Findings Of Fact The following findings of fact are based upon stipulations entered into and adopted by the parties on December 15, 1986, January 9, 1987, and January 12, 1987, which were confirmed by all parties at the final hearing: The League is a wholly owned instrumentality of its member cities. The League is charged in its bylaws to work for the general improvement of municipal government and its effective administration in this state. Further, it is charged with representing its membership on statewide issues affecting municipal government. The City is a municipal corporation organized and existing under the laws of the State of Florida. The City has five (5) "local law" municipal retirement funds, including three (3) police plans and two (2) firefighter plans, all of which receive excise tax revenue from the tax fund established in Chapters 175 and 185, Florida Statutes. The Department has responsibility for administering Chapters 175 and 185, Florida Statutes (1986). On November 7, 1986, the Department published notice in the Florida Administrative Weekly of its intent to adopt rules to implement Chapters 175 and 185, Florida Statutes, pertaining to municipal firefighter and police pension funds and to provide for interpretations, standards, applications, enforcement and administration thereof. The published notice stated there would be a public hearing on December 2, 1986, and the public hearing was held on that date. On November 26, 1986, the League filed its petition for administrative determination of the invalidity of certain of the proposed rules. The League represents over 390 cities throughout the State of Florida. As part of their municipal administration, many of these cities maintain firefighter pension funds that receive premium tax pursuant to Chapter 175, Florida Statutes, and police officer pension funds that receive premium tax pursuant to Chapter 185. A number of these cities maintain "local law plans" as defined by proposed rules 4-14.028 and 4-54.019; a number of the League's member cities maintain "chapter plans" as defined by the same proposed rules. Such plans are required by the proposed rules to meet certain standards which affect the cities' responsibilities in relation to said plans. Thus, the League, which is required to work for the effective administration of municipal government, is substantially affected by the proposed rules. The City is a substantially affected party pursuant to Section 120.54(4)(a),(d), Florida Statutes. All cities operating pension plans which receive funds pursuant to Chapter 175 and Chapter 185 have a duty to adequately fund said plans annually to meet the normal costs of the plan as well as fund any actuarial deficiency over a 40 year period. A number of local law plans presently have procedures and provisions which vary from the procedures and provisions in those sections of Chapters 175 and 185 which are addressed by proposed rules 4-54.024, 4-54.035, 4-54.036, 4- 54.037, 4-54.039, 4-54.040, 4-54.041, 4-54.044 and 4-54.047. The Department has copies of all pension plans which receive funds pursuant to Chapters 175 and 185 in their possession. Case No. 86-4722RP involves a challenge to certain proposed rule amendments to Chapter 4-54, Florida Administrative Code. Case No. 86-4723RP involves a challenge to certain proposed rule amendments to Chapter 4-14, Florida Administrative Code. Many of the proposed rule amendments to Chapters 4-14 and 4-54, Florida Administrative Code, which are being challenged are substantially similar. The statutory authority relied on for corresponding, similar proposed rule amendments in Chapters 4-14 and 4-54 are substantially similar, and the legal issues involved in the challenge to those corresponding proposed rules are identical. As a result of the public hearing held by the Department on December 2, 1986, the Department has agreed and stipulated to modify and/or withdraw certain proposed amendments to Chapter 4-54 which follow, as well as corresponding proposed amendments to Chapter 4-14, and in consideration thereof the Petitioners have agreed to withdraw their objections thereto: 4-54.018 Scope. These rules apply to all municipal firefighters in this State who participate in a pension fund which receives money from the premium tax provided for in ss. 175.101-175.131, Florida Statutes, as well as all municipal firefighter pension boards and municipalities having a municipal fire- fighter pension fund or system which receives state excise tax revenue from the tax fund established in Chapter 175, Florida Statutes, except as otherwise provided herein. The Department shall withdraw subsections (2) and (3) and renumber subsection (4) of proposed rule 4-54.023. The Department shall withdraw subsection (8) and renumber subsections (9), (10) and (11) of proposed rule 4-54.048. The Department shall withdraw subsection (3) of proposed rule 4-54.031. The League agrees to withdraw its challenge to proposed rule 4-54.032, but said withdrawal shall not prejudice its right to later challenge said rule pursuant to Sec. 120.56, Florida Statutes. The City did not object to this proposed rule. The Department shall amend subsection (2)(a) of proposed rule 4-54.024, Florida Administrative Code, to read: 4-54.024(2) A "professionally qualified" consultant means a consultant who meets the following minimum criteria: (a) he must offer his services on a "hard dollar" or flat fee as opposed to or in addition to a commission type basis. The League shall withdraw its objections to proposed rule 4-54.038. The City did not object to this proposed rule. 4-54.020 Minimum Standards Except as otherwise provided herein and Chapter 175, Florida Statutes, Chapter 175, excluding Section 175.351, Florida Statutes, provides minimum standards for (a)(line through original) all chapter funds. and (b) for all local law funds established on or after October 1, 1986. (line through original) Except as otherwise herein and in Chapter 175, Florida Statutes, Section 175.351, Florida Statutes, provides minimum standards for all local law funds. (established prior to October 4, 1986.(line through original) 4-54.029(4) The Department of Insurance shall withhold distribution of Chapter 175 tax revenues as allocated to a Chapter Fund or Local Law Fund which is not in compliance with the applicable requirements of Chapter 175 or Section 175.351. (or these rules.(line through original) 17. The application of Sections 175.071(5), 175.121, 175.162, 175.171, 175.181, 175.191, 175.231, 175.251, 175.261 and 175.333, Florida Statutes, will have an economic impact as defined in Section 120.54, Florida Statutes, (actuarial or administrative costs) on a number of local law municipal pension funds and those municipalities (including the City) that are not presently complying with these sections. The impact of these applications is ascertainable within an identifiable range. The issue of whether these statutory sections, and resulting economic impact, are made applicable to these funds by the provisions of Chapter 175, Florida Statutes, or by the proposed changes to Chapter 4-54, Florida Administrative Code, is not resolved by stipulation or agreement of the parties. During the hearing and also subsequent thereto, the parties further stipulated that: There is a difference in benefits available under the City's pension plans for firefighters enacted by special act and ordinance, and benefits available under a Chapter 175, Florida Statutes, plan. In their respective proposed final orders, Petitioners have listed the proposed rules which remain at issue, following stipulations and voluntary dismissals. (See League proposed finding of fact 23 and City proposed conclusion of law 4.) Proposed rules at issue are: Rule Chapter 4-54 Rule Chapter 4-14 4-54.024(3) 4-14.033(3) 4-54.027 4-14.036 4-54.029(2) 4-14.037(2) 4-54.033(2) 4-14.040(2) 4-54.034 4-14.041 4-54.035 None 4-54.036 4-14.042 4-54.037 4-14.043 4-54.039 4-14.045 4-54.040 4-14.046 4-54.041 4-14.047 4-54.045 4-14.051 4-54.047 None 4-54.048(3)(5)(6)(7)(10) 4-14.053(3)(5)(6)(7)(10) 4-54.049 4-14.054 The following findings of fact are based upon the evidence presented at final hearing: Based on the testimony of Dr. John J. Fenstermaker, who was accepted as an expert in English grammar and sentence structure, the phrase "approved by a majority of the firefighters" found in Section 175.351(13), Florida Statutes, modifies the nouns "board of trustees of the pension fund" and "official pension committee", instead of the verb in the sentence. However, the phrase does not mean that a majority of firefighters must approve the membership of the board of trustees or official pension committee. Rather, it means that a majority must approve action by the board of trustees or committee relative to the placement or use of certain income. A reasonable construction of the statute is that majority approval is required for the board of trustees or committee to act, but not that the make-up or membership of these bodies must be approved each time they propose to place or use certain income from the premium tax referred to in said statute. Proposed rule 4-54.048(7), Florida Administrative Code, is therefore authorized by, consistent with, and implements Section 175.351(13), Florida