended on September 29, 2014, the day on which the compliance inspection was conducted. Respondent's business records revealed that Respondent had fewer than four employees between January 1 and March 31, 2013, so Respondent was not required to have workers' compensation coverage for that period. Thus, Petitioner did not assess a penalty against Respondent for that period. For the rest of the look-back period, Respondent employed four or more employees, so was required to obtain workers' compensation coverage for those employees for that portion of the period. Respondent provided business records sufficient for Petitioner to determine Respondent's gross payroll for all but September 30, 2012. For that day, Petitioner imputed Respondent's gross payroll using Florida's statewide average weekly wage. On the basis of Respondent's business records submittals, Petitioner's auditor, Eric Ruzzo, recalculated the penalty to be assessed against Respondent. Petitioner issued an Amended Order of Penalty Assessment on October 17, 2014, imposing a total penalty of $5,617.04. On November 7, 2014, following receipt of additional records, Petitioner issued a Second Amended Order of Penalty Assessment, reducing the penalty to $3,982.52. Finally, after receiving more records, Petitioner issued a Third Amended Order of Penalty Assessment on January 12, 2015, further reducing the penalty to $3,205.70. Each of these penalty assessments was served on Respondent. Petitioner seeks to impose a $3,205.70 penalty against Respondent in this proceeding. In calculating the penalty, Ruzzo examined three-month (i.e., quarterly) periods within the two-year look-back period. Ruzzo identified the occupational class code applicable to each of Respondent's employees. As stated above, all but one of Respondent's employees were classified as clerical, and one of Respondent's employees was classified as a driver. For each employee, Ruzzo determined the gross payroll paid to that employee for the specific quarter in which Respondent was non-compliant during the look-back period, divided the employee's gross payroll by 100 pursuant to Petitioner's calculation methodology, then multiplied that amount by the numeric rate set by NCCI for that employee's specific occupational class code. This calculation yielded the workers' compensation coverage premium for that specific employee for the specific quarter for which Respondent was non- compliant during the look-back period. The premium amount then was multiplied by two, as required by statute, to yield the penalty to be imposed for failure to provide workers' compensation coverage for that specific employee. As previously noted, Respondent did not provide gross payroll records covering September 30, 2012; thus, for that day, Ruzzo imputed the gross payroll for each of Respondent's employees using the statewide average weekly wage as defined in section 440.12(2)4/ multiplied by two. Ruzzo then performed the same computations to yield the penalty amount to be imposed for Respondent's failure to provide workers' compensation on September 30, 2012. Ruzzo then added each penalty amount determined for each employee using actual gross payroll and imputed payroll, to yield the total penalty amount of $5,286.70. Because Respondent had not previously been issued a stop-work order, pursuant to section 440.107(7)(d)1., Petitioner applied a credit toward the penalty in the amount of the initial premium Respondent paid for workers' compensation coverage. Here, the premium payment amount for which Respondent received credit was $2,081.00. This was subtracted from the calculated penalty of $5,286.70, yielding a total penalty of $3,205.70. Respondent's Defense At the final hearing, Escalona testified that she and the other co-owners of Respondent always have attempted to fully comply with every law applicable to Respondent's business, and have never had compliance problems. She testified that neither she nor the other co-owners of Respondent realized that Respondent was required to have workers' compensation coverage for its employees, and they did not intentionally violate the law. Petitioner apparently mailed a memorandum regarding verifying workers' compensation coverage requirements to businesses in the area before it conducted compliance inspections. The memorandum was dated October 8, 2014, and Escalona testified Respondent received it on October 13, 2014, approximately two weeks after the compliance inspection that Fluriach conducted. Escalona asserted that had Respondent received the memorandum before the compliance inspection was conducted, she would have called Petitioner to determine if Respondent needed to obtain workers' compensation coverage, would have asked how to obtain it, and would have obtained coverage for its employees and exemptions for its corporate officers. Escalona testified that the $3,205.70 penalty is a substantial amount that Respondent, a small family-owned business, cannot afford to pay. Findings of Ultimate Fact Petitioner has shown, by clear and convincing evidence, that Respondent violated chapter 440, as charged in the Stop-Work Order, by failing to secure workers' compensation coverage for its employees. Petitioner has shown, by clear and convincing evidence, that the $3,205.70 penalty proposed to be assessed against Respondent pursuant to the Third Amended Penalty Assessment is the correct amount of the penalty to be assessed in this proceeding.
