The Issue The issues to be resolved in this proceeding concern whether the Petitioner was subjected to a discriminatory employment action on account of her race (black) and her disability ("severe asthmatic"). See, Section 760.10, Florida Statutes.
Findings Of Fact The Respondent, GAB Business Services, Inc. (GAB), is an insurance adjusting firm engaged in the business of adjusting insurance claims on a nationwide basis. At times pertinent hereto, it maintained a number of offices in Florida, also called "branches", one of which was located in Jacksonville, Florida, at which the Petitioner was employed at times pertinent hereto. The Petitioner was hired in March of 1985 and worked until May 31, 1992, when she was terminated because of a reduction in force enacted on a company-wide basis. Brian Sigman was appointed Branch Manager of the Jacksonville office, where the Petitioner was employed, on November 15, 1989 and served there in that capacity until May 1, 1991. After arriving as Branch Manager, he tried to assign the Petitioner property claim files and she told him that she did not want to do property insurance claims but never gave as a reason that she had an illness or disability which precluded her from handling such claims. Rather, she informed Mr. Sigman that she had a hard time visualizing hidden, structural elements of a building, such as what was behind a building wall, and, therefore, had a difficult time adjusting property insurance claims. Because at the time, in 1989, Mr. Sigman had six adjusters working in the office, he was able to give property insurance claim files to other adjusters to handle and let the Petitioner handle only casualty claims as she desired. She never informed him that she was unable to handle property claims because of asthma or other medical problems and never applied during that time for an accommodation for a disability. Mr. Sigman became aware at some point during his tenure that the Petitioner was being treated for allergies, but she never informed him of the effect of her allergies, as it related to the question of her handling property claims. There had been approximately six or more adjusters in the office since the Petitioner became employed there in 1985. Consequently, because of her aversion to handling property insurance claims, the Petitioner had been typically permitted to adjust only casualty claims, even before Mr. Sigman's tenure, since there were sufficient other adjusters in the office to handle the property claims. Property insurance claims generally deal with losses to a building while casualty claims most frequently involve third-party losses. Thus, the vast majority of the Petitioner's experience in working for the Respondent involved the handling of only casualty claims, with very little experience handling property insurance claims. In March 1991, Mr. Almus Shivley became the Branch Manager of GAB in Tampa, Florida. The Tampa branch included under its authority offices in Ft. Myers, Sarasota, Lakeland, Gainesville, and Jacksonville. All of the offices outside of Tampa are satellite offices, and each has a Supervising Adjuster supervising that office. A Supervising Adjuster reports directly to Mr. Shivley. Mr. Sigman was a Supervising Adjuster when Mr. Shivley became the Branch Manager in Tampa. When Mr. Shivley took over as Branch Manager working out of the Tampa branch office in 1991, he learned that the Petitioner was only handling casualty claims. He learned of this when she was asked to work property insurance claims and she declined to do so. She explained that she had asthma, and that various materials and smoke usually attendant to fire damage claims and locations, would, she feared, aggravate her asthmatic condition. Mr. Shivley accepted her representations to this effect and allowed her, for the time being, to work only casualty claims. The testimony of Sheila King establishes that as recently as February 1990, when she and the Branch Manager met with the Petitioner to ask her to handle property claims, she had made no mention of the asthma condition. Mr. George Walsh is in charge of the national operations of GAB, as they concern equal opportunity, affirmative action, salary administration and other personnel-type functions involving human resources. Mr. Walsh was involved with the hiring of the Petitioner and established that the Petitioner made no mention of the fact that she had any disability during the pre-hiring interview. The application form which the Petitioner executed and filed at the time of her hiring in 1985 contained a question concerning whether she had any disability which would restrict her ability to perform the job. She specifically answered "no" to that question. Mr. Walsh thereafter had no contact with the Petitioner until October 31, 1991, when she filed a "disability survey" form with him. A disability survey is a request by an employee for a disability accommodation, which can only be granted by the home office of the Respondent corporation. Mr. Walsh established that this was the first time he had any knowledge that the Petitioner had any sort of handicap of disability. He stated in his testimony that her job was thereupon analyzed in great detail because her request "went directly to the heart of our business". That is, the Petitioner was requesting the accommodation of not having to perform property insurance claims adjusting, which is a major portion of GAB's business since GAB is in the sole business of adjusting property and casualty insurance claims. In any event, Mr. Walsh reviewed her request under the appropriate company policies and determined that the number of casualty assignments and the work that the company was receiving was on a severely-declining trend in the Jacksonville office and, indeed, nationwide. He determined, however, to grant the accommodation to the Petitioner but informed her that "we could not guarantee that there would be enough casualty work in the future to allow her to perform only casualty work and still be a productive member of the office." In May of 1992, Mr. Shivley, the Branch Manager, made a recommendation to his superiors with the Respondent that the working force in Jacksonville be reduced because of a severe decline in business in that office. Prior to May of 1992, when the reduction in force took effect, there were already only three employees working in Jacksonville. After the reduction in force, only Mike Robinson, the Supervising Adjuster, who managed that office, remained. Almost two years after the reduction in force, at the time of the hearing, Mr. Robinson is still the only GAB employee in the Jacksonville office. The Petitioner, a black female, and Mr. Clark, a white male, were terminated as part of the reduction in force. Numerous offices of GAB, other than the one in Jacksonville, had suffered substantial reductions in force. A few years previously, the company had employed approximately 5,000 adjusters nationwide; and at the time of the hearing in this proceeding, it employed fewer than 2,000 adjusters nationwide. The Petitioner, upon being advised of her termination due to the reduction in force, was not offered a transfer nor requested to relocate by the Respondent. She was, however, offered an employment position in the company's Atlanta, Georgia, branch office. Under regular and customary company policy, when employees are transferred, the company pays relocation expenses, where appropriate. Since the Petitioner herein was terminated, the Respondent was under no obligation to pay relocation expenses if she took the offered position in the Atlanta office. Nevertheless, the Atlanta branch office offered her $3,000.00 in relocation expenses. Further, the job offered was one which accommodated her stated disability, being an "inside liability adjuster" position, handling only casualty claims. That was the type of work which she was performing in Jacksonville at her own request. The Petitioner took the position that the relocation expenses were insufficient for her to afford to move and refused the offer of employment. It was eventually accepted by a white female, who accepted the same amount of relocation financial assistance that had been offered to the Petitioner. Further, when Mike Robinson, the Supervising Adjuster in the Jacksonville office, was transferred to that office from Dallas, Texas, a much more distant location than Atlanta, he was only offered and paid $1,000.00 in relocation expenses. Mr. Robinson is a white male. In addition to Mr. Robinson, the testimony of Ms. Sheila King, the Human Resource Officer (Personnel Manager) for the Florida offices of GAB, establishes that two other employees were given only $1,000.00 for moving expenses, a black male and a white male. In conjunction with the reduction in force, the Petitioner and the white male, Mr. Clark, were terminated from the Jacksonville office because the volume of business did not justify any employees, other than the Supervising Adjuster. At the time of the hearing, some two years after the reduction in force, no employees have been hired to replace them. In fact, no employees have been hired at all, because the business volume only justifies the presence of the Supervising Adjuster and clerical staff in that office. GAB's offices in Florida, other than Tampa, are satellite offices and each has a Supervising Adjuster supervising the business and the employees of that office. Each Supervising Adjuster reports to Mr. Shivley, the Branch Manager in the Tampa office. In the summer of 1991, Brian Sigman left his position as Supervising Adjuster in the Jacksonville office, leaving an opening. The Petitioner applied for that position, among other employees who sought the promotion. Mr. Shivley recommended to his superiors that Adjuster Nan Hendricks become the Supervising Adjuster to replace Mr. Sigman. He found that Ms. Hendricks was an extremely good adjuster, being a multi-line adjuster handling a large volume of both property and casualty claims. She was a good performer at the functions of marketing, public relations, and generating new business. A multi-line adjuster is one who can handle any type of claim assigned to the Respondent's offices. The two most numerous types of claims handled by GAB are property and casualty claims, as described above. In considering who to hire for that position and ultimately deciding on Ms. Hendricks, the Respondent and Mr. Shivley determined that the Petitioner had little experience as a multi- line adjuster, even though she was so licensed, because she had handled almost entirely casualty claims, because of her own request that she not be given property damage claims. The Supervising Adjuster has to supervise the quality of the work performed by all adjusters and employees at the office. If an adjuster cannot work a property insurance claim, then the adjuster can gain no relevant experience performing such claims adjustment. A Supervising Adjuster needs to have had experience in performing such claims adjustment and performing adjustments of all types of claims. Mr. Shivley testified to this effect, saying "the Supervising Adjuster has to supervise the quality of the work that's going out of the office. If she can't work a property file, and if she can't handle a property file, then she can't supervise one". There is a regular and normally-followed company policy that, in considering who to place in supervising adjusting positions, such a person has to have had substantial experience handling all types of claims handled by GAB. The Petitioner did not have that type of experience and thus although she was considered for the position, she was found not to be qualified for it. Further, the Petitioner's performance, and evaluations of her performance, showed deficiencies over the period of time she was employed in the Jacksonville office. She was deficient in the areas of marketing, public relations, and generating new business, which, when coupled with the fact that she had no real, substantial, property claim adjustment experience, showed that she was not qualified for the promotion. Nan Hendricks left the employ of GAB after a short time as Supervising Adjuster in the Jacksonville office. When she left in 1991, she left because she was dissatisfied with the work of the office in terms of the rapidly- declining volume of business and the fact that both the Petitioner and Mr. Clark were performing their work in a sub-standard fashion. When she left the employ of GAB, Mr. Shivley recommended to his superiors that the position be awarded to Mike Robinson, who was then working in the Dallas, Texas, office of GAB. Mr. Shivley had experience with Mr. Robinson's capacity and abilities to work in a multi-line adjustment position and with the quantity and quality of his knowledge and experience at the job. He found him well-qualified for the position of Supervising Adjuster, due partially to his extensive experience in multi-line adjusting. The Petitioner was considered for the position but was not deemed to be qualified because she did not have significant experience as a multi-line adjuster and did not meet the qualifications, as explained more particularly in the above Findings of Fact, concerning the decision to promote Nan Hendricks as Supervising Adjuster. There has been no showing that the decision to terminate the Petitioner or the decision concerning the manner and amount of offered payment of her re-location expenses, had she taken the Atlanta job, was motivated by any discriminatory intent on account of her race or disability. In fact, the Respondent amply demonstrated that the termination was due to a legitimate reduction in force caused by loss of business in the Jacksonville office. The Petitioner's position was not later filled by another employee. Nevertheless, the company, without being required to do so, voluntarily offered the Petitioner a position in its Atlanta office at no reduction in salary. This position would even accommodate her disability by allowing her to only process casualty claims, even though the Respondent had a legitimate basis for terminating the Petitioner without any recourse, due to the reasons justifying the reduction in force. Further, the two promotions, one accorded to Nan Hendricks, a white female, and one to Mike Robinson, a white male, of which the Petitioner complains, were given to those two employees based upon their superior job performance and superior experience in being able to handle all types of insurance claim adjusting work. The Petitioner was shown to clearly not be so qualified. The Respondent's lack of discriminatory intent in terms of the Petitioner's race or disability was further demonstrated by the fact that a white female, a white male, and a black male were only offered and paid $1,000.00 in re-location expenses, when they moved their place of employment to distant offices in the company, especially Mike Robinson, who transferred to Jacksonville, Florida, all the way from Dallas, Texas. The Petitioner, however, was offered $3,000.00 to relocate from Jacksonville, Florida, to Atlanta, Georgia, when the company was not even obligated to offer any relocation expense, since the Petitioner's job offer in Atlanta did not involve a company- required transfer. Rather, it was a job merely offered to accommodate the Petitioner and to assist her in obtaining employment when she had to be terminated from the Jacksonville office. It has simply not been demonstrated that any of the employment actions of which the Petitioner complains and which are delineated in the above Findings of Fact were motivated by any discriminatory motive directed at the Petitioner's race or disability.