Statutes. The City's firefighter and law enforcement pension plans have received distributions of state premium tax funds pursuant to Chapters 175 and 185, Florida Statutes, for the last five years. The provisions of the City's local plans are very similar. Actuarial valuations of the City's firefighter and law enforcement pension plans are performed by the City's actuary as required by Chapter 112, Part VII, Florida Statutes. The City's local pension plan for firefighters does not presently apply or conform to the requirements of: Section 175.071(5), Florida Statutes, which requires the board of trustees to retain an independent consultant professionally qualified to evaluate the performance of professional money managers at least once every three years; Section 175.171, Florida Statutes, which deals with optional forms of retirement income; Section 175.181, Florida Statutes, which concerns the designation of beneficiaries; Section 175.191, Florida Statutes, dealing with disability benefits; and Section 175.261, Florida Statutes, regarding reports to Respondent. The Department promulgated an Economic Impact Statement in connection with the proposed rules in Chapter 4-54 which states, in pertinent part, that: Pursuant to Section 120.54(2), Florida Statutes, the State of Florida, Department of Insurance has considered the economic impact associated with the implementation of proposed Rule Chapter 4-54 which relates to municipal firefighters' pension funds. Chapter 175, Florida Statutes, was amended by Chapter 86-41, Laws of Florida, generally effective on October 1, 1986 with some exceptions. The amendments of Chapter 175, Florida Statutes, contained in Chapter 86-41, Laws of Florida, had and will have an economic impact upon the Department, the municipalities receiving state excise tax funds provided for in Chapter 175, Florida Statutes, and the firefighters' pension boards of trustees and pension funds. That economic impact was addressed fully in the legislation and enactment of Chapter 86-41, Laws of Florida. These rules, which augment, interpret, and provide for definitions, application and enforcement of Chapter 175, Florida Statutes, as amended by Chapter 86-41, Laws of Florida, will have no additional impact or nominal additional impact on those entities affected by Chapter 86-41, Laws of Florida. * * * 2. An Estimate of the Cost or Economic Benefit to all Persons Directly Affected by the Proposed Action. Insurance Companies: None. Insurance Agents: None. General Public: None. Municipalities: None, except for minor interest cost if a violation of 175.131, Florida Statutes occurs. Firefighter Pension Boards: None. * * * 5. A statement of the Data and Methods Used in Making Each of the Above Estimates. METHODOLOGY Costs and benefits of the proposed rule are estimated on marginal basis, i.e., additional costs or benefits over and above those associated with normal operations of the affected entity. The relevant costs or benefits to any economic impact are the net additions associated with implementation of the action. DATA The data used in calculating costs and benefits are derived from Departmental experience and statistics. The estimated cost to the agency for implementing the proposed changes was made by responsible agency staff personnel. The Department's Economic Impact Statement for proposed rule Chapter 4-14 is substantially similar to the above. It is clear from the Notice published by the Department, as well as its Economic Impact Statement, that the proposed rules which are here at issue implement Chapters 175 and 185, as amended by Chapters 86-41 and 86-42, Laws of Florida, respectively.
The Issue The issue in this case is whether Respondent, Ocala Exterior Solutions, Inc., failed to properly maintain workers' compensation insurance coverage for its employees, and, if so, what penalty should be assessed.
Findings Of Fact The Department is the state agency responsible for ensuring that all employers maintain workers' compensation insurance for themselves and their employees. It is the duty of the Department to make random inspections of job sites and to answer complaints concerning potential violations of workers' compensation rules. This case arose as a result of a random inspection. Respondent is a business created by Johnny Busciglio on or about October 16, 2012. At all times relevant hereto, Respondent was duly licensed to do business in the State of Florida. Its business address is 140 Southwest 74th Lane, Ocala, Florida 34476. On May 22, 2015, the Department’s investigator, William Pangrass, made a random site visit to a construction site located at a residence at 9189 Southwest 60th Terrace Road, Ocala, Florida. He saw two men installing soffit as part of the construction which was going on. Pangrass remembers the men identifying themselves as Derek McVey and Frank Deil. When Pangrass inquired as to their employer, the two men were initially not certain for whom they were working. One of the men made a telephone call and then told Pangrass they were employees of Sauer & Sons. Interestingly, Respondent said the two men on-site that day were McVey and a man named James Van Brunt. Pangrass contacted Sauer & Sons and were told that neither McVey nor Deil (or Van Brunt) were employees of that company. He was told by a representative of Sauer & Sons that the men were in fact employees of Respondent. Pangrass then verified that Respondent was a current, viable company and checked whether the company had workers’ compensation insurance coverage for its employees. He found that Respondent had a workers’ compensation insurance policy for a short time in 2014. Two of Respondent’s employees, however, did have exemptions from coverage. Those two were Johnny Busciglio and Anthony Wayne. Based on his findings, Pangrass issued a SWO which he posted at the work site he had visited. He posted the SWO on the permit board in front of the job site on May 26, 2015. On May 29, he served a Request for Production of Business Records on Respondent, seeking information concerning Respondent’s business for purposes of calculating a penalty for failure to have workers’ compensation insurance in place. Respondent emailed the requested business records to Pangrass. The Department requested additional records and clarification concerning some of the records which had been provided. Busciglio made a good faith effort to respond to each of the Department’s requests. After review of Respondent’s business records, the Department calculated a penalty and issued an amended OPA. That amended OPA was issued on September 8 and served on Busciglio (as agent for Respondent) on October 1, 2015. The amount of the penalty in the amended OPA was $9,896.32. Within a few days after receiving the amended Order, Busciglio obtained workers’ compensation insurance for his employees, paid a down payment of $1,000 to the Department, and Respondent was released to resume its work. The penalty in the amended OPA was based upon information obtained from Busciglio concerning Respondent. Using the bank records supplied by Busciglio, the Department determined that Respondent had the following employees: Eric McVey, Frank Dorneden, Jeff Burns, Jordan Anchondo, Anthony Wayne, Nikki Smith, Johnny Busciglio, and Jason Bridge. Their wages were used by the Department to calculate the penalty. The penalty was calculated by the Department as follows: The business was assigned class code 5645, construction on residential dwellings; The period of non-compliance was set at two years; The gross payroll amount for that two-year period was established at $30,905.14; The gross payroll amount was divided by 100, resulting in the sum of $309.05; The approved manual rate, i.e., the amount the employer would have paid if insurance was in place, was assigned for each employee; The gross payroll was multiplied by the manual rate; And the penalty amount was established, taking the figure in (f), above, and multiplying by two. Busciglio established by credible testimony, unrefuted by the Department, that Nikki Smith was a person from whom he bought tools; she was never an employee of Respondent. The same was true for the person listed as Jason Bridge (although his real name may have been Jason Woolridge). As for Eric McVey, he worked for Frank Dorneden, who paid McVey directly. There were no payroll records or checks from Respondent provided to the Department which were attributable to McVey. Dorneden had begun working for Respondent on December 22, 2014. On May 22, 2015, he was asked by Busciglio to visit the work site; he found McVey working there and Deil/Van Brunt was also on the site. Neither the Department nor Respondent offered any further explanation about Deil/Van Brunt, nor did the Department attribute any penalty to Van Brunt as a putative employee. His status in this matter is a mystery. When the penalties associated with McVey, Smith, and Bride are subtracted from the calculation, the amount of the penalty would be $9,454.22.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services requiring Respondent, Ocala Exterior Solutions, Inc., to pay the sum of $9,454.22. DONE AND ORDERED this 20th day of November, 2015, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of November, 2015.