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 determining that Respondent, Customs Logistics Services, Inc., violated the requirement in chapter 440 to secure workers' compensation coverage and imposing a total penalty of $3,205.70. DONE AND ENTERED this 11th day of August, 2015, 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 11th day of August, 2015.
The Issue The issue is whether the Stop-Work Order and the Third Amended Order of Penalty Assessment entered by Petitioner on July 25, 2013, and August 13, 2013, respectively, should be upheld.
Findings Of Fact The Department is the state agency tasked with the responsibility of enforcing the requirement of section 440.107(3), Florida Statutes, that employers in Florida secure the payment of workers' compensation for their employees. Respondent, Mad Dog Marketing Group, Inc., is a corporation organized under chapter 607, Florida Statutes, and was registered with the Florida Department of State, Division of Corporations, throughout the period of July 26, 2010, to July 25, 2013. At all times relevant to this proceeding, Respondent was engaged in the operation of a hardware store business with three locations in Florida. On July 25, 2013, based upon an anonymous referral, Tracey Gilbert, the Department's compliance investigator, commenced a workers' compensation compliance investigation of Respondent by visiting the job site, an appliance parts store at 730 West Brandon Boulevard, Brandon, Florida, and interviewing Sharon Belcher. According to Ms. Gilbert, Ms. Belcher informed her that she had 11 employees at the time of the site visit and that she did not have workers' compensation coverage for them. Ms. Belcher showed Ms. Gilbert an application for workers' compensation insurance and said she had not taken action with it since the company wanted a $10,000 premium. She also showed Ms. Gilbert some OSHA and workplace posters, but not the typical "broken arm poster" that describes workers' compensation coverage for a place of business. Ms. Belcher then gave Ms. Gilbert a list of Respondent's 11 current employees. On her laptop computer, Ms. Gilbert consulted the Department's Coverage and Compliance Automated System (CCAS) database to determine whether Respondent had secured workers' compensation coverage or an exemption from the requirements for coverage for its employees. CCAS is the database Ms. Gilbert routinely consults during the course of her investigations. She determined from CCAS that Respondent neither had workers' compensation coverage for her employees nor had received an exemption from such coverage from the Department. Ms. Belcher's recollection of her meeting with Ms. Gilbert differs from Ms. Gilbert's. Ms. Belcher recalled that she had applied for insurance with ADP on July 11, 2013, received the "broken arm poster," and believed she was covered at the time Ms. Belcher conducted her investigation. She offered an exhibit showing photographs of posters (but not the "broken arm poster") on the office bulletin board. She also offered an exhibit she testified was the UPS label from the tube containing the "broken arm poster." No photograph of the "broken arm poster" was produced as an exhibit. Ms. Gilbert did not contact ADP to verify whether Respondent had coverage on the date of her site visit to the Brandon store. Ms. Gilbert issued a Stop-Work Order to Respondent and a concurrent Request for Production of Business Records for Penalty Assessment Calculation at 11:20 a.m. on July 25, 2013. Ms. Belcher first submitted an application for workers' compensation coverage on July 11, 2013, but coverage was not bound on that date. Ms. Belcher submitted the paperwork to bind her insurance coverage on the afternoon of July 25, 2013, according to Mark Cristillo, an employee of ADP Insurance. Mr. Cristillo testified that he had made several attempts during the month of July 2013 to obtain the signed documents from Ms. Belcher, including an attempt as late as July 23, 2013, at 11:45 a.m. Ms. Belcher told Mr. Cristillo at that time that she had not reviewed the quote package. At 11:20 a.m., the time Ms. Gilbert's issued the Stop-Work Order on July 25, 2013, Ms. Belcher had not bound her insurance coverage. When she submitted the payment with the signed documents to ADP later that afternoon, the coverage was bound effective 12:01 a.m. on July 25, 2013. The records produced by Ms. Belcher were given to Chad Mason, one of the Department's penalty auditors, to calculate the penalty. He reviewed the records and determined the amount of gross payroll paid to Respondent's employees during the three- year penalty period preceding the investigation during which Respondent was not in compliance with the workers' compensation coverage requirements. Using Respondent's bi-weekly payroll chart, Respondent's Florida Department of Revenue UCT-6 reports, and the classification codes for each employee, Mr. Mason calculated a Third Amended Order of Penalty Assessment of $42,251.43, based upon what Respondent would have paid in workers' compensation premiums had it been