Recommendation Based on 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 RECOMMENDED that a Final Order be entered by the Florida Commission on Human Relations dismissing the Petition in its entirety. DONE AND ENTERED this 11th day of October, 1994, in Tallahassee, Florida. P. MICHAEL RUFF 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 11th day of October, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4399 Respondent's Proposed Findings of Fact 1-17. Accepted, except to the extent that they differ or are subordinate to the Hearing Officer's findings of fact on the same subject matter. Petitioner's Proposed Findings of Fact The Petitioner's proposed findings of fact are stricken and rejected on the basis that they were not timely submitted and the motion requesting extension of time for their submission was substantially late. COPIES FURNISHED: Reginald Estell, Jr., Esquire 816 Broad Street Jacksonville, FL 32202 Kalvin M. Grove, Esquire FOX AND GROVE 360 Central Avenue, 11th Floor St. Petersburg, Florida 33701 Sharon Moultry, Clerk Human Relations Commission Building F, Suite 240 325 John Knox Road Tallahassee, FL 32303-4149 Dana Baird, Esquire General Counsel Human Relations Commission Building F, Suite 240 325 John Knox Road Tallahassee, FL 32303-4149
The Issue The issues are whether Respondent failed to secure the payment of workers' compensation insurance, and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the agency charged with enforcing the provisions of Chapter 440, Florida Statutes. Respondent is a Florida limited-liability company, organized in 2004. Salvador Rivera is one of the company's managers/officers. On or about February 27, 2009, Respondent secured workers' compensation insurance for its employees. The carrier was Guarantee Insurance Co. In a Notice of Termination of Workers' Compensation Insurance dated August 10, 2009, Guarantee Insurance Co. advised Petitioner and Respondent that Respondent's workers' compensation insurance would be cancelled on August 25, 2009. Guarantee Insurance Co. issued the notice because Respondent had not paid its insurance premium. Some time after receiving the notice from its insurer, Respondent received a check from Brantley Custom Homes. Mr. Rivera deposited the check into Respondent's bank account. Mr. Rivera then wrote a check to Guarantee Insurance Co. for the workers' compensation insurance premium. Mark Piazza is one of Petitioner's compliance investigators. On September 25, 2009, Mr. Piazza conducted a routine compliance check in the Southwood subdivision of Tallahassee, Florida. During the compliance check, Mr. Piazza noticed a new home under construction. He saw two men, Gilberto Torres and Saturino Gonzalez, doing carpentry work at the building site. Under the Scopes Manual, carpentry is identified as construction work under the class code 5645. During an interview with the two men, Mr. Piazza learned that they were employed by Respondent. Mr. Rivera confirmed by telephone that Respondent employed the two men. Mr. Rivera believed that Respondent had workers' compensation coverage on September 25, 2009. Mr. Rivera was not aware that the check from Brantley Custom Homes had bounced, resulting in insufficient funds for Respondent's bank to pay Respondent's check to Guarantee Insurance Co. Mr. Piazza then contacted Respondent's local insurance agent and checked Petitioner's Coverage and Compliance Automated System (CCAS) database to verify Mr. Rivera's claim that Respondent had workers' compensation insurance. Mr. Piazza subsequently correctly concluded that Respondent's insurance policy had been cancelled on August 25, 2009, due to the failure to pay the premium. On September 25, 2009, Mr. Piazza served Respondent with a Stop-work Order and Order of Penalty Assessment. The penalty assessment was 1.5 times the amount of the insurance premium that Respondent should have paid from August 25, 2009, to September 24, 2009. After receiving the Stop-work Order on September 25, 2009, Brantley Custom Homes gave Respondent another check. Mr. Rivera then sent Guarantee Insurance Co. a second check to cover the premium with the understanding that there would be no lapse in coverage. On September 28, 2009, Guarantee Insurance Co. provided Respondent with a notice of Reinstatement or Withdrawal of Policy Termination. The notice states as follows: Our Notice of Termination, filed with the insured and the Department of Labor and Employment Security effective 8/25/2009 and or dated 8/10/2009, is hereby voided and coverage remains in effect for the employer identified below. There is no evidence to show whether Respondent had to sign a no-loss affidavit and submit it to Guarantee Insurance Co. before the insurer would reinstate the policy with no lapse. Such an affidavit usually states that the insured had no claims during the uninsured period, On September 29, 2009, Mr. Piazza served a second copy of the Stop-work Order and Order of Penalty Assessment on Respondent. At that time, Mr. Piazza also served Respondent with a Request for Production of Business Records for Penalty Assessment Calculation. Respondent subsequently provided Petitioner with the records. On October 6, 2009, Mr. Piazza served Respondent with an Amended Order of Penalty Assessment. The assessed penalty was $3,566.27. The assessed penalty was based on Respondent's business records showing the following: (a) Respondent's total payroll from August 25, 2009, through September 24, 2009, was $15,280.00; (b) the total workers' compensation premium that Respondent should have paid for its employees during the relevant time period was $2,377.56; and (c) multiplying $2,377.56 by the statutory factor of 1.5 results in a penalty assessment in the amount of $3,566.37. On October 6, 2009, Petitioner and Respondent entered into a Payment Agreement Schedule for Periodic Payment of Penalty. Respondent gave Petitioner $1,000 as a down payment on the assessed penalty. The balance of the penalty is to be paid in 60 monthly payments in the amount of $42.77 per month, with the exception of the last payment in the amount of $42.64 on November 1, 2014. On October 6, 2009, Petitioner issued an Order of Conditional Release from Stop-work Order. The conditional release states that it will be in place until Respondent pays the assessed penalty in full.
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 affirming the Stop- work Order and Amended Order of Penalty Assessment in the amount of $3,566.37. DONE AND ENTERED this 19th day of March, 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 19th day of March, 2010. COPIES FURNISHED: Salvador Rivera Rivera Construction of North Florida, LLC 931 Rosemary Terrace Tallahassee, Florida 32303 Paige Billings Shoemaker, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 Julie Jones, CP, FRP, Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399
Findings Of Fact Liberty National Fire Insurance Company (hereinafter referred to as "Liberty National") is a licensed foreign insurer in the State of Florida and subject to the jurisdiction and regulation of the Florida Department of Insurance (hereinafter referred to as "Department"), pursuant to Chapter 624, Florida Statutes. Liberty National is headquartered in Birmingham, Alabama, and writes business in 45 states, in direct personal lines business, direct commercial lines business, and almost an equal amount of assumed reinsurance. Prior to Hurricane Andrew, as of August 1, 1992, Liberty National had approximately 40,000 personal line policies in the State of Florida. This figure includes all personal lines; the homeowners, preferred homeowners, special homeowners, industrial fire, business resale, and mobile homes. In 1987 Liberty National started writing mobile home programs with the Raymond Patterson Agency as their managing general agent. On May 19, 1993, the Department of Insurance promulgated emergency Rule 4 ER93-18. Subsection (3) imposed a 90 day moratorium on cancellations and nonrenewals of personal lines residential property insurance on the basis of hurricane claims. Subsection (4) provided: "This rule shall not apply if the insurer can affirmatively demonstrate to the Department that the proposed cancellation or nonrenewal is necessary for the insurer to avoid an unreasonable risk of insolvency." In direct response to the devastation in the wake of Hurricane Andrew and the resulting nonrenewals and cancellations of homeowner coverage by insurers, at Special Session B (1993) of the Florida Legislature, Section 1 of Chapter 93-401, Laws of Florida (HB 89-B) was passed which provided for a "moratorium on cancellation and nonrenewal of residential property coverage." This "moratorium law" was signed by the Governor on June 8, 1993, and by its terms was effective from May 19, 1993, until November 14, 1993. Subsection (1) of the moratorium law sets forth the "Findings and Purpose" of the Legislature in passing the bill: FINDINGS AND PURPOSE. -- The Legislature finds that property insurers, as a condition of doing business in this state, have a responsibility to contribute to an orderly market for property insurance and that there is a compelling state interest in maintaining an orderly market for property insurance. . . . The Legislature further finds that the massive cancellations and nonrenewals announced, proposed, or contemplated by certain insurers constitute a significant danger to the public health, safety, and welfare, especially in the context of a new hurricane season, and destabilize the insurance market. In furtherance of the overwhelming public necessity for an orderly market for property insurance, it is the intent of the Legislature to impose, for a limited time, a moratorium on cancellation or nonrenewal of personal lines residential property insurance policies. Subsection (3) describes the nature of the moratorium imposed by the Legislature: (3) MORATORIUM IMPOSED. -- Effective May 19, 1993, no insurer authorized to transact insurance in this state shall, until the expiration of this section pursuant to subsection (6), cancel or nonrenew any personal lines property insurance policy in this state, or issue any notice of cancellation or nonrenewal, on the basis of risk of hurricane claims. All cancellations or nonrenewals must be substantiated by underwriting rules filed with and accepted for use by the Department of Insurance, unless inconsistent with the provisions of this section. The Department of Insurance is hereby granted all necessary power to carry out the provisions of this section. On June 4, 1993, Respondent, Department of Insurance (DOI) filed 4ER93- 20 (published in the Florida Administrative Weekly, Vol. 19, No. 24, pp. 3398- 3400), indicating that the laws implemented included the moratorium law, Subsections 626.9541(1)(a)(d)(x) and Section 627.4133 of the Florida Insurance Code. The Emergency rule 4ER93-20 is entitled "Procedures For Applying for Moratorium Exemption and Required Insurer Corrective Action on Previous Notices of Cancellation or Nonrenewal" and indicates as follows: The purpose of this rule is to enumerate the procedures required for an insurer to be granted an exemption to that rule [the Department moratorium Rule 4ER93-18]; and to specify corrective action required of any insurer which has sent out a notice of cancellation or nonrenewal which is prohibited under the moratorium. On June 15, 1993, Liberty National submitted a request for an exemption from the Moratorium. In the request for partial exemption, Liberty National requested the nonrenewal of approximately 6,000 of 17,000 mobile home policies on one program only, which were written through Raymond Patterson Agency of Fort Lauderdale. The basis for Liberty National's request for exemption, was that subsequent to Hurricane Andrew they incurred problems with their ceded reinsurance program. Liberty National alleges that the problem with the reinsurance was that Liberty National was only able to secure foreign reinsurance and no domestic reinsurance. Liberty National is continuously trying to obtain domestic reinsurance. Effective July 1993 Liberty National's reinsurance provides caps for each county based on a Tier System dividing the counties in Florida into Tier 1, Tier 2, and Tier 3 counties. The cap for Tier 1 counties is $7,500,000; Tier 2 is $15,000,000; and Tier 3 is $25,000,000. A chart was submitted to the department as part of Liberty National's exemption application with the total exposure that Liberty National has in each county. Liberty National had also contracted with a firm, Applied Insurance Research, which does windstorm analysis for various companies, to develop loss scenarios, and this information was submitted to the Department as part of the application. On August 12, 1993, Liberty National submitted additional information to the Department, pursuant to their exemption request. In the material Liberty National reported surplus as of December 31, 1992, in the amount of $66,798,297, and a contribution by Tourchmark of $50,000,000 additional capital on July 16, 1993. On August 19, 1993, the Department held a public hearing on Liberty National's request for partial exemption at which Liberty National introduced two exhibits that contained supplemental information regarding Liberty National's application for partial exemption. On September 2, 1993, the Department issued a letter denying Liberty National's request for exemption.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance issue a Final Order in this case denying the exemption sought by the Petitioner. DONE AND ENTERED this 14th day of February 1994 in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of February 1994. COPIES FURNISHED: Mark A. Cohen, Esquire Mark A. Cohen & Associates, P.A. 1221 Brickell Avenue, Suite 1780 Miami, Florida 33131 Nancy Aliff, Esquire Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, Florida 32399 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue The issues in this case are whether Respondent violated chapter 440, Florida Statutes (2014),1/ by failing to secure the payment of workers' compensation coverage as alleged in the Stop-work Order and 2nd Amended Order of Penalty Assessment, and if so, the amount of the penalty that should be assessed.