The Issue The issue is whether Respondent is liable for a penalty of $4,741.76 for the alleged failure to maintain workers’ compensation insurance for its employees in violation of Chapter 440, Florida Statutes (2008).1
Findings Of Fact Petitioner is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees in accordance with the requirements of Section 440.107. Respondent is a Florida corporation engaged in the construction business. The corporate officers of Respondent in 2007 were: Julie Magill, Glen Magill, Jamie Guerrero, and Richard Magill. The corporate officers after amendment on June 12, 2008, were: Julie Magill, Albert Farradaz, and Farid O’Campo. Corporate officers are eligible to obtain exemption from the requirements of workers’ compensation through the process described in Section 440.05. Construction exemptions are valid for a period of two years. The expiration date of each exemption is printed on an exemption card issued to each card holder. Julie Magill, Glen Magill, and Jaime Guererro obtained construction exemptions as officers of Respondent, pursuant to Section 440.05. Julie Magill acknowledged receiving a card for each exemption with the expiration date printed on each exemption card. The exemption for Julie Magill expired on June 2, 2008. The exemption for Glen Magill expired on May 29, 2008, and the exemption for Jaime Guererro expired on May 29, 2008. Petitioner notifies exemption holders at least 60 days prior to the expiration date. Petitioner sent the Notice of Expiration to Julie Magill at Respondent's current mailing address. On October 5, 2009, an investigator for Petitioner interviewed Mr. Cliff Chavaria, an installer and repairer of air-conditioner units. Mr. Chavaria was an employee of Respondent. Respondent did not maintain workers’ compensation insurance coverage for Mr. Chavaria in violation of Chapter 440. It is undisputed that Mr. Chavaria did not have any type of coverage for workers’ compensation insurance. Mr. Jaime Guererro and Mr. Glen Magill also had no exemptions and no workers’ compensation insurance coverage. Respondent offered tax records for 2007 as Exhibit 8 at the hearing to show gross payroll for Julie and Richard Magill. The offered exhibit was an attempt to re-create tax information from an internet website. Respondent was given 10 days following the date of the hearing to produce an authenticated version of this document. No documentation was received.
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 imposing a penalty assessment in the amount of $4,741.76. DONE AND ENTERED this 15th day of April, 2010, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 15th day of April, 2010.
The Issue The issues are whether Respondent failed to provide workers' compensation insurance for its employees, whether the "Stop-Work" Order was warranted, and, whether Petitioner correctly calculated the assessed penalty.
Findings Of Fact Based upon the testimony and evidence received at the hearing, the following facts were established by clear and convincing evidence: Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees. Respondent, Harold's Plumbing, Inc., a Florida corporation, was engaged in business operations from January 23, 2005, through January 19, 2008. A Stop-Work Order was issued to Respondent on January 22, 2008, after Harold Whitfield advised Petitioner's investigator that Respondent did not have workers' compensation insurance coverage. Petitioner's Coverage and Compliance Automated System database confirmed the lack of coverage. The initial Order of Penalty Assessment was issued on January 22, 2008, and served on Respondent the next day. Based on additional documentation provided by Whitfield and a human resources out-sourcing organization, Gevity HR, which had provided some insurance coverage until it severed its business relationship with Respondent, the Order of Penalty Assessment was amended; the last amendment is dated October 13, 2008. The total penalty, $29,688.72, is accurate and reflects the result of a detailed assessment of Respondent's employee payroll records and application of the classification codes, published by the National Council on Compensation Insurance, Inc., and incorporated into Florida law in Florida Administrative Code Rule 69L-6.021.
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, enter a final order: Finding that Respondent, Harold's Plumbing, Inc., failed to secure the payment of workers' compensation for its employees, in violation of Subsections 440.10(1)(a) and 440.38(1), Florida Statutes; and Assessing a penalty against Respondent in the amount of $29,668.72, which is equal to 1.5 times the evaded premium based on Petitioner's records and the applicable approved manual rate and classification code. DONE AND ENTERED this 17th day of December, 2008, in Tallahassee, Leon County, Florida. S JEFF B. CLARK 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 17th day of December, 2008. COPIES FURNISHED: Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Kristian E. Dunn, Esquire Justin H. Faulkner, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street, 6th Floor Tallahassee, Florida 32399-4229 Harold Whitfield 1125 5th Street Southwest Winter Haven, Florida 33880
The Issue The issue is whether a retiree's forfeiture of Florida Retirement System (FRS) benefits authorizes Respondent to seize from unrelated remittals due Petitioner the sum of $18,271.75, which is the amount that Respondent had previously deducted from the retiree's pension benefits and remitted to Petitioner for the payment of the retiree's insurance premiums.
Findings Of Fact Employed by Petitioner in April 1974, Garfield Perry participated in the FRS pension plan. On or about October 31, 2009, Mr. Perry terminated his employment and began receiving his monthly FRS pension benefit. Two months earlier, Mr. Perry had entered into an agreement with Petitioner for it to provide post-retirement life insurance for Mr. Perry and medical and dental insurance for Mr. Perry and his wife with all three policies commencing in November 2009. While these policies were in effect, pursuant to an agreement between Petitioner and Respondent that is described below, Respondent remitted to Petitioner a portion of Mr. Perry's FRS pension benefit equal to $17,429.47 for medical and dental premiums and $842.28 for life insurance premiums, for a total of $18,271.75. Petitioner is a self-insurer for medical insurance, so, on receipt of medical insurance premiums, Petitioner pays a portion of the premiums to a third-party administrator for insurance-related services and reserves the remainder for the payment of claims. For dental and life insurance, Petitioner remits the premiums to the respective insurers. On May 7, 2014, Mr. Perry pleaded guilty to one count of bribery and extortion in the United States District Court, Southern District of Florida, in connection with his employment in Petitioner's Public Works Department. On or about July 29, 2014, the court adjudicated Mr. Perry guilty. By letter dated August 6, 2014, Respondent advised Mr. Perry that, pursuant to article II, section 8(d), of the Florida Constitution, and sections 112.3173 and 121.091(5), Florida Statutes, his FRS benefits were forfeited due to his guilty plea. Mr. Perry requested an administrative hearing on the forfeiture, and Respondent transmitted the file to DOAH, which designated the case as DOAH Case No. 14-4195. On December 31, 2014, Mr. Perry voluntarily dismissed his request for hearing prior to the final hearing, and, on January 9, 2015, Respondent issued a Final Order of Dismissal that finds, among other things, that Mr. Perry committed the criminal offenses "from in or about 2006 through in or about October 2009." The final order formally declares a forfeiture of Mr. Perry's FRS pension benefits, evidently including benefits already paid. Respondent did not provide Petitioner with a copy of the August 6, 2014, letter, the Final Order of Dismissal, or any of the pleadings in DOAH Case No. 14-4195. The present record does not indicate if Petitioner had actual notice of the forfeiture process. However, this case likely represents the first time that Respondent has attempted to recover insurance premiums that it has remitted to an agency or company following the retiree's forfeiture of retirement benefits, and it is unlikely that Petitioner was aware of its potential liability to repay these amounts until April 1, 2016, as described below. This potential liability arguably arises from a Payroll Deduction Agreement entered into by Petitioner and Respondent. The agreement allows a