in compliance with Florida's Workers' Compensation Law. The order was issued on October 24, 2013. Mr. Mason determined that the appropriate codes for Respondent's employees were 8010 and 8810, which are hardware store employees and general clerical employees, respectively. These codes were derived from the Scopes Manual, which lists all of the various jobs that may be performed in the context of workers' compensation. The manual is produced by NCCI, the National Council on Compensation Insurance, Inc., the nation's most authoritative data collecting and disseminating organization for workers' compensation. The parties stipulated prior to hearing that all of the individuals listed on the penalty worksheet of the Amended Order of Penalty Assessment were "employees" in the state of Florida of Respondent during the periods of non-compliance listed on the penalty worksheets. However, Respondent claimed that some of the employees were out-of-state and not subject to Florida law. Ms. Belcher testified that, as of July 25, 2013, three of its employees, Fred Hasselman, Douglas Strickland, and Josh Hyers, were employees of the Tennessee store and not subject to a Florida penalty. Mr. Hyers was a Florida employee prior to July 1, according to Ms. Belcher. However, all three of the employees were listed on the Florida Department of Revenue's UCT-6 form for the time period of the non-compliance. The UCT-6 form lists those employees who are subject to Florida's Unemployment Compensation Law. Mr. Mason reasonably relied upon the UCT-6 filings for the relevant time period to calculate Respondent's gross payroll in Florida. No evidence was produced to show them listed as Tennessee employees on that state's comparable tax form or any official document from outside Florida. The logical assumption is that they are Florida employees under the law. Accepting all the employees disclosed by Respondent as Florida employees led Mr. Mason to make his calculations of the penalty assessment using the appropriate codes from the Scopes Manual for hardware store and general clerical workers, 8010 and 8810. All the named employees on the Third Amended Order of Penalty Assessment were paid by Respondent in the amounts indicated on the penalty worksheet that accompanies that assessment during the penalty period of July 26, 2010, through July 25, 2013. Even though small discrepancies came up at the hearing regarding the classifications of some of Respondent's employees, the parties had stipulated to the accuracy of the classifications of those employees so those numbers will be accepted for purposes of this decision. Based upon the testimony at the hearing and the pre-hearing stipulations of the parties, the penalty assessment in the amount of $42,251.43 is accurate. Mr. Mason correctly applied the methodology for determining the amount of coverage required, determining that the appropriate premium for the three- year period would have been $28,167.50. When multiplied by the factor used to calculate the penalty, 1.5 times the premium, the total amount due is $42,251.43. The Department has proven by clear and convincing evidence that at the time the Stop-Work Order was issued and served on Respondent on the morning of July 25, 2013, Respondent had not secured workers' compensation coverage for its employees as required by chapter 440. On two occasions, August 2 and August 21, 2013, Ms. Gilbert returned to Respondent's Brandon location after the Stop-Work Order had been issued. The first was to serve the Amended Order of Penalty Assessment and the second was to serve the Second Amended Order of Penalty Assessment. On both occasions, the business was open in violation of the Stop-Work Order. A business under a Stop-Work Order may elect to enter into a payment plan after a ten percent down payment to keep the business open while a challenge to DOAH is under way. Respondent had not entered into such a plan. Therefore, the Department seeks $1,000 penalty for each of the days Ms. Gilbert visited the Brandon store and saw it open for business. This total additional penalty of $2,000 could have been greater had the Department further investigated whether the business remained open on other days after the Stop-Work Order had been imposed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue a final order upholding the Stop-Work Order and Third Amended Order of Penalty Assessment, and assess a penalty in the amount of $42,251.43. It is further RECOMMENDED that the Department fine Respondent an additional $1,000 per day for the two days Respondent did not comply with the Stop-Work Order, resulting in a total penalty of $44,251.43. DONE AND ENTERED this 20th day of December, 2013, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN 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 20th day of December, 2013. COPIES FURNISHED: Trevor S. Suter, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 Kristian Eiler Dunn, Esquire Dickens and Dunn, P.L. 517 East College Avenue Tallahassee, Florida 32301 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390