Findings Of Fact The Parties Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the requirement in chapter 440 that employers in the state of Florida secure the payment of workers' compensation insurance covering their employees. Respondent, Bargain Bob's Carpets, Inc., is a corporation registered to do business in Florida. Its principal business address is 3954 Byron Drive, Riviera Beach, Florida. The Compliance Investigation As the result of an anonymous referral, Petitioner's compliance investigator, Peter Sileo, investigated Respondent to determine whether it had secured workers' compensation coverage for its employees as required by chapter 440. Before Sileo visited Respondent's business location, he checked the State of Florida Coverage and Compliance Automated System ("CCAS") computer database, which contains information regarding workers' compensation insurance policies that have been obtained by employers. The CCAS database showed no record of any workers' compensation policies covering Respondent's employees having been issued. On Sileo's first visit to Respondent's business location, he observed a man loading carpeting into a van. Upon being questioned, the man identified himself as Gary Persad. He told Sileo that he was a carpet installation subcontractor for Respondent. Sileo checked CCAS and determined that Persad was covered by workers' compensation insurance. On January 23, 2015, Sileo again visited Respondent's business location, which is a warehouse housing large rolls of carpeting and other flooring materials. There, Sileo met John Charles, an owner and corporate officer of Respondent. Charles claimed that he did not know that Respondent was required to have workers' compensation coverage for its employees. Charles told Sileo that Respondent sold flooring but did not install it and that all installation was performed by subcontractors. At the time of the inspection, Sileo determined that Respondent employed five employees: Charles and Calideen, each of whom own more than ten percent of Respondent's business; Alex Stark; Peter Phelps; and Anthony Frenchak. Sileo served a Stop-work Order, ordering Respondent to cease all business operations in the state pending demonstrating compliance with the workers' compensation coverage requirement. Sileo also served a Request for Production of Business Records for Penalty Assessment Calculation. Respondent subsequently demonstrated compliance with the workers' compensation coverage requirement, and Petitioner lifted the Stop-work Order.2/ Respondent also produced business records consisting of spreadsheets showing quarterly payroll, transaction listings, affidavits, insurance coverage documents, and other records. The Penalty Assessment Eric Ruzzo, a penalty auditor with Petitioner, used these records to calculate the penalty to be assessed against Respondent. The $31,061.68 penalty is reflected in the 2nd Amended Order of Penalty Assessment, issued April 23, 2015, that is the subject of this proceeding. To calculate the applicable penalty, Petitioner determines the employer's gross payroll for the two-year period preceding the noncompliance determination——the so-called "penalty period"——from a review of the employer's business records. For days during the penalty 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 penalty period commenced on January 24, 2013, and ended on January 23, 2015, the day on which the compliance inspection was conducted, and Respondent was determined to not be in compliance with the workers' compensation coverage requirement. Initially, Respondent produced payroll records that did not identify the subcontractors Respondent hired to install the carpeting. Ruzzo identified the subcontractors using Respondent's transaction records. Respondent subsequently provided information, including affidavits and certificates of exemption regarding the subcontractors it had hired during the penalty period. At all times during the penalty period, Respondent employed four or more non-construction employees, including Charles and Calideen.3/ Based on the business records produced, Ruzzo compiled a list of the persons, including the subcontractors and non-construction employees who were on Respondent's payroll, but not covered by workers' compensation insurance during the penalty period. This list of employees and the penalty computation for each is set forth on the Penalty Calculation Worksheet attached to the 2nd Amended Order of Penalty Assessment. Using the National Council on Compensation Insurance ("NCCI") workers' compensation insurance occupation class codes set forth in the NCCI Scopes Manual, Ruzzo determined the occupation class code applicable to each employee listed on the Penalty Calculation Worksheet. Respondent's subcontractors were classified in NCCI class code 5478, which is the class code for the flooring installation industry. This is consistent with Florida's construction industry class code rule, Florida Administrative Code Rule 69L-6.021(2)(kk), which identifies the installation of carpet and other floor covering as NCCI class code 5478. Alex Stark, Amber Krembs, Jacquelyn Skwarek, and Monica Stahl were classified in NCCI class code 8018, which applies to workers engaged in selling merchandise, including carpeting and linoleum, at the wholesale level. Calideen, Frenchak, and Phelps were classified in NCCI class code 8742, which applies to outside salespersons primarily engaged in sales off of the employer's premises. Charles was classified in NCCI class code 8810, which applies to clerical office employees. Ruzzo then determined the period of Respondent's noncompliance for each employee listed on the Penalty Calculation Worksheet. For each of these employees, Ruzzo determined the gross payroll paid to that employee for the period during which Respondent was noncompliant, 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 occupation class code. This calculation yielded the workers' compensation coverage premium for that specific employee for which Respondent was noncompliant during the penalty 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. Respondent did not provide records covering Charles, Calideen, Stark, Frenchak, or Phelps for the period between January 1, 2015, and January 23, 2015. For this period, Ruzzo imputed the gross payroll for each of these employees using the statewide average weekly wage as defined in section 440.12(2),4/ multiplied by two. Ruzzo then performed the same computations discussed above to determine the penalty amount to be imposed for Respondent's failure to provide workers' compensation for those employees during this time period. Ruzzo added the penalty determined for each employee using actual gross payroll and imputed payroll, as applicable, to arrive at the total penalty assessment amount of $31,061.68. Respondent's Defense Respondent is engaged in the retail sale of various types of flooring, such as carpeting, and hires subcontractors to install the flooring. The evidence did not establish that Respondent engaged in wholesale sales of flooring. Charles testified that Respondent had attempted to operate its business as a "cash and carry" operation in which Respondent would sell the flooring to retail customers, who would take the purchased flooring from Respondent's premises and would be solely responsible for securing their own installation services. In Charles' words, "[t]hat didn't work. The public demanded that we provide them, as part of the sale, installers—— I might be saying it wrong legally, but they demanded that it all be done in one shot." Thus, Respondent began hiring subcontractors to do the installation work. Charles explained that Respondent makes retail sales of flooring to customers, either on Respondent's premises or at the customer's premises through its outside sales people. The flooring is then cut from the roll on Respondent's premises and placed in the installer's vehicle. The installer transports the purchased flooring to, and installs it at, the customer's premises. Charles estimated that Respondent currently does approximately five percent of its business as "cash and carry" sales, and the remaining 95 percent consists of sales requiring installation. Charles testified that he and Calideen, as corporate officers of Respondent, previously had obtained exemptions from the workers' compensation coverage requirements for themselves; however, they were unaware that the exemptions had to be renewed, so their exemptions had expired. As of the date of the 2nd Amended Order of Penalty Assessment, neither Charles nor Calideen possessed valid certificates of exemption from the workers' compensation coverage requirement. Charles testified that Respondent always had tried to operate in compliance with the law. He was of the view that because he and Calideen were exempt from the worker's compensation coverage requirement, Respondent effectively employed only three employees——one fewer than the workers' compensation coverage requirement threshold of four employees applicable to non-construction industry businesses. Charles and Calideen testified that when Respondent initially hired subcontractors, they required copies of their insurance policies, including proof of workers' compensation coverage or exemption therefrom. Calideen testified that thereafter, he and Charles assumed that the subcontractors were in compliance with the workers' compensation laws, and they did not know that they needed to obtain updated certificates of workers' compensation exemption or coverage from the subcontractors. On that basis, Charles asserted that Respondent should not be required to "babysit" its subcontractors to ensure that they are in compliance with the workers' compensation law. Respondent thus asserts that it should not be responsible for securing workers' compensation coverage for subcontractors whose workers' compensation policies or exemptions had expired during the penalty period. The undisputed evidence establishes that Charles' employment entails clerical work. Calideen testified, credibly, that Stark's employment duties entail selling flooring on Respondent's business premises, and that he does not engage in sales off the premises. Calideen testified, credibly, that Frenchak and Phelps primarily are engaged in outside sales off of Respondent's premises. Calideen testified, credibly, that he performs clerical duties rather than sales duties. Calideen and Charles both testified, credibly, that employees Krembs, Skwarek, and Stahl performed computer-related duties for Respondent, such as entering business information into Respondent's computer databases, and that they did not work on Respondent's business premises. Calideen testified, credibly, that subcontractor Mike Smith was hired on a one-time basis to paint parking place stripes at the newly-repaved parking lot behind Respondent's business premises. Findings of Ultimate Fact The credible, persuasive evidence establishes that Respondent is engaged in the retail sale of carpeting and other flooring materials and that Respondent itself does not install the flooring. The credible, persuasive evidence establishes, and the parties stipulated, that Respondent is not a member of the construction industry. The credible, persuasive evidence establishes that at all times during the penalty period, Respondent employed more than four employees who were engaged in non-construction employment. Accordingly, Respondent was required to secure workers' compensation coverage for its employees, including Charles and Calideen, whose previously-issued certificates of exemption had expired and were not in effect during the penalty period. The undisputed evidence establishes that at certain times during the penalty period, Respondent employed subcontractors who performed floor installation. The evidence clearly establishes that the subcontractors, in installing the flooring, perform a service that is integral to Respondent's business and that they work specifically at Respondent's direction for each particular installation job. Even though Respondent is not classified as a member of the construction industry, it nonetheless is a "statutory employer" of its subcontractors, who are members of the construction industry. Thus, Respondent is responsible for securing workers' compensation coverage for its subcontractors who failed to secure an exemption or coverage for themselves.5/ The credible, persuasive evidence establishes that Petitioner correctly calculated the penalty attributable to flooring installation subcontractors for which Respondent was noncompliant during the penalty period. However, the unrebutted evidence establishes that subcontractor Mike Smith was hired on a one-time basis to paint parking lot stripes in Respondent's parking lot. Thus, Petitioner's classification of Smith in NCCI class code 5478—— which is a construction industry code that applies to workers engaged in flooring installation——obviously is incorrect, and no evidence was presented showing the correct NCCI class code in which Smith should be classified. Accordingly, Smith should not be included in Petitioner's calculation of the penalty to be assessed against Respondent. The credible, persuasive evidence establishes that Petitioner correctly calculated the penalty attributable to Respondent's noncompliance with respect to Charles, Frenchak, and Phelps during the penalty period. The credible, persuasive evidence establishes that Stark is engaged in retail sales on Respondent's business premises. However, in calculating the penalty, Petitioner classified Stark in NCCI class code 8018, which applies to salespersons engaged in selling merchandise at the wholesale level, rather than at the retail level. Thus, Petitioner incorrectly classified Stark in NCCI class code 8018. There is no evidence in the record identifying the correct NCCI class code in which Stark should be classified. Accordingly, Stark should not be included in Petitioner's calculation of the penalty to be assessed against Respondent. The credible, persuasive evidence establishes that Calideen performs clerical employment duties and does not perform sales duties, so he should be classified in NCCI class code 8810, rather than in class code 8742. Accordingly, Petitioner should recalculate the portion of the penalty attributable to Respondent's noncompliance for Calideen using NCCI class code 8810. The credible, persuasive evidence establishes that Krembs, Skwarek, and Stahl are not employed as salespersons at the wholesale level. Thus, Petitioner incorrectly classified these employees in NCCI class code 8018. In its Proposed Recommended Order, Petitioner contends that because Respondent disputes the classification of these employees in class code 8018, Respondent is responsible for identifying the correct applicable class code, which it has not done. This position disregards that in this proceeding, Petitioner bears the burden of proof, by clear and convincing evidence, to show that its proposed penalty assessment against Respondent is accurate. Thus, Petitioner——not Respondent——is responsible for correctly identifying the NCCI class codes applicable to Respondent's employees. Here, the credible, persuasive evidence establishes that in calculating the penalty, Petitioner incorrectly classified Krembs, Skwarek, and Stahl in class code 8018,6/ and no evidence was presented showing the correct NCCI class code applicable to these employees. Accordingly, Krembs, Skwarek, and Stahl should not be included in Petitioner's calculation of the penalty to be assessed against Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner, Department of Financial Services, Division of Workers' Compensation, issue a final order amending the penalty to be assessed against Respondent as follows: Subtracting the penalty assessed for subcontractor Mike Smith, as shown on the Penalty Calculation Worksheet; and Subtracting the penalties assessed for Respondent's alleged noncompliance with respect to employees Amber Krembs, Jacquelyn Skwarek, and Monica Stahl, as shown on the Penalty Calculation Worksheet; and Reclassifying employee Andy Calideen in NCCI class code 8810 and recalculating the portion of the penalty attributable to Respondent's noncompliance for Calideen using this class code; and Reclassifying employee Alexander Stark in NCCI class code 5784 and recalculating the portion of the penalty attributable to Respondent's noncompliance for Stark using this class code. DONE AND ENTERED this 22 day of January, 2016, 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 22 day of January, 2016.