retiree to authorize Respondent to deduct monthly from his pension benefit an amount equal to his insurance premiums and to remit this sum to Petitioner, so that it can pay the retiree's premiums. In this case, Respondent remitted insurance premiums to Petitioner from November 2009 through October 2012 and allocated them in the manner set forth above in paragraph 2. Three and one-half years after the last remittal that included any sums for Mr. Perry's insurance premiums, almost two years after Mr. Perry's guilty plea, and about 15 months after the final order declaring the forfeiture, Respondent withheld $18,271.75 from Respondent's March 2016 consolidated remittal to Petitioner on the account of other retirees in an attempt to recover the remittals that Respondent had made to Petitioner to pay Mr. Perry's insurance premiums. The Payroll Deduction Agreement is a form prepared by Respondent that is signed by the agency or company seeking to receive remittals for its FRS retirees. Under the agreement, which has a signature line only for the agency or company and not Respondent, the agency or company agrees to preserve the confidentiality of the information, assume responsibility for the accuracy of the premium deductions, and notify Respondent timely of the discontinuation of this payroll deduction service. An employee of Petitioner signed the Payroll Deduction Agreement on April 27, 2009. The Payroll Deduction Agreement requires the agency or company to accept the "Procedures for Admitting Insurance Providers for Retired Payroll Deduction." The procedures document states that Respondent offers the convenience of payroll deduction of insurance premiums as a service to FRS pension recipients. Only two paragraphs of this document address post-deduction adjustments: 11. If a retiree's insurance premium is deducted incorrectly for any reason (i.e.-- overpayment of amount, policy cancelled, administrative error, etc.), the Insurance provider company or FRS agency is responsible for refunding the premium amount to the retiree. 13. [1] If a retirement benefit is cancelled by the Division of Retirement, the corresponding insurance premium that was deducted from that same dated payment is recovered from the following month's consolidated insurance payment. Reasons for cancellations include payee deaths, [sic] cancelling retirement. When determining the amount of insurance premiums to be reimbursed to families of deceased members, please note that the Division cannot determine when a death will be reported or when funds will be funds will be returned [sic] from banks (resulting in cancellations). [4] There are occasions when a report of death is received months after a retiree's death. [5] If payments for the deceased are still outstanding, they most likely will be cancelled. A common example follows: Example: Payee dies 1/5/09. Family reports death to the Division on 4/1/09. Retiree was only due payments through the month of January. Since the February and March payments are still outstanding, these paper checks are cancelled by the Division of Retirement. This cancellation action recovers the 2/27/09 and 3/31/09 premium deductions from the 4/30/09 consolidated payment. A credit entry will also appear on the April 2009 report of retiree insurance deductions. Please Note: We recommend that you contact the Division of Retirement to inquire about possible payment cancellations prior to processing premium reimbursements. Paragraph 11 of the Payroll Deduction Agreement requires that an agency or company repay the retiree any excessive premium deduction, so is irrelevant in the case of forfeiture. Paragraph 13 of the Payroll Deduction Agreement applies to the situation in which a premium deduction is unfunded because of the cessation of the pension benefit from which it is deducted. In its proposed recommended order, Petitioner argues that the application of paragraph 13 is prospective only, so it would not apply to a retroactive setoff of the type that has occurred in this case. The first sentence identifies the contingency of the cancelation of a retirement benefit and authorizes Respondent to recover its remittal of any premiums deducted from the cancelled pension benefit, but mentions a recovery or setoff only in the month following the cancelation. This establishes the kind of liability that Respondent seeks to impose on Petitioner, but only for the brief period of one month. Obviously, the willingness of an agency or company to assume this minor liability for the convenience of its retirees does not imply a willingness to assume a much larger liability spanning several months or even years of remittals. The second sentence cites two common reasons for cancelation: the death of the retiree and the cancellation of the pension benefit by the retiree. The use of "includes," as well as the insertion of a comma in place of "and" or "or," suggests that these two reasons are illustrative, not exhaustive. Even so, the second sentence does not add the reason of forfeiture, and, at this point in paragraph 13, the details of the parties' agreement concerning a forfeiture has not been explicitly addressed. The third and fourth sentences address only the contingency of the death of the retiree, in which case Respondent recovers unearned premiums that Respondent intends to remit to the estate of the retiree--in most cases, one assumes, indirectly to the families of the deceased member. Typically, insurers are not exposed to the risk of insured losses after the death of a retiree--even a life insurer's exposure ends after the insured's death and payment of the death benefits--so any premiums paid after death are unearned and should be refunded to the proper party. The warning that Respondent may not learn of the retiree's death for many months suggests a longer period may be available for retroactive adjustments, but this warning applies only to the contingency of death, again, where the insurers are obligated to refund unearned premiums. The fifth sentence also addresses only the contingency of the death of a retiree and seems to provide only that Respondent will cancel any pension benefits or premium remittals still outstanding at the time of the retiree's death. The example illustrates a three-month delay in the receipt of notification of a retiree's death followed by the cancellation of the pension benefits issued in the preceding two months, which presumably could not have been lawfully presented for payment by anyone besides the deceased retiree. In this case, Respondent would issue a corresponding credit entry on the next month's report of premium deductions made on account of the retiree. The procedures document thus fails to address the contingency of forfeiture. The provisions applicable to the contingencies of the death of the retiree and the retiree's cancellation of pension benefits are a poor fit for the contingency of forfeiture. Respondent has previously recovered income tax withheld on paid pension benefits following a forfeiture, but the recovery was limited to the period during which an amended personal income tax return could be filed--the effect being that the amount could be effectively recovered in the form of a tax refund from the Internal Revenue Service, rather than from an agency or company.
Recommendation It is RECOMMENDED that the Department of Management Services enter a final order dismissing the Petition Requesting an Administrative Hearing filed on August 17, 2016. DONE AND ENTERED this 8th day of February, 2017, in Tallahassee, Leon County, Florida. S Robert E. Meale Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of February, 2017. COPIES FURNISHED: Veronica E. Donnelly, Esquire Offices of the General Counsel Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399-0950 (eServed) Joni A. Mosely, Esquire Assistant County Attorney Miami-Dade County Attorney's Office Stephen P. Clark Center, Suite 2810 111 Northwest 1st Street Miami, Florida 33128-1993 (eServed) Elizabeth Stevens, Director Division of Retirement Department of Management Services Post Office Box 9000 Tallahassee, Florida 32315-9000 (eServed) J. Andrew Atkinson, General Counsel Office of the General Counsel Department of Management Services 4050 Esplanade Way, Suite 160 Tallahassee, Florida 32399-0950 (eServed)
The Issue Whether Petitioner, Department of Financial Services, Division of Workers’ Compensation (“Division”), properly issued a Stop-Work Order and 4th Amended Penalty Assessment against Respondent, Best Affordable Contractors, LLC (“Respondent”), for failing to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes.