The Issue Whether Petitioner failed to obtain workers’ compensation insurance meeting the requirements of Chapter 440, Florida Statutes, and, if so, the penalty that should be imposed.
Findings Of Fact Olender is a Delaware corporation that is registered to do business in Florida and engaged in the business of construction. Primarily, Olender frames the walls of structures and installs siding, windows and moisture barriers to such structures. Such activities are construction activities under the Florida’s workers’ compensation law. See Ch. 440, Fla. Stat., and Fla. Admin. Code R. 69L-6. On June 22, 2006, an investigator for the Department visited the Alta Westgate Apartment complex construction project, located at 6872 Alta Westgate Drive, Orlando, Florida. The visit was prompted by a “confidential tip” received by the Department from Tyler Balsinger, a former employee of Petitioner. The Alta Westgate complex is owned by Alta Westgate, LLC. The general contractor responsible for the construction of the complex was W.P. South Builders. The overall project manager for the general contractor was Robert Beliveau. The on-site representative for the general contractor was Danny Campbell. Mr. Campbell provided the Department’s investigator with a list of subcontractors on the project worksite. The list reflected that the subcontractor for framing was Olender and that John Olender was the person in charge of the company’s work at the project site. Among other things, the contract also included the installation of a moisture barrier, generally known as Tyvek, on the framed structures. Because of the nature of construction work, it is not unusual to have several subcontractors on a construction worksite at the same time. It is unlikely that Olender was the only subcontractor working on the day the Department’s investigator visited the Alta Westgate project. The subcontract required that Olender secure the payment of workers’ compensation on its employees. The evidence was not clear regarding whether the general contractor, under its subcontract with Olender, would provide workers’ compensation insurance on the employees of Olender’s subcontractors. However, the evidence was clear that J.P. Builders did not secure such workers’ compensation insurance on the employees of Olender’s subcontractors. Mr. Campbell also provided the certificate of insurance for Petitioner. The certificate reflected that Modern Business Associates, Inc. (MBA), an employee leasing company, provided workers’ compensation for Olender’s leased employees. See § 468.520, Fla. Stat. MBA entered into a client service agreement with Olender. Under the agreement, Olender would lease employees from MBA and MBA would provide payroll services and workers’ compensation coverage for the employees it leased to Petitioner. The agreement terminated on August 30, 2006. MBA’s Client Service Agreement with Petitioner states on p. 3: Insurance Coverage. MBA is responsible for providing Workers’ Compensation coverage to workers employed by MBA and assigned to Client, in compliance with applicable law, and as specified in the Proposal. Workers performing services for Client not covered by this Agreement and not on MBA’s payroll shall not be covered by the workers’ compensation insurance. Client understands, agrees, and acknowledges that MBA shall not cover any workers with workers’ compensation coverage who has not completed and submitted to MBA an employment application and tri- fold, and which applicant has not been reviewed and approved for hire by MBA. (emphasis supplied) Other than information necessary to supply its services, MBA was not aware of any specific project or projects on which Olender was working when it leased employees from MBA. John Olender and Ruben Rojo were two employees that Olender leased from MBA and for whom MBA provided workers’ compensation insurance. The workers’ compensation policy complied with Florida’s workers’ compensation requirements. After speaking with Mr. Campbell, the Department’s investigator, who is fluent in Spanish, walked around the complex’s worksite. She did not have a hardhat on. She eventually saw about 10 to 12 workers on the third floor of one of the buildings under construction (Building 8 or 9). The Department’s investigator could not say if they were framing. At some point, John Olender, the company’s project superintendent, saw the Department’s investigator, noticed she did not have any safety equipment on, and went to meet her. The investigator yelled to the workers on the third floor and showed her Department badge or identification. She was speaking Spanish to them. The workers ran in an effort to avoid the Department’s investigator. Mr. Olender, who does not speak or understand Spanish, sent for Ruben Rojo. Mr. Rojo is the assistant superintendent for Olender and works under John Olender. He is fluent in Spanish. He does not hire employees for Olender, but oversees the work being performed under Olender’s subcontracts. The Department’s investigator continued to attempt to explain to the workers that she was not interested in their immigration status, but was there to make sure they were covered by workers’ compensation insurance. At least some of the workers came down to talk to her. Mr. Rojo thought the investigator was asking about the workers’ immigration status and told them that they did not have to talk to her. However, apparently some workers very reluctantly gave her limited information. The workers who talked to her were Pedro Antonio Mendez, Jaco Sarmentio, Juan Cardenas, Alvaro Don Juan Diaz, Jose Varela Orellana, Nesto Suarez Ventura, Miguel Martinez Diaz, Jose Perez Renaldo and Antonio Hernandez. She did not obtain any addresses, phone numbers or other identifying information from the employees. The evidence did not show whether these individuals gave the Department’s investigator the correct information. Importantly, they did not tell her who their employer was or what duties they were performing. None of these individuals testified at the hearing. John Olender did not recognize these workers. Mr. Rojo told the investigator that Olender subcontracted the framing portion of its contract to “T-Bo”. T-Bo was also known as Primitivo Torres. In his deposition testimony, Mr. Torres did not recognize these workers’ names. He also thought that most of the workers he employed for his framing subcontract with Olender were illegal immigrants. Mr. Torres was unclear in his testimony regarding his status with Olender. He did indicate that he worked in both Orlando and Tampa. Apparently, at times, he was an employee and at other times he was a subcontractor. He was listed as a leased employee under MBA’s contract with Olender. The evidence suggests, but does not prove, that Mr. Torres was a person who supplied immigrant workers to construction sites. In Orlando, Mr. Torres lived in an apartment complex in the Rosemond area with his employees. The rent was sometimes paid by Olender and then deducted from the remuneration paid to Mr. Torres. Mr. Torres paid his employees from the money he received under his subcontract with Olender. Mr. Torres also testified that when the Department’s investigator contacted him in June 2006, to discuss workers’ compensation insurance, he told her that he neither secured the payment of workers’ compensation for himself nor for the other workers in both Tampa and Orlando. Donna Knoblauch, who oversaw Olender’s main office, received a faxed copy of a certificate of workers’ compensation insurance from Mr. Torres. However, the faxed certificate was an illegible copy of what appeared to be a certificate of liability insurance issued by a company in Texas. The certificate does not have a legible “sent date,” a legible workers’ compensation policy number, legible dates of coverage, a legible producer name, or any information indicating that coverage includes the State of Florida. The document is insufficient to demonstrate that Mr. Torres provided workers’ compensation coverage for his employees that worked under his subcontract with Olender. John Olender testified that Mr. Torres utilized, at most, 20 framers for the construction at Alta Westgate. Mr. Torres corroborates that number and indicates that various people worked in crews of around five. On the other hand, Danny Campbell testified that Olender had approximately 20 workers when the project started, increased to approximately 75 people performing framing duties on the worksite and decreased to about 20 workers by the time the Department’s investigator visited the worksite. Mr. Campbell testified that on January 22, 2006, he believed that Olender had approximately five individuals for the punch-out group, three–to-five cleaners, a forklift operator, approximately two individuals installing the Tyvek moisture- barrier paper, two individuals performing window installation and approximately 15–to-20 individuals installing siding at the worksite. No other testimony supports the number of workers Mr. Campbell believed to be at the jobsite on June 22. On balance, the best evidence of the approximate number of workers was that of Mr. Olender and Mr. Torres. However, these figures were only estimates of the actual number which may have been less than 20 workers. In any event, the employment of these 12 workers on the third floor was not demonstrated by the evidence. Their names did not appear on the list of employees leased by Olender from MBA and were otherwise, unknown to the Mr. Olender, Rojo and Torres. While at the jobsite, the Department’s investigator also spoke with Victor Ibarra. Mr. Ibarra drove a forklift and indicated that he worked for Olender. Again, no address or other identifying information was supplied to the investigator. Later, the investigator spoke with a woman who purported to be Mr. Ibarra’s wife. There was no information on the forklift indicating that it belonged to Olender and Olender denies employing a person named Victor Ibarra. Mr. Campbell testified in his deposition that Olender had forklifts on the jobsite. However, he did not testify that the forklift Victor Ibarra drove on June 22, 2006, was owned by Olender. Likewise, Mr. Campbell did not testify that Mr. Ibarra was an employee of Olender. Mr. Ibarra’s name did not appear on the list of leased employees provided by MBA. The Department's investigator included Mr. Ibarra as an employee of Olender based on Mr. Ibarra’s statements. However, the evidence presented by the Department is not sufficient to establish that Mr. Ibarra was an employee of Olender, since Mr. Ibarra did not testify at the hearing. Mr. Campbell’s testimony does not corroborate the hearsay statements of Mr. Ibarra since the testimony does not indicate the forklift Mr. Ibarra drove belonged to Olender or to another subcontractor on the project. After talking to Mr. Ibarra, the Department’s investigator met Rosa Barden, Martha Alvarado and Ismael Ortiz, who were applying a moisture barrier paper known as “Tyvek” to a building at the construction site. The three individuals told the investigator that that they had been hired by Mr. Rojo on behalf of Olender and had only worked for about a day. The investigator included these three individuals as employees of Olender. No addresses or other contact information was obtained by the investigator. None of these individuals testified at the hearing. Mr. Rojo testified that he did not know the three individuals on the “paper crew” and did not hire them. None of the three individuals were listed as leased employees with MBA. However, Olender’s subcontract clearly lists the application of Tyvek as a part of its contract. Additionally, the payment information supplied by the general contractor shows that Olender was paid for Tyvek application on all the buildings in the complex. Unlike Mr. Ibarro’s testimony, the contract and payment evidence independently corroborates the otherwise hearsay statements of these three individuals and Olender should have provided workers compensation insurance on them. There was no evidence that Olender provided such workers’ compensation insurance; such failure violates Chapter 440, Florida Statutes. See §§ 440.10(1)(g) and 440.38(7), Fla. Stat., and Fla. Admin. Code R. 69L-6.019. In total, the Department’s inspector met with John Olender for approximately one hour discussing the work performed by Olender and the employees retained by Olender. During this meeting, Mr. Olender, identified members of a “punch-out” crew who had worked on the project. The punch-out crew repaired any defects in framing prior to inspection. The names supplied by Mr. Olender were Juan Gonzalez, Miguel, Sal, William, WI Gerardo (noted as El Guardo in the third Amended Order of Penalty assessment), Pedro, Jacobo and Boso. Mr. Olender did not know their last names. The evidence did not show the period of time that the punch-out crew would have been working at the project site. Presumably, they would have begun some time after the initial building was framed. The Department’s investigator did not personally see the punch-out crew at the project. Mr. Olender also informed the Department’s investigator that he did not handle matters concerning workers’ compensation insurance and that she would have to contact the Company’s main office in Missouri. He provided the number for the office. He also gave the investigator the number for Michael Olender, the president of the company and the number for Mr. Torres. The investigator issued a Workers’ Compensation Request for Production of Business Records to Olender. She left the Request with John Olender. The request for records asked for certain categories of Olender’s business records for the period of January 22, 2004 to June 22, 2004. Of importance here, the Department requested records in categories 1, 4, 5 and 6. In general, category 1 covers all payroll records, including checks and check stubs, time sheets, attendance records and cash payment records. Categories 4, 5 and 6 cover all records that relate to subcontractors, including their identity, contract, payment thereof, workers compensation coverage for all the subcontractor’s employees, and/ or the employees’ exemption status. These records are required to be maintained by a company doing business in Florida. Mr. Campbell testified that some members of the punch- out crew often approached him about whether he had paid Olender so that they in turn could be paid. Again, none of these individuals testified at the hearing. However, given the admissions of Olender’s employee and Mr. Campbell’s testimony, the evidence supports the conclusion that the eight individuals on the punch-out crew were employed by Olender. None of these employees were leased employees and therefore, were not covered by the workers’ compensation policy provided by MBA. There was no evidence that Olender secured any workers' compensation insurance on these eight employees. Such failure violates Chapter 440, Florida Statutes. See §§ 440.10(1)(g) and 440.38(7), Fla. Stat., and Fla. Admin. Code R. 69L-6.019. The Department’s investigator contacted Ms. Knoblauch while she was on her way to a medical appointment. The investigator requested Olender’s proof of workers’ compensation insurance. Ms. Knoblauch told the investigator that she was not at the office where the records were kept, but on the way to a medical appointment. She said she would be returning to the office after the appointment. The investigator said she needed the records immediately. Ms. Knoblauch offered to skip her appointment and requested time to turn around and return to the office. The investigator refused to permit her the time to return to the office. At some point, MBA supplied the Department’s investigator with a list of Olender’s leased employees. The list did not contain any of the names she had gathered during her visit to the worksite. Within a few hours from the beginning of the investigation, the Department's investigator issued a Stop Work Order and an Order of Penalty Assessment on June 22, 2006. The Order was served via certified mail on Michael Olender and Olender’s legal counsel. The Stop Work Order required that Olender "cease all business operations in this state" and advised that a penalty of $1,000.00 per day would be imposed if Olender were to conduct any business in violation of the Stop Work Order. Additionally, along with the Order, the Department issued and served on Petitioner via certified mail a Division of Workers’ Compensation Request for Production of Business Records for Penalty Calculation, requesting records for a period of three years. The request, made pursuant to Section 440.107(7), Florida Statutes, asked the employer to produce, for the preceding three years, documents that reflected payroll, proof of insurance, workers’ compensation audit reports, identity, duration, contracts, invoices and check stubs reflecting payment to subcontractors, proof of workers’ compensation coverage for those subcontractors, employee leasing company information, temporary labor service information, and any certificate of workers’ compensation exemption. The request asked for the same type of records that had been requested earlier. Neither request for records was specific to a particular construction job that Olender may have performed work on. The investigator informed Mr. Campbell that Petitioner was being issued a Stop-Work Order and gave him a copy of the Order. Mr. Campbell faxed the Order to Olender’s office in Missouri. The Department’s investigator also checked the Department’s Coverage and Compliance Automated System (“CCAS”) database. The system tracks workers' compensation insurance policy information provided by workers’ compensation carriers on an insured employer. The database did not contain an entry that reflected a current State of Florida workers' compensation insurance policy for Olender. The database did reference that Olender had a stop-work order served on it on July 12, 2002, which had been lifted on July 31, 2002, with payment of the penalty. Florida law requires that employers maintain a variety of business records involving their business. See § 440.107(5), Fla. Stat., and Fla. Admin. Code R. 69L-6.015. The Rule is limited to records regarding a business’ employees and any payout by the employer to any person. In this case, under the Rule, the only records Olender was required to maintain related to its employees and its subcontractor, Mr. Torres. There was no evidence regarding any other subcontractors Olender may have contracted with. The only records supplied by Olender to the Department were the records from MBA that included workers’ compensation information and W-2 forms for Olender’s leased employees, the illegible proof of insurance for Mr. Torres and copies of checks from Olender to Mr. Torres for the subcontract. Those records reflected that John Olender, Ruben Rojo and Primitivo Torres were leased employees and covered by workers’ compensation insurance under Olender’s contract with MBA. Olender supplied no records regarding workers’ compensation coverage for the eight employees who were members of the punch- out crew, the three workers who were members of the paper crew or the 12 workers who were on the third floor. When an employer fails to provide requested business records that the statute requires it to maintain, the Department is required to impute the employer's payroll using "the statewide average weekly wage as defined in Section 440.12(2)." § 440.107(7)(e), Fla. Stat., and Fla. Admin. Code R. 69L-6.028. The penalty for failure to secure the workers' compensation insurance coverage required by Florida law is 1.5 times the premium that would have been charged for such coverage for each employee identified by the Department. The premium is calculated by applying the approved manual rate for workers' compensation insurance coverage for each employee to each $100.00 of the gross payroll for each employee. In this case, the Department, after several amended assessments, imputed the payroll for Olender for the period beginning January 22, 2004, Petitioner’s date of incorporation, and ending June 26, 2006. Included in the calculation were the eight individuals on the punch-out crew identified by John Olender, the 12 employees who were working on the third floor, the forklift driver Victor Ibarra, and the three individuals on the paper crew. In calculating the premium for workers' compensation insurance coverage, the Department's investigator used the risk classifications and definitions of the National Council of Compensation Insurance, Inc. ("NCCI") SCOPES Manual. The appropriate code for Olender’s employees was classification code 5561 which covers framing of multiple family dwellings. The gross payroll imputed to each of the 27 employees was $683.00 per week. The Department then utilized the imputed payroll for same employees for the years 2004 and 2005. The Department’s calculation resulted in an assessed penalty of $1,205,535.40. However, the evidence establishes that Olender had 11 direct employees rather than 27 employees during the period of the Alta Westgate contract. Olender’s performance under that contract began on April 3, 2006. Other than the period of time involved with the Alta Westgate project, there was no evidence regarding the period of time Olender conducted business in Florida that would require it to comply with Florida law. The date of incorporation of Olender is insufficient to demonstrate that Olender engaged in any business in Florida that would require it to comply with Florida’s workers’ compensation law. Therefore, the penalty calculation must be modified to reflect only those eleven employees for the time period Olender performed under its contract on the Alta Westgate project.
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 Olender Construction Co., Inc., failed to have Florida workers' compensation insurance coverage for 11 of its employees, in violation of Sections 440.10(1)(a) and 440.38(1), Florida Statutes; and Recalculating the penalty against Olender. DONE AND ENTERED this 14th day of March, 2008, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of March, 2008. COPIES FURNISHED: Colin M. Roopnarine, Esquire Department of Financial Services, Division of Workers Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Jeremy T. Springhart, Esquire Broad and Cassel 390 North Orange Avenue, Suite 1500 Orlando, Florida 32801 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issues in this proceeding are whether Respondent, Mark Dunlap, d/b/a Mark Dunlap Masonry of Central Florida, Inc., a dissolved Florida corporation, and Mark Dunlap Masonry of Central Florida, Inc. ("Respondent") 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 whether the Petitioner properly assessed a penalty against the Respondent pursuant to section 440.107, Florida Statutes.
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(3), Fla. Stat. Respondent operates a masonry business located in Paisley, and is therefore engaged in the construction industry. On January 8, 2010, Hector Beauchamp, the Department's investigator, received a referral alleging that Respondent was working at 1601 Tillery Drive in Deltona, in violation of the Workers' Compensation Law. Mr. Beauchamp visited the plans examiner for the City of Deltona, who confirmed that a building permit had been issued for the cited address. Mr. Beauchamp drove to 1601 Tillery Drive in Deltona, where he found four people behind the house building a block wall as part of an addition to the single-family house at that address. Mark Dunlap was on the site, and told Mr. Beauchamp that the four men worked for his business, Mark Dunlap Masonry of Central Florida, Inc. Mr. Dunlap subsequently identified the four persons working on the site as Wayne Sochocki, Kevin Copeland, Annie Blackburn, and David Allen Baxley. Mr. Beauchamp researched the database maintained by the Department of State, Division of Corporations (accessible at www.sunbiz.org) and learned that Mark Dunlap Masonry of Central Florida, Inc. had been administratively dissolved for failure to file an annual report on September 25, 2009. Mr. Beauchamp also learned that Mr. Dunlap had owned another Florida corporation, Mark Dunlap Masonry, Inc., that had been administratively dissolved for failure to file an annual report on September 16, 2005. According to the Division of Corporations' information, both Mark Dunlap Masonry of Central Florida, Inc., and Mark Dunlap Masonry, Inc., had the same Federal Employer Identification Number ("FEIN") of 030531755. Mr. Dunlap claimed to Mr. Beauchamp that he was himself exempted from carrying workers' compensation coverage, but admitted that he had not secured coverage for the four employees building the block wall at 1601 Tillery Drive. Mr. Beauchamp consulted the Department's Coverage and Compliance Automated System ("CCAS") database, which lists the workers' compensation insurance policy information for each business as provided by the insurance companies, as well as any workers' compensation exemptions for corporate officers. CCAS indicated that in previous years Respondent had secured workers' compensation insurance through a leasing arrangement with Employee Leasing Solutions ("ELS"). In an employee leasing arrangement, the leasing company hires an employer's workers and leases them back to the employer. The leasing company provides payroll services and workers' compensation insurance coverage to the leased employees in exchange for a fee paid by the employer. However, only those employees specifically placed in the leasing arrangement by the employer and accepted as employees by the leasing company are covered by the leasing company's workers' compensation insurance. Mr. Beauchamp's investigation confirmed that Respondent's workers' compensation coverage obtained through the leasing agreement with ELS had been terminated as of July 8, 2008. The CCAS database confirmed that Mr. Dunlap had an active exemption from the requirement to obtain workers' compensation coverage. It also confirmed that none of the four employees whom Mr. Beauchamp found building the block wall at 1601 Tillery Drive were exempt. Mr. Beauchamp concluded that Respondent had failed to secure workers' compensation insurance coverage that met the requirements of chapter 440. Mr. Beauchamp therefore issued an SWO to Respondent on January 8, 2010, and personally served the SWO on Mr. Dunlap on the same date. Also on January 8, 2010, Mr. Beauchamp served Respondent with the Request for Production of Business Records for Penalty Assessment Calculation. The purpose of this request was to obtain the business records necessary to determine the appropriate penalty to be assessed against Respondent for violating the coverage requirements of chapter 440. Because section 440.107(7)(d)1. provides that the Department's assessment of a penalty covers the preceding three-year period, the request for production asked for Respondent's business records from January 9, 2007, through January 8, 2010. If an employer fails to produce business records sufficient to allow for the calculation of the appropriate penalty, the Department must calculate the applicable penalty by imputing the employer's payroll using the statewide average weekly wage for the type of work performed by the employee and multiplying that payroll by 1.5. The statewide average wage is derived by use of the occupation classification codes established by the proprietary Scopes Manual developed by the National Council on Compensation Insurance, Inc. ("NCCI"). The Scopes Manual has been adopted by reference in Florida Administrative Code Rule 69L-6.031(6). For Respondent's employees, Mr. Beauchamp applied the occupation classification code 5022, for masonry. Fla. Admin. Code R. 69L- 6.031(6)(b)9. The Department's Amended Order, assessing an imputed penalty in the amount of $121,001.30 against Respondent, was issued on February 12, 2010, and served on Mr. Dunlap by process server on March 5, 2010. Following service of the Amended Order, Respondent supplied the Department with additional business records, including Respondent's payroll runs from ELS and W-2's for the year 2007. However, even these records were not sufficient to permit the Department to calculate a penalty based on Respondent's actual payroll. The additional business records produced by Respondent did show that Mark Dunlap Masonry, Inc., had a policy of workers' compensation insurance in place with Business First Insurance Company from September 9, 2004, through February 22, 2008. Mr. Beauchamp had not previously found this coverage because the FEIN number listed by the Division of Corporations for Mark Dunlap Masonry, Inc., was incorrect. The Department issued the Second Amended Order on August 18, 2010, lowering the penalty assessment to $64,315.28. Although the Business First Insurance Company policy had been issued to Mark Dunlap Masonry, Inc., and not to Respondent, the Department nonetheless concluded that the policy brought Respondent into compliance with chapter 440 until February 22, 2008, and adjusted the penalty assessment accordingly. Respondent's workers' compensation coverage through the leasing agreement with ELS became effective on March 20, 2008, and was terminated on July 7, 2008. Of the four workers whom Mr. Beauchamp found at the work site on January 8, 2010, only Wayne Sochocki was listed on the ELS employee roster. Thus, Respondent was in compliance with respect to Mr. Sochocki for the period from March 20, 2008, through July 7, 2008. However, the records indicate that Respondent was not in compliance through the ELS leasing agreement with respect to its employees Kevin Copeland, Annie Blackburn, or David Allen Baxley because they had never been tendered to ELS as leased employees. The Department correctly imputed the penalty against Respondent for the four employees found at the work site on January 8, 2010, for all periods of noncompliance. The Department correctly determined the period of noncompliance for Mr. Sochocki to run from July 8, 2008 to January 8, 2010, and for Mr. Copeland, Ms. Blackburn and Mr. Baxley to run from February 22, 2008, to January 8, 2010. The Department utilized the correct occupation classification code for the four employees. The Department correctly utilized the procedure set forth by section 440.107(7)(d) and (e), and the penalty calculation worksheet incorporated by reference into Florida Administrative Code Rule 69L-6.027(1), to calculate the penalty assessed against Respondent by the Second Amended Order.