Findings Of Fact On July 31, 2020, the parties filed a Joint Pre-hearing Stipulation, by which the parties stipulated to the facts set forth in the following paragraphs 2 through 17. Stipulated Findings The Division is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees and corporate officers. Respondent was engaged in business operations in Florida during the entire period of January 4, 2017, through January 3, 2019. On January 3, 2019, the Division’s investigator, Deryck Gallegos, commenced a workers’ compensation compliance investigation at Respondent’s work site at 1203 Dancy St., Jacksonville, Florida 32205. On January 3, 2019, Respondent had a paid subcontractor, Terry Wayne Lyons, Sr., performing roofing work at 1203 Dancy St., Jacksonville, Florida 32205. On January 3, 2019, Respondent’s subcontractor, Terry Wayne Lyons, Sr., had five paid employees performing roofing work at 1203 Dancy St., Jacksonville, Florida 32205: Terry Wayne Lyons, Sr.; Jahru Li-Ly Campbell; Kevin Lee Hagan; Terry Wayne Lyons, Jr.; and Jonathan Wayne McCall. On January 3, 2019, Respondent’s subcontractor, Terry Wayne Lyons, Sr., had no workers’ compensation exemptions and no workers’ compensation insurance coverage. On January 3, 2019, Respondent had no workers’ compensation exemptions and no workers’ compensation insurance coverage. On January 3, 2019, the Division issued a Stop-Work Order for Specific Worksite Only and Order of Penalty Assessment to Respondent. The Division served the Stop-Work Order for Specific Worksite Only and Order of Penalty Assessment on Respondent by personal service on January 4, 2019. The Division served a Request for Production of Business Records for Penalty Assessment Calculation on Respondent on January 4, 2019. On February 1, 2019, the Division issued an Amended Order of Penalty Assessment to Respondent. The Division served the Amended Order of Penalty Assessment on Respondent on February 7, 2019. The Amended Order of Penalty Assessment imposed a penalty of $353,349.72. On June 3, 2020, the Division issued a 2nd Amended Order of Penalty Assessment to Respondent. The Division served the 2nd Amended Order of Penalty Assessment on Respondent on June 11, 2020. The 2nd Amended Order of Penalty Assessment imposed a penalty of $68,705.29. On July 30, 2020, the Division served a 3rd Amended Order of Penalty Assessment to Respondent. The 3rd Amended Order of Penalty Assessment imposed a penalty of $46,805.02. Throughout the penalty period, Respondent was an “employer” in the state of Florida, as that term is defined in section 440.02(16). Respondent did not obtain exemptions from workers’ compensation insurance coverage requirements for the entries listed on the penalty worksheet of the 3rd Amended Order of Penalty Assessment as “Employer’s Payroll” during the penalty period. Respondent did not secure the payment of workers’ compensation insurance coverage, nor did others secure the payment of workers’ compensation insurance coverage, for the entries listed on the penalty worksheet of the 3rd Amended Order of Penalty Assessment as “Employer’s Payroll” during the periods of non-compliance listed on the penalty worksheet. The manual rates, class codes, and gross payroll identified on the penalty worksheet of the 3rd Amended Order of Penalty Assessment are correct to the extent a penalty is due. Evidentiary Findings Based on business records received from Respondent, the Division has recalculated the assessed penalty. The proposed penalty has been reduced to $27,553.78. Respondent has paid $1,000.00 for the release of the Stop Work Order, leaving a remaining penalty of $26,553.78. In determining the penalty, the Division reviewed Respondent’s business and financial records for a period of two years, from January 4, 2017, through January 3, 2019. Respondent was cooperative and forthcoming with the Division in providing its business and financial records. Penalties are calculated first by establishing the nature of the work being performed by employees. That is done by comparing the work to descriptions provided in the National Council of Compensation Insurance (NCCI) SCOPES® Manual. As relevant to this proceeding, the work being performed by persons who were employees of Respondent was as described in SCOPES® Manual class codes 5551 (Roofing - All Kinds & Drivers); 8227 (Construction or Erection Permanent Yard); 5213 (Concrete Construction NOC); and 8810 (Clerical Office Employees NOC). Workers’ compensation insurance premium rates are established based on the risk of injury associated with a particular class code. The greater the risk of injury, the greater the premium rate to insure that risk. Work such as roofing entails a significant risk of injury, and the approved manual rate is thus very high. Office and clerical work entails a very low risk of injury, and the approved manual rate is correspondingly very low. When work is performed but it is not specifically identified, e.g., laborer, the highest rated classification code for the business being audited is assigned to the employee. In this case, the highest rated classification code applicable to Respondent is class code 5551, for roofing. The 4th Amended Order of Penalty Assessment reveals payroll for individuals engaged in work described in class codes as follows: Anthony Wright - class code 5551 Donnell Eugene Johnson - class code 5551 Edward Tipton - class code 8227 Eugene Monts - class code 5213 James Dunlap - class code 5551 James Walters - class code 5551 Jorel Golden - class code 5551 Kelvin Morrison - class code 5551 Matthew Robinson - class code 5551 Vincent Marino - class code 8810 Jahru Li-Ly Campbell - class code 5551 Kevin Lee Hagan - class code 5551 Jonathan Wayne McCall - class code 5551 Terry Lyons, Jr. - class code 5551 Terry Lyons, Sr. - class code 5551 Mr. Lyons, Sr., was retained by Respondent as a subcontractor. Mr. Lyons, Sr., previously held an exemption from workers’ compensation as an officer of his company, but it had expired on December 27, 2017. Mr. Lyons, Sr., was working at the 1203 Dancy Street worksite on January 3, 2019. The evidence was sufficient to establish that Mr. Lyons, Sr., was appropriately assigned as class code 5551. His exemption was accepted up to its date of expiration, so the period applicable to the penalty calculation for Mr. Lyons, Sr., was from December 28, 2017, to January 3, 2019. Mr. Lyons, Sr.’s employees who were working at the 1203 Dancy Street worksite on January 3, 2019, were Mr. Campbell, Mr. Hagan, Mr. McCall, and Mr. Lyons, Jr. The evidence was sufficient to establish that they were employees of Respondent’s uninsured subcontractor, and that they were appropriately assigned as class code 5551. Mr. Wright and Mr. Robinson were listed on Respondent’s Profit & Loss Detail Sheet as “subcontract labor -- roofing.” Respondent was not able to demonstrate that they were covered by workers’ compensation. The evidence was sufficient to establish that Mr. Wright and Mr. Robinson were appropriately included in the penalty calculation, and that they were appropriately assigned as class code 5551. Mr. Johnson, Mr. Dunlap, and Mr. Morrison were listed on Respondent’s Profit & Loss Detail Sheet as “subcontract labor -- laborer.” Respondent was not able to demonstrate that they were covered by workers’ compensation. The evidence was sufficient to establish that Mr. Johnson, Mr. Dunlap, and Mr. Morrison were appropriately included in the penalty calculation, and that they were appropriately assigned as the highest rated classification code applicable to Respondent, class code 5551. Mr. Tipton was listed on Respondent’s Profit & Loss Detail Sheet as “subcontract labor -- handyman, yard work/clean up, truck detail.” Mr. Monts was listed on Respondent’s Profit & Loss Detail Sheet as “subcontract labor -- laborer.” Ms. Murcia testified that Mr. Marino provided information that Mr. Monts did concrete work, rather than roofing. Respondent was not able to demonstrate that they were covered by workers’ compensation. Mr. Marino indicated that Mr. Tipton and Mr. Monts should have been identified as his personal expenses, performing work at his home. However, they were identified in Respondent’s records as subcontract labor, and the payments to them were reported on Respondent’s 2017 income tax return as business expenses. They each received multiple payments over an extended period. The evidence was sufficient to establish that Mr. Tipton and Mr. Monts were employees of Respondent. The evidence was sufficient to establish that Mr. Tipton was appropriately assigned as class code 8227, and that Mr. Monts was appropriately assigned as class code 5213. Nonetheless, payments to the two were reduced by 20 percent to account for expenditures for materials, with the remaining 80 percent constituting payroll. Fla. Admin. Code R. 69L-6.035(1)(i). Mr. Marino was not an on-site employee of Respondent, but rather performed administration and clerical functions for Respondent. Mr. Marino previously had workers’ compensation, but it had been cancelled on February 28, 2015. The evidence was sufficient to establish that Mr. Marino was appropriately assigned as class code 8810. Mr. Marino obtained an exemption from workers’ compensation as an officer of Respondent on January 4, 2019. The evidence established that James Walters performed repairs to Respondent’s truck. The evidence was not clear and convincing that Mr. Walters was an employee of Respondent. Jorel Golden was identified solely as the payee on a single check image. He did not appear on Respondent’s Profit & Loss Detail Sheet, and there was no evidence as to why Mr. Golden was being paid. The evidence was not clear and convincing that Mr. Golden was an employee of Respondent. The salaries of the employees were calculated based on Respondent’s business records. The total gross payroll amounted to $170,139.07. Except for the amount of payments to Mr. Walters and Mr. Golden, that figure is supported by clear and convincing evidence. The penalty for Respondent’s failure to maintain workers’ compensation insurance for its employees is calculated as 2.0 times the amount Respondent would have paid in premiums for the preceding two-year period. The NCCI periodically issues a schedule of workers’ compensation rates per $100 in salary, which varies based on the SCOPES® Manual classification of the business. The NCCI submits the rates to the Florida Office of Insurance Regulation, which approves the rates to be applied to the calculation of premiums in Florida. The workers’ compensation insurance premium was calculated by multiplying one percent of the gross payroll ($17,013.91) by the approved manual rate for each quarter (which varied depending on the quarterly rate), which resulted in a calculated premium of $18,369.19. Clear and convincing evidence supports a finding that the Division applied the correct rates in calculating the premium. The penalty was determined by multiplying the calculated premium by 2.0, resulting in a final penalty of $36,738.38. In recognition of Respondent’s cooperation in the investigation and the timely submission of its business records, the Division applied a 25 percent reduction in the penalty ($9,184.60), resulting in a total penalty of $27,553.78. The evidence established that the Division gave every benefit of the doubt to Respondent to reduce the penalty, and its effect on Respondent, to the extent allowed within the confines of the law and the records provided.