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 $64,315.28 against Respondent. DONE AND ENTERED this 22nd day of March, 2011, 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 22nd day of March, 2011. COPIES FURNISHED: Mark Dunlap Mark Dunlap Masonry, Inc. 45806 Lake Street Paisley, Florida 32767 Justin H. Faulkner, 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 P. K. Jameson, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399 Honorable Jeff Atwater Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399
The Issue The issue in the case is whether Moonlight General Contractors, Inc. (Respondent), should be assessed a penalty for an alleged failure to comply with the workers' compensation requirements referenced herein, and, if so, in what amount.
Findings Of Fact Pursuant to section 440.107, Florida Statutes (2015),1/ the Petitioner is the state agency charged with enforcing compliance with Florida’s workers’ compensation requirements. At all times material to this case, the Respondent was a business providing services in the construction industry with a main office located at 1900 18th Avenue South, St. Petersburg, Florida. On April 1, 2015, Kent Howe, employed by the Petitioner as a Compliance Investigator, observed two men working on a roof of a residential structure located at 2513 Anastasia Drive South, Daytona, Florida (the “subject property”.) Mr. Howe specifically observed that a portion of the roof structure was exposed and that the individuals were working on the roof trusses. Mr. Howe testified that the men identified themselves as “Milan Kreal” and “Svatopluk Vavra” and that they identified the Respondent as their employer. Mr. Howe accessed corporate records maintained online by the Department of State, Division of Corporations, and identified Abbey Khdair as the sole corporate officer for the Respondent. Mr. Howe accessed the Petitioner’s Coverage and Compliance Automated System (CCAS) to determine whether the Respondent was in compliance with applicable workers’ compensation requirements. CCAS is a database maintained by the Petitioner that contains workers’ compensation coverage information provided to the Petitioner by insurance providers. Pursuant to section 440.05, corporate officers can be exempted from workers’ compensation coverage requirements. Mr. Howe determined through CCAS that Mr. Khdair had an active exemption for himself as the corporate officer, but the two individuals working on the subject property had no workers’ compensation coverage. Mr. Howe contacted Mr. Khdair, who told Mr. Howe that the two men were employed through an employee leasing company identified as “Skilled Resources.” Personnel employed through licensed employee leasing companies can have workers’ compensation coverage arranged through the leasing companies. Mr. Howe contacted Skilled Resources and determined that, although on occasion the Respondent had obtained employees from Skilled Resources, the individuals working on the subject property had not been supplied to the Respondent by Skilled Resources. Mr. Howe thereafter issued a Stop-Work Order and posted it at the jobsite. On April 2, 2015, the Stop-Work Order was personally served on Mr. Khdair, along with a Request for Production of Business Records for Penalty Assessment Calculation for the period from April 2, 2013, through April 1, 2014 (the “audit period”). On that same date, Mr. Khdair paid a $1,000 penalty down payment towards the penalty assessment, in order to obtain a release from the Stop-Work Order and allow the subject property roof to be secured from potential inclement weather. By letter dated April 10, 2015, Mr. Khdair advised the Petitioner that, prior to April 1, 2015, the Respondent and the property owner had entered into a contract to perform work related to “a new gable roof, electrical, plumbing, and HVAC work.” Mr. Khdair wrote that he obtained the building permit for the project and that the property owner was to hire additional subcontractors to work under the permit Mr. Khdair had obtained. Mr. Khdair wrote that he “inadvertently” referred Mr. Howe to Skilled Resources when Mr. Howe contacted him on April 1, 2015, and that the property owner had hired the workers without Mr. Khdair’s knowledge or consent. Mr. Khdair wrote that, prior to Mr. Howe’s telephone call, Mr. Khdair was unaware that there were any people working at the subject location, other than those who were to have obtained their own sub-permits in relation to the project. On April 10, 2015, Mr. Khdair also submitted a letter purporting to be from the property owner stating that the owner had personally hired Mr. Vavra and “Guy Ackerly” to work on the roof. Neither of the two individuals observed by Mr. Howe working at subject property on April 1, 2015, identified himself as “Guy Ackerly.” The task of calculating the penalty assessment was assigned to Eunika Jackson, employed by the Petitioner as a Penalty Auditor. The Respondent failed to provide any business records to the Petitioner. Accordingly, Ms. Jackson calculated the penalty assessment pursuant to section 440.107(7)(e), which provides that in the absence of business records sufficient to determine payroll, the Petitioner is required to impute wages for the employees working without workers’ compensation coverage. As the corporate officer, Mr. Khdair had obtained an exemption from the coverage requirements. The National Council on Compensation Insurance (NCCI) assigns classification codes for various occupations related to levels of risk presented by the specific tasks performed by an employee. The codes are used to establish rates charged for workers’ compensation coverage and are relevant for determining the penalty assessed for violations of workers’ compensation requirements. For purposes of enforcing compliance with Florida’s workers’ compensation requirements, the Petitioner has adopted the NCCI codes through Florida Administrative Code Rules 69L- 6.021. Ms. Jackson correctly determined that NCCI Code 5551 is applicable in this case. NCCI Code 5551 (titled “Roofing-All Kinds & Drivers”) specifically applies to “the installation of new roofs and the repair of existing roofs” and includes “the installation and/or repair of joists, trusses, rafters, roof decks, sheathing, and all types of roofing materials.” In determining the penalty assessment, Ms. Jackson calculated the penalty based on the Respondent having three employees without workers’ compensation coverage. Ms. Jackson applied the procedures set forth in section 440.107(7)(d) and rules 69L-6.027 and 69L-6.028, and determined that the penalty assessment was $192,425.94, which reflects a penalty of $64,141.98 for each of the three individuals. Although Ms. Jackson’s calculation of the penalty was procedurally correct, the evidence establishes only that there were two individuals working on the roof of the subject property.
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 against the Respondent imposing a penalty assessment in the amount of $128,283.96, as set forth herein. DONE AND ENTERED this 23rd day of October, 2015, 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 23rd day of October, 2015.
The Issue The issues to be determined in this case are whether Respondent Lockhart Builders, Inc., violated state laws applicable to workers’ compensation insurance coverage by failing to secure coverage for three employees and failing to produce records requested by Petitioner Department of Financial Services, Division of Workers’ Compensation (Department) and, if so, what penalty should be assessed for the violations.
Findings Of Fact Petitioner is the state agency responsible for the enforcement of the workers’ compensation insurance coverage requirements established in Chapter 440, Florida Statutes (2007).1 Respondent is a Florida corporation with its office in Bradenton. William Lockhart is Respondent’s president. Respondent is licensed to engage in construction activity in Florida. Respondent was engaged to construct a two-story duplex at 2315 Gulf Drive in Bradenton. Respondent began work at the job site on or about February 21, 2007. On August 22, 2007, Lockhart received a proposal from Burak Yavalar, owner of BY Construction, to do the exterior stucco work on the duplex building for a flat fee of $10,750. The proposal was accepted by Respondent on August 23, 2007. Yavalar presented Lockhart with a certificate of liability insurance which indicated that he had obtained workers’ compensation coverage for his employees. The certificate was issued by Employee Leasing Solutions, Inc. (ELS), a professional leasing company in Bradenton. ELS provides mainly payroll services and workers’ compensation insurance coverage for its clients. Lockhart did not ask for, and Yavalar did not provide Lockhart with, a list of the names of the BY Construction employees who were covered by the insurance. Lockhart made a call to ELS to verify that BY Construction had workers’ compensation insurance coverage, but he did not ask for a list of BY Construction employees covered by its insurance policy. BY Construction began work at Respondent’s job site on or about September 10 or 11, 2007. On September 12, 2007, BY Construction had eight employees at the job site. One employee, Justin Ormes, had previously worked for BY Construction, had quit for a while, and had just returned. Two other employees, Carlos Lopez and Jaime Alcatar, had been working on a nearby job site and were asked by Yavalar to come to work at Respondent’s job site. Yavalar claims that on the morning of September 12, 2007, Ormes, Lopez, and Alcatar had not yet been employed or authorized to start work for BY Construction. On September 12, 2007, Petitioner’s investigators Germaine Green and Colleen Wharton performed a random compliance check at Respondent’s job site. Without being specific about what particular work was being performed at the site by Ormes, Lopez, and Alcatar, the investigators testified that when they arrived at the job site they observed all eight men performing stucco work. The investigators spoke to Yavalar, Lockhart and the workers at the job site to determine their identities and employment status. Yavalar told the investigators his eight employees had workers’ compensation insurance coverage through ELS. However, upon checking relevant records, the investigators determined that insurance coverage for Ormes, Lopez, and Alcatar had not been secured by either BY Construction or Respondent. Wharton issued a statewide stop-work order to BY Construction for its failure to obtain workers’ compensation coverage for the three employees. After the stop work order was issued, Yavalar left the job site with Lopez and Alcatar to complete their paperwork to obtain insurance coverage through ELS. Yavalar’s wife was able to re-activate Ormes’ insurance coverage with ELS over the telephone. By the end of the day on September 12, 2007, insurance coverage was secured by BY Construction for Ormes, Lopez, and Alcatar. The business records of BY Construction produced for the Department indicated that Ormes had been paid by BY Construction in the period from March to July 2007, and then on September 12, 2007; Lopez had been paid on August 24, 2007, and then on September 12, 2007; Alcatar had been paid on September 12, 2007. All three men were paid only $28 on September 12, 2007. This evidence supports the testimony of Yavalar that these three had arrived at Respondent’s job site for the first time on September 12, 2008. BY Construction was later served with an amended order of penalty for its failure to obtain workers’ compensation coverage for the three employees. It arranged with the Department to pay the penalty through installments and was conditionally released from the stop-work order. When the Department's investigators were at the job site on September 12, 2007, they informed Lockhart about the stop-work order being issued to BY Construction and gave Lockhart a Request for Production of Business Records for the purpose of determining whether Respondent had obtained proof of workers’ compensation insurance coverage from BY Construction before BY Construction commenced work at Respondent’s job site. Respondent produced the requested records. As discussed in the Conclusions of Law, Florida law charges a contractor with the duty to secure workers’ compensation insurance coverage for any uninsured employees of its subcontractors. On this basis, the Department served Respondent with a Stop-Work Order and an Order of Penalty Assessment on September 21, 2007, for failing to secure coverage for Ormes, Lopez, and Alcatar. On September 21, 2007, the Department served a Request for Production of Business Records for Penalty Assessment Calculation to Respondent. The Department’s request asked Respondent to produce records for the preceding three years, including payroll records, tax returns, and proof of insurance. Respondent produced some records in response to this second request, which the Department deemed insufficient to calculate a penalty. However, the evidence shows Respondent produced the only records that it possessed regarding its association with BY Construction. The Department’s proposed penalty does not include an assessment based solely on Respondent’s failure to produce requested records. When an employer fails to provide requested business records within 15 days of the request, the Department is authorized to assess a penalty by imputing the employer's payroll using "the statewide average weekly wage as defined in Section 440.12(2), multiplied by l.5." § 440.107(7)(e), Fla. Stat., and Fla. Admin. Code R. 69L-6.028. Imputing the gross payroll for Ormes, Lopez and Alcatar for the years 2004, 2005, 2006, and 2007, by using the average weekly wage for the type of work, the Department assessed Respondent with a penalty of $138,596.67 and issued an Order of Penalty Assessment to Respondent on October 31, 2007. Petitioner later amended the penalty to $70,272.51, based on the fact that BY Construction was not incorporated until January 1, 2006, and issued a Second Amended Order of Penalty Assessment on December 20, 2007.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is recommended that the Department enter a final order that amends its penalty assessment to reflect one day of non-compliance by Respondent. DONE AND ENTERED this 31st day of March, 2008, in Tallahassee, Leon County, Florida. BRAM D. E. CANTER 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 31st day of March, 2008.
The Issue The issues are whether Respondent violated Chapter 440, Florida Statutes (2009), by failing to secure the payment of workers' compensation, and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency responsible for enforcing the statutory requirement that Florida employers secure the payment of workers' compensation for the benefit of their employees. See § 440.107(3), Fla. Stat. Respondent is a Florida for-profit corporation providing pharmacy services. Respondent has business locations at 842 West Plymouth Avenue, Deland, Florida, and 112 East First Avenue, Pierson, Florida. Respondent's Pierson business site sells a small amount of food like bubble gum and other sundries. Activities at the Pierson location include filling prescriptions, compounding and blending drugs, and dispensing drugs or medicine to walk-in customers and patients. The patients are referred from a health care clinic known as Northeast Florida Health Services (NEFHS). The patients are federally qualified as indigent pursuant to a federal poverty calculation. Respondent's Deland location deals solely with prescription drug transactions to indigent patients who are referred by NEFHS. The Deland business site is very small and has no walk-in customers or food or other sundries for sale. At the end of the month, Respondent sends a bill to NEFHS for the prescriptions dispensed by Respondent at both locations. NEFHS than reimburses Respondent for its services. Respondent pays its employees at both locations out of a single checking account. Only one tax identification number is used for both business locations. On October 27, 2009, Hector Beauchamp, one of Petitioner's workers' compensation compliance investigators, received a referral, indicating that Respondent was operating without workers' compensation insurance coverage for its employees. After receiving the referral, Mr. Beauchamp used the website of the Department of State, Division of Corporations, to obtain Respondent's federal employer identification number. The Department of State website showed that Respondent became Pierson Community Pharmacy, Inc., on March 3, 2005. The website also indicated that Respondent had two corporate officers, John Eidt and Hanan Francis. Next, Mr. Beauchamp contacted Samantha Nixon, one of Petitioner’s penalty calculators, to research Respondent's unemployment compensation tax information on the Department of Revenue's website. Ms. Nixon's research revealed that Respondent employed in excess of four employees for each quarter in the past three years. Mr. Beauchamp also consulted Petitioner's Coverage and Compliance Automated System (CCAS) database. The CCAS database lists the workers' compensation insurance policy information for Florida employers together with any workers' compensation exemptions for corporate officers. The CCAS database accurately revealed that Respondent had no workers' compensation insurance policy in place for its employees and no workers' compensation exemptions for either Mr. Eidt or Ms. Francis as corporate officers. This was true from October 29, 2006, through October 28, 2009. Additionally, the CCAS database did not reveal any utilization of employee leasing by Respondent. Mr. Beauchamp also researched the National Council on Compensation Insurance, Inc. (NCCI) on-line database. Using Respondent's name and federal employer identification number, the database showed no record of a Florida workers' compensation insurance policy for Respondent. On October 28, 2009, Mr. Beauchamp visited both of Respondent's business locations. At the Pierson location, Mr. Beauchamp observed five individuals working behind a Plexiglas partition filling prescriptions. Mr. Beauchamp spoke with Mr. and Mrs. Francis. They confirmed that Respondent did not have workers' compensation insurance in place. Mr. Beauchamp then issued and served a Stop-Work Order. He also issued and served a records request. On October 29, 2010, Respondent provided Petitioner with the following records: (a) corporate tax records for 2007 and 2008; (b) a workers' compensation insurance application submitted after the issuance of the Stop-Work Order; and (c) payroll summaries for October 2006 through October 2009. The records confirmed that Respondent had employed more than four employees for the prior three years. On October 30, 2009, Petitioner issued and served the Amended Order of Penalty Assessment. That order was followed by the Second Amended Order of Penalty Assessment on March 15, 2010. Ms. Nixon calculated the gross payroll for Respondent's employees for the relevant time period. The gross payroll amounts for Ms. Francis from January 1, 2008, through December 31, 2008, and April 1, 2009, through June 30, 2009, were limited to the average weekly wage in effect at the time the Stop-Work Order was issued, multiplied by 1.5 for those periods pursuant to Florida Administrative Code Rule 69L- 6.035(2). As a corporate officer, Ms. Francis' actual earnings were in excess of these amounts. However, Florida Administrative Code Rule 69L-6.035(2) limits the amount of a corporate officer's income upon which workers' compensation penalties may be assessed to 1.5 times the average weekly wage in effect at the time a Stop-Work Order is issued or actual earnings, whichever is less. Using the classification codes in the NCCI Scopes® Manual, Petitioner accurately assigned the occupation classification code 8045, which corresponds to "Store: Drug Retail." Classification code 8045 is "applicable to store locations where the employer's books of accounts reflect at least 40 percent gross receipts in prescription sales and less than 50 percent gross receipts in the service of food." Prescription sales intended for the patients of health care facilities are included even though the facility is billed instead of the individual patient. Ms. Nixon then divided the payroll for each year by 100 and multiplied that figure by the approved manual rates adopted by the Florida Office of Insurance Regulation for 2006, 2007, 2008, and 2009 for classification code 8045. That product was then multiplied by 1.5 to find the penalty for the period for the three-year period. The total penalty is $13,996.60.
Recommendation Based on the foregoing Findings of Facts and Conclusion of Law, it is RECOMMENDED: That the Department of Financial Services, Division of Workers' Compensation, issue a final order affirming the Stop- Work Order and Second Amended order of Penalty Assessment in the amount of $13,996.60. DONE AND ENTERED this 26th day of April, 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 26th day of April, 2010. COPIES FURNISHED: John C. Eidt Pierson Community Pharmacy Inc. 112 East 1st Avenue Pierson, Florida 32180 Justin H. Faulkner, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Julie Jones, CRP, FP 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 32399-0307 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issues are whether Respondent had workers' compensation insurance coverage for the relevant time period as required by Sections 440.10(1)(a) and 440.38(1), Florida Statutes, and if not, what penalty should be imposed.
Findings Of Fact Petitioner is the agency responsible for enforcing the requirement that employers secure the payment of workers' compensation insurance for their employees. Respondent is a Florida corporation, incorporated on October 3, 2001. Paul Gilbert is Respondent's only officer and the corporation's managing member. Zurich-American Insurance Group (Zurich) issued a workers' compensation and employer's liability insurance policy (Policy No. WC 3617144) to Mitchell Construction Company (Mitchell) in October 1999. Zurich also provided Mitchell with general liability and business automobile insurance. At that time, Paul Gilbert was the risk manager for Mitchell, which was a large commercial contractor doing business in several states. Mitchell's offices were located in Vidalia, Georgia. In October 2000, Zurich renewed Mitchell's workers' compensation policy (Policy No. WC 3617144-01) for the period October 1, 2000 through October 1, 2001. The original and renewed policies listed other combinable entities as named insureds. Mitchell owned at least 51 percent of its combinable companies, one of which was Wood-Hopkins Contracting Company of Georgia, LLC. The company was also registered in Florida as Wood-Hopkins Contracting Company, LLC. The company was located in Jacksonville, Florida, with a mailing address in Vidalia, Georgia. The type of workers' compensation insurance that Zurich provided to Mitchell was known as a rolling contractor- controlled insurance policy (CCIP). It had endorsements for large deductible reimbursements for paid losses and a set monthly premium based in part on the projected payroll and experience rating modifiers for Mitchell and its combinable entities. The CCIP also covered subcontractors that had a contract with Mitchell for such coverage. The CCIP was renewable on an annual basis. Zurich did not need to re-underwrite the policy each year because the policy was created using three-year parameters. Additionally, Zurich had the option of auditing Mitchell's operations to determine whether there was a substantial change in the business. Palmer and Cay of Georgia (Palmer and Cay) was the producer and the broker of record for Mitchell's original and renewed CCIP. Stephen McMillan, an associate with Palmer and Cay at its offices in Savannah, Georgia, was the insurance agent that helped Mr. Gilbert negotiate and service Mitchell's CCIP with Zurich. In the Fall of 2001, Mr. Gilbert and Mr. McMillan contacted Zurich about renewing Mitchell's CCIP for the period October 1, 2001 through October 1, 2002. In a meeting with Zurich's representatives at its offices in Atlanta, Georgia, Mr. Gilbert advised Zurich that a company bearing the Wood-Hopkins name was going to complete Mitchell's then on-going projects. Zurich's employees believed Mr. Gilbert was referring to Wood- Hopkins Contracting Company, LLC. During the trip to Atlanta, Mr. Gilbert told Mr. McMillan that he was attempting to form a new company. However, Mr. Gilbert did not make it clear in the meeting with the Zurich representatives that he intended to incorporate Respondent, an independent company with a similar name to Wood- Hopkins Contracting Company, LLC, but unrelated to Mitchell. After the meeting in the Fall of 2001, Zurich was unaware that Mitchell and its combinable entities were or soon would be out of business as a general contracting group. Zurich's employees mistakenly believed that Mr. Gilbert continued to work for Mitchell. Mr. Gilbert resigned his position with Mitchell on September 1, 2001. After he incorporated Respondent, it purchased the assets of Mitchell and Wood-Hopkins Contracting Company, LLC, and hired about 100 of Mitchell's employees. Respondent planned to complete Mitchell's on-going projects and then operate primarily as a marine and civil contractor. Respondent was a new company, smaller than Mitchell, with a different risk exposure. Mr. Gilbert provided Zurich's underwriters with the payroll projections and other information necessary to renew Mitchell's CCIP. The data related to Mitchell's on-going projects and loss history as well as Respondent's planned projects. Zurich subsequently issued Policy No. WC 3617144-02 for the period October 1, 2001 through October 1, 2002. The policy designated Mitchell as the primary named insured and Wood-Hopkins Contracting Company, LLC, as one of the combinable entities and an additional named insured. The policy listed Palmer and Cay as the broker of record. The policy did not list Respondent as a named insured. Mr. Gilbert did not receive a copy of the policy until March 2002. However, Mr. Gilbert learned that Zurich had not added Respondent as a named insured to Mitchell's CCIP at least by February 2002. After learning that Zurich had not named Respondent as an insured, Mr. Gilbert continued to operate Respondent as if it had workers' compensation insurance. He was convinced that Respondent's assumption of Mitchell's business presented no additional risk exposure to Zurich. In fact, Mr. Gilbert had a history of spending sufficient funds on safety to reduce a company's loss ratio by half. Additionally, Respondent had suffered no workers' compensation losses. For these reasons, Mr. Gilbert hoped to persuade