Recommendation Based on the Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation enter a final order assessing a penalty of $27,553.78, against Respondent, Best Affordable Contractors, LLC, for its failure to secure and maintain required workers’ compensation insurance for its employees and subcontracted labor, subject to recalculation as provided herein, and subject to Respondent’s previous payment of $1,000.00. DONE AND ENTERED this 15th day of September, 2020, in Tallahassee, Leon County, Florida. S E. GARY EARLY 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 15th day of September, 2020. COPIES FURNISHED: Vincent Marino Best Affordable Contractors, LLC 1348 Clements Woods Lane Jacksonville, Florida 32211 (eServed) Leon Melnicoff, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
Findings Of Fact The Petitioner, G. H. Johnson Construction Company, Inc., is a general contractor with an office in, and doing business in, the State of Florida. During the period from June 1, 1984, through May 31, 1987, the Petitioner did not pay State of Florida use tax on $244,916.62 of items purchased for use in the State of Florida. During the period from July 1, 1987, through July 31, 1988, the Petitioner did not pay State of Florida use tax on $4,344.88 of items purchased for use in the State of Florida. During the period from April 1, 1985, through March 31, 1987, the Petitioner did not pay Hillsborough County local option indigent health care tax and discretionary sales surtax on $37,083.77 of items purchased or used in Hillsborough County, Florida. The tax rate established by Hillsborough County for those taxes was 0.0328767 percent. The tax due was $92.71. The Petitioner did not pay State of Florida intangible tax on $622,634 of accounts receivable on the books of the company as of January 1, 1984. The Petitioner paid State of Florida intangible tax on only $516,690 of $743,865 of accounts receivable on the books of the company as of January 1, 1986. The Petitioner did not pay State of Florida intangible tax on $1,615,661 of accounts receivable and $225,000 of loans to stockholders on the books of the company as of January 1, 1987. The Petitioner did not pay State of Florida intangible tax on $942,449 of accounts receivable and $225,000 of loans to stockholders on the books of the company as of January 1, 1988. On or about March 12, 1989, the Petitioner made a partial payment in the amount of $11,394.14. The letter transmitting the payment both stated that "we wish to contest the interest and penalties which have been accrued" and also requested "that the interest and penalties be waived." The letter concluded: "It is understood that acceptance of this payment constitutes acceptance of the above proposal that the interest and penalties be waived." The DOR accepted the payment without direct comment on the closing remarks in the letter.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Petitioner, the Department of Revenue, enter a final order assessing against the Petitioner, G. H. Johnson Construction Company, Inc.: (1) sales and use tax in the amount of $5,025.05; (2) interest in the amount of $8,236.36 as of September 24, 1992, and accruing at the rate of one percent per month on the $5,025.05 of tax due from that date forward; and (3) penalty in the amount of $5,512.42. RECOMMENDED this 30th day of November, 1992, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 30th day of November, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-0285 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Rejected as contrary to the greater weight of the evidence. The DOR uses additional available information to ascertain, as best it can, where purchases are delivered and used. Those means include, but are not limited to, conferring with the taxpayer and requesting evidence showing delivery and use elsewhere. Rejected as subordinate to facts contrary to the greater weight of the evidence. Rejected as not supported by any competent evidence and as subordinate to facts contrary to the greater weight of the evidence. Rejected in part as conclusion of law and in part as contrary to facts found and to the greater weight of the evidence. Subordinate clause, rejected as contrary to facts found and to the greater weight of the evidence. Main clause, rejected as conclusion of law. Accepted but subordinate and unnecessary. In part, accepted and incorporated to the extent not subordinate or unnecessary; in part, rejected as paraphrasing the letter. Accepted and incorporated. Rejected as not supported by the evidence why the taxpayer sent the March 12, 1989, letter and check. 10.-11. Rejected in part as conclusion of law and in part as contrary to facts found and to the greater weight of the evidence. 12. Not a proposed finding of fact. Respondent's Proposed Findings of Fact. Accepted and incorporated. Accepted but unnecessary. Accepted but subordinate and unnecessary. Largely subordinate to facts found. In part, conclusion of law. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. 5.-8. Largely subordinate to facts found. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. 9.-10. In part, conclusion of law. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. 11. Accepted and incorporated to the extent not subordinate or unnecessary. 12.-13. In part, conclusion of law. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. In part, argument. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. In part, argument. Otherwise, subordinate and unnecessary. COPIES FURNISHED: Matias Blanco, Jr., Esquire 701 North Franklin Street Tampa, Florida 33602 James McAuley, Esquire Assistant Attorney General Tax Section Department of Legal Affairs The Capitol Tallahassee, Florida 32399-1050 Linda Lettera, Esquire General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 Dr. James Zingale Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issue is whether the Stop-Work Order and the Third Amended Order of Penalty Assessment entered by Petitioner on July 25, 2013, and August 13, 2013, respectively, should be upheld.
Findings Of Fact The Department is the state agency tasked with the responsibility of enforcing the requirement of section 440.107(3), Florida Statutes, that employers in Florida secure the payment of workers' compensation for their employees. Respondent, Mad Dog Marketing Group, Inc., is a corporation organized under chapter 607, Florida Statutes, and was registered with the Florida Department of State, Division of Corporations, throughout the period of July 26, 2010, to July 25, 2013. At all times relevant to this proceeding, Respondent was engaged in the operation of a hardware store business with three locations in Florida. On July 25, 2013, based upon an anonymous referral, Tracey Gilbert, the Department's compliance investigator, commenced a workers' compensation compliance investigation of Respondent by visiting the job site, an appliance parts store at 730 West Brandon Boulevard, Brandon, Florida, and interviewing Sharon Belcher. According to Ms. Gilbert, Ms. Belcher informed her that she had 11 employees at the time of the site visit and that she did not have workers' compensation coverage for them. Ms. Belcher showed Ms. Gilbert an application for workers' compensation insurance and said she had not taken action with it since the company wanted a $10,000 premium. She also showed Ms. Gilbert some OSHA and workplace posters, but not the typical "broken arm poster" that describes workers' compensation coverage for a place of business. Ms. Belcher then gave Ms. Gilbert a list of Respondent's 11 current employees. On her laptop computer, Ms. Gilbert consulted the Department's Coverage and Compliance Automated System (CCAS) database to determine whether Respondent had secured workers' compensation coverage or an exemption from the requirements for coverage for its employees. CCAS is the database Ms. Gilbert routinely consults during the course of her investigations. She determined from CCAS that Respondent neither had workers' compensation coverage for her employees nor had received an exemption from such coverage from the Department. Ms. Belcher's recollection of her meeting with Ms. Gilbert differs from Ms. Gilbert's. Ms. Belcher recalled that she had applied for insurance with ADP on July 11, 2013, received the "broken arm poster," and believed she was covered at the time Ms. Belcher conducted her investigation. She offered an exhibit showing photographs of posters (but not the "broken arm poster") on the office bulletin board. She also offered an exhibit she testified was the UPS label from the tube containing the "broken arm poster." No photograph of the "broken arm poster" was produced as an exhibit. Ms. Gilbert did not contact ADP to verify whether Respondent had coverage on the date of her site visit to the Brandon store. Ms. Gilbert issued a Stop-Work Order to Respondent and a concurrent Request for Production of Business Records for Penalty Assessment Calculation at 11:20 a.m. on July 25, 2013. Ms. Belcher first submitted an application for workers' compensation coverage on July 11, 2013, but coverage was not bound on that date. Ms. Belcher submitted the paperwork to bind her insurance coverage on the afternoon of July 25, 2013, according to Mark Cristillo, an employee of ADP Insurance. Mr. Cristillo testified that he had made several attempts during the month of July 2013 to obtain the signed documents from Ms. Belcher, including an attempt as late as July 23, 2013, at 11:45 a.m. Ms. Belcher told Mr. Cristillo at that time that she had not reviewed the quote package. At 11:20 a.m., the time Ms. Gilbert's issued the Stop-Work Order on July 25, 2013, Ms. Belcher had not bound her insurance coverage. When she submitted the payment with the signed documents to ADP later that afternoon, the coverage was bound effective 12:01 a.m. on July 25, 2013. The records produced by Ms. Belcher were given to Chad Mason, one of the Department's penalty auditors, to calculate the penalty. He reviewed the records and determined the amount of gross payroll paid to Respondent's employees during the three- year penalty period preceding the investigation during which Respondent was not in compliance with the workers' compensation coverage requirements. Using Respondent's bi-weekly payroll chart, Respondent's Florida Department of Revenue UCT-6 reports, and the classification codes for each employee, Mr. Mason calculated a Third Amended Order of Penalty Assessment of $42,251.43, based upon what Respondent would have paid in workers' compensation premiums had it been in compliance with Florida's Workers' Compensation Law. The order was issued on October 24, 2013. Mr. Mason determined that the appropriate codes for Respondent's employees were 8010 and 8810, which are hardware store employees and general clerical employees, respectively. These codes were derived from the Scopes Manual, which lists all of the various jobs that may be performed in the context of workers' compensation. The manual is produced by NCCI, the National Council on Compensation Insurance, Inc., the nation's most authoritative data collecting and disseminating organization for workers' compensation. The parties stipulated prior to hearing that all of the individuals listed on the penalty worksheet of the Amended Order of Penalty Assessment were "employees" in the state of Florida of Respondent during the periods of non-compliance listed on the penalty worksheets. However, Respondent claimed that some of the employees were out-of-state and not subject to Florida law. Ms. Belcher testified that, as of July 25, 2013, three of its employees, Fred Hasselman, Douglas Strickland, and Josh Hyers, were employees of the Tennessee store and not subject to a Florida penalty. Mr. Hyers was a Florida employee prior to July 1, according to Ms. Belcher. However, all three of the employees were listed on the Florida Department of Revenue's UCT-6 form for the time period of the non-compliance. The UCT-6 form lists those employees who are subject to Florida's Unemployment Compensation Law. Mr. Mason reasonably relied upon the UCT-6 filings for the relevant time period to calculate Respondent's gross payroll in Florida. No evidence was produced to show them listed as Tennessee employees on that state's comparable tax form or any official document from outside Florida. The logical assumption is that they are Florida employees under the law. Accepting all the employees disclosed by Respondent as Florida employees led Mr. Mason to make his calculations of the penalty assessment using the appropriate codes from the Scopes Manual for hardware store and general clerical workers, 8010 and 8810. All the named employees on the Third Amended Order of Penalty Assessment were paid by Respondent in the amounts indicated on the penalty worksheet that accompanies that assessment during the penalty period of July 26, 2010, through July 25, 2013. Even though small discrepancies came up at the hearing regarding the classifications of some of Respondent's employees, the parties had stipulated to the accuracy of the classifications of those employees so those numbers will be accepted for purposes of this decision. Based upon the testimony at the hearing and the pre-hearing stipulations of the parties, the penalty assessment in the amount of $42,251.43 is accurate. Mr. Mason correctly applied the methodology for determining the amount of coverage required, determining that the appropriate premium for the three- year period would have been $28,167.50. When multiplied by the factor used to calculate the penalty, 1.5 times the premium, the total amount due is $42,251.43. The Department has proven by clear and convincing evidence that at the time the Stop-Work Order was issued and served on Respondent on the morning of July 25, 2013, Respondent had not secured workers' compensation coverage for its employees as required by chapter 440. On two occasions, August 2 and August 21, 2013, Ms. Gilbert returned to Respondent's Brandon location after the Stop-Work Order had been issued. The first was to serve the Amended Order of Penalty Assessment and the second was to serve the Second Amended Order of Penalty Assessment. On both occasions, the business was open in violation of the Stop-Work Order. A business under a Stop-Work Order may elect to enter into a payment plan after a ten percent down payment to keep the business open while a challenge to DOAH is under way. Respondent had not entered into such a plan. Therefore, the Department seeks $1,000 penalty for each of the days Ms. Gilbert visited the Brandon store and saw it open for business. This total additional penalty of $2,000 could have been greater had the Department further investigated whether the business remained open on other days after the Stop-Work Order had been imposed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue a final order upholding the Stop-Work Order and Third Amended Order of Penalty Assessment, and assess a penalty in the amount of $42,251.43. It is further RECOMMENDED that the Department fine Respondent an additional $1,000 per day for the two days Respondent did not comply with the Stop-Work Order, resulting in a total penalty of $44,251.43. DONE AND ENTERED this 20th day of December, 2013, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of December, 2013. COPIES FURNISHED: Trevor S. Suter, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 Kristian Eiler Dunn, Esquire Dickens and Dunn, P.L. 517 East College Avenue Tallahassee, Florida 32301 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390