Zurich to add Respondent retrospectively as a named insured on Mitchell's CCIP policy. Towards the end of 2001 or the beginning of 2002, Zurich learned that Mitchell was going out of business or was no longer in business. Michael Esposito, Mitchell's account manager at Zurich, began to realize that something was wrong when Zurich received a premium payment for Mitchell's CCIP drawn on Respondent's bank account. At that time, Mitchell was behind in making deductible and premium payments to Zurich. Mitchell also was behind in paying Palmer and Cay its fees. On or about January 2, 2002, Mr. Gilbert signed one of Respondent's checks made payable to Palmer and Cay in the amount of $28,740.23. The check included a premium payment in the amount of $3,818.00 for October 2001 workers' compensation insurance. Mr. Gilbert wrote the check pursuant to a Palmer and Cay invoice addressed to The Mitchell Group. The record indicates that Respondent sent its check to Palmer and Cay's lockbox in Atlanta, Georgia, and that it was cashed. By letter dated February 7, 2002, Palmer and Cay advised Mitchell that it resigned as broker of record for The Mitchell Group. The most persuasive evidence indicates that Palmer and Cay resigned due to a dispute with Respondent over fees, not premium payments. By the end of February 2002, Mr. Esposito became aware that Mr. Gilbert wanted Zurich to continue Mitchell's CCIP with Respondent, a totally new company, listed as a named insured. Mr. Esposito then told Mr. Gilbert that Respondent would have to pay Mitchell's past-due premiums and provide Zurich with the necessary information to re-underwrite the policy, reflecting the change in ownership and operations. There is no persuasive evidence that Palmer and Cay or Mr. Gilbert ever provided Zurich with this information. Despite its resignation as broker of record for Mitchell's CCIP, Palmer and Cay agreed to continue servicing the policies until Zurich advised otherwise. For example, on or about February 22, 2002, Mr. Gilbert asked Palmer and Cay to add Respondent as a named insured, along with Wood-Hopkins Contracting Company, LLC, to Mitchell's railroad protection policies. Palmer and Cay referred this request to Zurich. Effective February 26, 2002, Zurich issued a Notice of Cancellation for Mitchell's Policy No. WC 3617144-02. The notice indicates that the policy was cancelled due to nonpayment of premium. About that time, Mr. Gilbert began trying to find a replacement for Palmer and Cay as broker of record. Willis of Florida, an affiliate of Willis of North America, Inc. (Willis), is an insurance broker with offices located in Tampa, Florida. Robert Allen is an insurance agent associated with Willis of Florida. Mr. Allen and Mr. Gilbert had a social and business relationship for many years prior to the time frame at issue here. Toward the end of February 2002, Mr. Allen and Mr. Gilbert had a telephone conference with Mr. Esposito. During that conversation, Mr. Allen indicated that his company was not interested in becoming the broker of record for Mitchell. However, Mr. Allen agreed that, in order to assist Zurich, Willis would issue Certificates of Liability Insurance for Respondent. At that time, Mr. Allen was under the impression that Respondent was a named insured under the Mitchell CCIP. As authorized by Zurich, Palmer and Cay issued three Certificates of Liability Insurance to the Florida Department of Transportation on March 4, 2002. The certificates indicate that Zurich provided commercial general liability and railroad protection insurance for CSX Transportation, Inc., Norfolk Southern Corporation, and Florida East Coast Railway as the named insureds. The certificates state that Wood-Hopkins Contracting Company, LLC, and Respondent were the contractors. Palmer and Cay issued these certificates for the Beaver Street viaduct bridge replacement in Jacksonville, Florida, a project begun by Wood-Hopkins Contracting Company, LLC, during the time that Palmer and Cay was acting as Mitchell's broker of record. On or about March 6, 2002, Mr. Gilbert signed one of Respondent's checks made payable directly to Zurich in the amount of $24,848.00. The check included premium payments in the amount of $3,818.00 for Policy No. WC 3617144-02 for the months of February and March 2002. The record indicates that this check was sent to Zurich's lockbox in Chicago, Illinois, and that it was cashed. On or about March 7, 2002, Zurich reinstated Policy No. WC 3617144-02 without lapse of coverage. The Notice of Reinstatement indicates that Mitchell was the named insured and that Palmer and Cay was the broker of record. On or about March 20, 2002, Zurich sent Mitchell a Notice of Cancellation. The notice states that Mitchell's Policy No. WC 3617144-02 would be cancelled effective June 8, 2002, due to a material change in exposures. Mr. Gilbert did not receive a copy of this cancellation notice. Mr. Gilbert and Mr. Allen did not learn about the cancellation until November 2002. On or about April 17, 2002, Mr. Gilbert signed one of Respondent's checks made payable directly to Zurich in the amount of $12,424.00. The check included a premium payment in the amount of $3,818.00 for Policy No. WC 3617144-02 for the month of April 2002. The record indicates that this check was sent to Zurich's Illinois lockbox and cashed. On April 25, 2002, Willis issued a Certificate of Liability Insurance to American Home Assurance with Respondent as the named insured. The certificate indicates that Zurich provided commercial general liability, automobile liability, and workers' compensation insurance for Respondent on the Beaver Street viaduct bridge replacement project with American Home Assurance and the Florida Department of Transportation as additional named insureds with respect to the general liability coverage. Mr. Allen signed this certificate. On May 6, 2002, Willis issued a Certificate of Liability Insurance to the University of Georgia Athletic Association with Respondent as the named insured. The certificate indicates that Zurich provided commercial general liability, automobile liability, and workers' compensation insurance for Respondent on an academic achievement center project. Mr. Allen signed this certificate. On or about June 13, 2002, Mr. Gilbert signed one of Respondent's checks made payable directly to Zurich in the amount of $12,424.00. The check included a premium payment in the amount of $3,818.00 for Policy No. WC 3617144-02 for the month of May 2002. The record indicates that this check was sent to Zurich's Illinois lockbox and cashed. On July 18, 2002, Willis issued a Certificate of Liability Insurance to Crowley Maritime Corporation with Respondent as the named insured. The certificate indicates that Zurich provided general liability, automobile liability, and workers' compensation insurance to Respondent for a barge loading ramp concrete removal and replacement in Jacksonville, Florida, and that Crowley Maritime Corporation was an additional named insured with respect to general liability coverage. Mr. Allen did not know the policy was cancelled when he signed this certificate. On August 12, 2002, Willis issued a Certificate of Liability Insurance to Martin K. Eby Construction Company with Respondent as the named insured. The certificate indicates that Zurich provided general liability, automobile liability, and workers' compensation insurance for Respondent on the Wonderwood Expressway channel excavation with the Jacksonville Transit Authority and J. E. Sverdrup (Engineer) as additional named insureds as to general liability coverage. Mr. Allen did not know the policy was cancelled when he signed this certificate. On or about August 15, 2002, Mr. Gilbert signed one of Respondent's checks made payable directly to Zurich in the amount of $12,424.00. The check included a premium payment in the amount of $3,818.00 for Policy No. WC 3617144-02 for the month of June 2002. The record indicates that this check was sent to Zurich's Illinois lockbox and cashed. On or about October 1, 2002, Mr. Gilbert signed one of Respondent's checks made payable directly to Zurich in the amount of $12,424.00. The check included a premium payment in the amount of $3,818.00 for Policy No. WC 3617144-02 for the month of September 2002. The record indicates that this check was sent to Zurich's lockbox in Illinois and cashed. In November 2002, Petitioner issued a Stop Work and Penalty Assessment Order for failing to secure workers' compensation insurance. In November and December 2002, Mr. Gilbert and Mr. Allen attempted to persuade Seth Hausman, Zurich's regional manager, to provide retroactive coverage for Respondent under the Mitchell workers' compensation policy, to reinstate the coverage, and to let the policy continue until it lapsed at expiration. Mr. Hausman concluded that Zurich could not assume the exposure without an underwriting evaluation. Mr. Hausman told Mr. Gilbert what information he had to provide in order for Zurich to conduct such an evaluation. In January 2003, Mr. Hausman advised Mr. Gilbert that Zurich had been unable to collect on a surety bond and that Mitchell owed Zurich approximately $750,000.00 in uncollected deductible payments. Mr. Hausman stated that in order to amend the workers' compensation policy to include Respondent as a named insured and to rescind the cancellation retroactively to allow the policy to run full term, Zurich would have to be paid for all outstanding balances. In that event, Zurich was willing to talk about extending workers' compensation coverage to Respondent as requested. When Petitioner issued the Stop Work and Penalty Assessment Order in November 2002, Respondent had about 20 employees. For the period October 1, 2001 through December 31, 2001, Respondent had the following amounts of payroll by class code: Class Code Payroll 5213 $126,739.96 5606 $170,615.31 5610 $5,391.51 6003 $5,777.00 6217 $62,691.54 7335 $73,434.08 8227 $135,572.71 8810 $27,503.88 41. For the period October 1, 2001 through December 31, 2001, the workers' compensation premium rates per $100.00 of payroll for each relevant Class Code class code were as follows: Premium Rates 5213 $33.02 5606 $4.76 5610 $18.08 6003 $62.53 6217 $14.27 7335 $25.97 8227 $9.80 8810 $0.59 For the period October 1, 2001 through December 31, 2001, the premium Respondent would have paid for workers' compensation coverage Class Code by class codes was as follows: Premium 5213 $41,849.53 5606 $8,121.29 5610 $974.79 6003 $3,612.36 6217 $8,946.08 7335 $19,070.83 8227 $13,286.13 8810 $162.27 For the period January 1, 2002 through November 5, 2002, Respondent had the following amounts of payroll by class code: Class Code Payroll 5213 $360,825.22 5403 $7,969.23 5606 $355,253.16 5610 $93,981.09 6003 $17,977.19 6217 $237,889.32 7335 $212,654.00 8227 $261,091.70 8810 $162,068.41 For the period January 1, 2002 through November 5, 2002, the workers' compensation premium rates per $100.00 of payroll for each relevant Class Code class code were as follows: Premium Rates 5213 $32.31 5403 $30.39 5606 $4.91 5610 $17.91 6003 $57.57 6217 $13.52 7335 $29.60 8227 $10.80 8810 $0.65 For the period January 1, 2002 through November 5, 2002, the premium Respondent would have paid for workers' compensation coverage by class codes was as follows: Class Code Premium 5213 $116,582.63 5403 $2,421.85 5606 $17,442.93 5610 $16,832.01 6003 $10,349.46 6217 $32,162.64 7335 $62,945.58 8227 $28,197.90 8810 $1,053.44 Respondent was out of compliance with the workers' compensation law for 398 calendar days between October 1, 2001 and November 5, 2002. Petitioner properly assessed penalty of $100.00 per day, totaling $39,800.00. Respondent would have paid a premium of $384,011.72 to secure workers' compensation insurance for its employees and owes a $39,800.00 penalty for the days it operated without coverage during the period October 1, 2001 through November 5, 2002. Accordingly, Respondent owes a total penalty in the amount of $423,811.72.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Petitioner enter a final order affirming the Amended Stop Work Penalty Assessment Order and directing Respondent to pay a penalty in the amount of $423,811.72. DONE AND ENTERED this 10th day of November, 2003, 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 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 November, 2003.