The Issue The issue in this case is whether Respondent failed to provide workers' compensation insurance coverage for employees and, if so, what penalty should be assessed.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation ("Division") is the state agency responsible for enforcing the requirement within the state that employers cover employees with workers' compensation insurance. § 440.107, Fla. Stat. (2009). Respondent, Jurgenson Trading Corporation, is owned, in part, by Julio Raudsett, and operates a "Subway" sandwich restaurant franchise in Hialeah, Florida. It is a family-owned business with a total of five employees, three of whom are related. Cesar Tolentino, an investigator for the Division, conducted a field interview of Raudsett, who admitted that he did not carry workers' compensation insurance. Tolentino checked the database in the Coverage and Compliance Automated System ("CCAS"), and there were no records showing workers' compensation coverage for the Subway employees, nor any notices of applicable exemptions. Martha Aguilar, Tolentino's supervisor authorized the issuance of a Stop-Work Order that was personally served on Raudsett by Tolentino by hand-delivery on April 17, 2009. At the same time, Tolentino served a Request for Production of Business Records for Penalty Assessment Calculation. Raudsett provided his business records, including payroll journals and unemployment tax returns. Based on Aguilar's review of the business records, the Division issued its Amended Order of Penalty Assessment ("Order") on June 8, 2009, with an assessed penalty of $19,873.79. Aguilar determined the amount of the penalty, using the following steps: (1) assigning each employee the National Council on Compensation Insurance (NCCI) class code that was applicable for restaurant workers; (2) determining how much the employee had been paid from April 2006 to April 2009 (the period of non-coverage); and (3) assigning the rate to the gross pay to calculate the insurance premium that should have been paid, then multiplying that by 1.5, as required by rule. The NCCI class codes for employees administrative staff as compared to restaurant workers are lower and, therefore, their workers' compensation insurance premiums would be lower. The business records available to Aguilar did not distinguish among employee's responsibilities. Absent that information, the penalty is, by law, calculated using the highest NCCI class code associated with that kind of business, and was correctly done in this case. Raudsett has entered into a payment plan with the Division. He objected only to that portion of the penalty that was based on his earnings, and those of his wife, Maribel Medina, who works part-time, and his father-in-law, Rolando Medina. He claims an exemption for the three of them as owners and managers of the corporation. Excluding their salaries and associated penalties, according to Joseph Cabanas, Respondent's accountant, would reduce the penalty by $10,267.67, to $9,606.12. Cabanas testified that Raudsett, an immigrant from Venezuela, was not aware of workers' compensation laws, and that was why the three owners/officers of the Respondent's corporation failed to file a Notice of Elections to be Exempt from coverage until after the Division's investigation began.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Financial Services, Division of Workers' Compensation, that upholds the assessment of a penalty of $19,873.79. DONE AND ENTERED this 15th day of December, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER 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 15th day of December, 2009. COPIES FURNISHED: Julie Jones, CP, FRP, 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 Douglas D. Dolan, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Joseph Cabanas 10520 Northwest 26 Street, Suite C-201 Doral, Florida 33172
The Issue This issue in this case is whether the Petitioner is responsible for payment of certain state employee health insurance premiums.
Findings Of Fact In July, 1986, Ms. Phyllis McCluskey-Titus became employed at Florida State University ("FSU"). She and her husband, John, moved to Tallahassee from outside Florida, so that she could accept her employment. At the time Ms. McCluskey-Titus became employed, Mr. Titus had not yet accepted employment. She appropriately enrolled in the state health insurance plan. Mr. Titus was listed as, and had coverage as, a dependent on her family coverage. In August, 1986, Mr. Titus accepted employment at Tallahassee Memorial Regional Medical Center ("TMRMC"). Although TMRMC offered an employee health insurance benefit, Mr. Titus retained his coverage on his wife's plan, because the couple believed the state plan's benefits to be more beneficial. Enrollment in the state health insurance plan requires the payment of premiums. Such premiums are generally paid through joint contributions, by the employee (through payroll deduction) and by the state. However, where spouses are both state employees, and one spouse is listed as an eligible dependent on the other spouse's family coverage, the state makes the full health insurance premium contribution (the "spouse plan"). In August, 1988, Mr. Titus became employed by the Department of Health and Rehabilitative Services ("DHRS"). Both FSU (Ms. McCluskey-Titus's employer) and DHRS are state agencies. Therefore, upon Mr. Titus' employment at DHRS, the couple became eligible for the spouse plan. On August 24, 1988, Ms. McCluskey-Titus went to her personnel office and completed the necessary forms to qualify for the spouse plan. At the time of his employment, Mr. Titus received a package of materials from DHRS. Included in the materials was a five page document entitled "EMPLOYEE BENEFITS INFORMATION PACKAGE". The document outlines various insurance benefits and lists premiums related to coverages. On the first page of the information document, under the heading "PREMIUMS (full-time employees)" is the following statement: "If you and your spouse are both employed with State Agencies, please contact the Personnel office for information on the Spouse Program. If you are eligible, the State will pay up to 100% of your premium". Believing that his wife's completion of the appropriate form at the FSU personnel office was sufficient, Mr. Titus did not contact his personnel office for information. On the third page of the information document, is a form which was to be completed and returned to the DHRS personnel office. Contained on the form is the following statement: "If your spouse is employed with a State Agency in a Career Service position, please contact the Personnel office to request an application for the Spouse Program". Ms. McCluskey-Titus was not employed in a Career Service position. Mr. Titus believed that his wife's completion of the appropriate form at the FSU personnel office was sufficient. He did not obtain or submit an application for the program. Neither form provided to Mr. Titus stated that both spouses were required to submit separate documentation. There is no evidence that either Mr. or Ms. Titus were informed, by either employer or the Respondent, that the failure to complete separate documentation would preclude enrollment in the spouse program and could result in an assessment of unpaid premiums. After Ms. McCluskey-Titus submitted the form to the FSU personnel office, the state discontinued deducting her contribution to the health insurance premium from her check. The couple believed that, since no premium deduction was being withheld, the spouse plan enrollment had been completed. In February, 1989, Mr. Titus was informed that, because he had not completed the appropriate form at the DHRS office, the couple was ineligible for the spouse plan. The Respondent requires that both spouses complete separate documentation in order to enroll in the spouse plan. He completed the form and by March 1, 1989, their coverage in the spouse plan became effective. The Respondent is now attempting to assess Ms. McCluskey-Titus for the $83.46 monthly family coverage premiums which were not deducted from her pay during the five month period preceding Mr. Titus' completion of the appropriate form. The total amount claimed by Respondent is $417.30. The evidence indicates that, but for Mr. Titus' failure to complete and submit the form, the couple would have been entitled to participate in the spouse plan and no premium contribution would be owed.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that: The Department of Administration, Division of State Employees' Insurance, enter a Final Order dismissing the assessment against the Petitioner for additional insurance premiums in the total amount of $417.30. DONE and RECOMMENDED this 9th day of February, 1990, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of February, 1990. APPENDIX CASE NO. 89-4943 The following constitute rulings on proposed findings of facts submitted by the parties. Petitioner Accepted as modified. Accepted as modified, except for last sentence, rejected, argument, not appropriate finding of fact. Statement that prescription drug claims were covered is rejected, not supported by evidence. Rejected, irrelevant. Nature of communication between the respective personnel offices, rejected, not supported by evidence. Respondent Accepted. Rejected, not supported by evidence. 3-4. Accepted as modified. However, requirement that both spouses must submit forms, not supported by evidence. Accepted as to amount, rejected as to indicating that Petitioner was responsible for payment, not supported by evidence. Rejected. Paragraph 2E(2) of the Petition does not state that Mr. Titus failed to read the document, but states only that he took no action. Rejected, not supported by evidence. COPIES FURNISHED: Phyllis McCluskey-Titus 2353 Skyland Drive Tallahassee, Florida 32303 William A. Frieder, Esq. Department of Administration Room 438, Carlton Building Tallahassee, Florida 32399-1550 Aletta Shutes Secretary Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550 =================================================================
