The Issue At issue in this proceeding is whether the Respondent, Klenk Roofing, Inc. ("Klenk Roofing"), failed to abide by the coverage requirements of the Workers' Compensation Law, chapter 440, Florida Statutes, by not obtaining workers' compensation insurance for its employees and, if so, whether the Petitioner properly assessed a penalty against the Respondent pursuant to section 440.107.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following findings of fact are made: The Department is the state agency responsible for enforcing the requirement of the workers' compensation law that employers secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. Klenk Roofing is a corporation based in Daytona Beach. The Division of Corporations’ “Sunbiz” website indicates that Klenk Roofing was first incorporated on February 23, 2005, and remained an active corporation up to the date of the hearing. Klenk Roofing’s principal office is at 829 Pinewood Street in Daytona Beach. As the name indicates, Klenk Roofing’s primary business is the installation of new roofs and the repair of existing roofs. Klenk Roofing was actively engaged in roofing operations during the two-year audit period from July 24, 2012, through July 23, 2014. Kent Howe is a Department compliance investigator assigned to Volusia County. Mr. Howe testified that his job includes driving around the county conducting random compliance investigations of any construction sites he happens to see. On July 23, 2014, Mr. Howe was driving through a residential neighborhood when he saw a house under construction at 2027 Peninsula Drive in Daytona Beach. He saw a dumpster in the driveway with the name “Klenk Roofing” written on its side. Mr. Howe also saw a gray van with the name “Klenk Roofing” on the door. Mr. Howe saw three men working on the house. He spoke first with Vincent Ashton, who was collecting debris and placing it in the dumpster. Mr. Howe later spoke with Jonny Wheeler and Craig Saimes, both of whom were laying down adhesive tarpaper on the roof when Mr. Howe approached the site. All three men told Mr. Howe that they worked for Klenk Roofing and that the owner was Ronald Klenk. Mr. Ashton and Mr. Wheeler told Mr. Howe that they were each being paid $10 per hour. Mr. Saimes would not say how much he was being paid. After speaking with the three Klenk Roofing employees, Mr. Howe returned to his vehicle to perform computer research on Klenk Roofing. He first consulted the Sunbiz website for information about the company and its officers. His search confirmed that Klenk Roofing was an active Florida corporation and that Ronald Klenk was its registered agent. Ronald Klenk was listed as the president of the corporation and Kyle Klenk was listed as the vice president. Mr. Howe next checked the Department's Coverage and Compliance Automated System ("CCAS") database to determine whether Klenk Roofing had secured the payment of workers' compensation insurance coverage or had obtained an exemption from the requirements of chapter 440. CCAS is a database that Department investigators routinely consult during their investigations to check for compliance, exemptions, and other workers' compensation related items. CCAS revealed that Klenk Roofing had no active workers' compensation insurance coverage for its employees and that Ronald and Kyle Klenk had elected exemptions as officers of the corporation pursuant to section 440.05 and Florida Administrative Code Rule 69L-6.012. Mr. Howe’s next step was to telephone Ronald Klenk to verify the employment of the three workers at the jobsite and to inquire as to the status of Klenk Roofing's workers' compensation insurance coverage. Mr. Klenk verified that Klenk Roofing employed Mr. Wheeler, Mr. Ashton, and Mr. Saimes. Mr. Klenk also informed Mr. Howe that Klenk Roofing did not have workers' compensation insurance coverage for the three employees. Based on his jobsite interviews with the employees, his interview with Mr. Klenk, and his Sunbiz and CCAS computer searches, Mr. Howe concluded that as of July 23, 2014, Klenk Roofing had three employees working in the construction industry and that the company had failed to procure workers’ compensation coverage for these employees in violation of chapter 440. Mr. Howe consequently issued a Stop-Work Order that he personally served on Mr. Klenk on July 23, 2014. Also on July 23, 2014, Mr. Howe served Klenk Roofing with a Request for Production of Business Records for Penalty Assessment Calculation, asking for documents pertaining to the identification of the employer, the employer's payroll, business accounts, disbursements, workers' compensation insurance coverage records, professional employer organization records, temporary labor service records, documentation of exemptions, documents relating to subcontractors, documents of subcontractors' workers compensation insurance coverage, and other business records to enable the Department to determine the appropriate penalty owed by Klenk Roofing. Anita Proano, penalty audit supervisor for the Department, was assigned to calculate the appropriate penalty to be assessed on Klenk Roofing. Penalties for workers' compensation insurance violations are based on doubling the amount of evaded insurance premiums over the two-year period preceding the Stop-Work Order, which, in this case was the period from July 24, 2012, through July 23, 2014. § 440.107(7)(d), Fla. Stat. At the time Ms. Proano was assigned, Klenk Roofing had not provided the Department with sufficient business records to enable Ms. Proano to determine the company’s actual gross payroll. Section 440.107(7)(e) provides that where an employer fails to provide business records sufficient to enable the Department to determine the employer’s actual payroll for the penalty period, the Department will impute the weekly payroll at the statewide average weekly wage as defined in section 440.12(2), multiplied by two.1/ In the penalty assessment calculation, the Department consulted the classification codes and definitions set forth in the SCOPES of Basic Manual Classifications (“Scopes Manual”) published by the National Council on Compensation Insurance (“NCCI”). The Scopes Manual has been adopted by reference in Florida Administrative Code Rule 69L-6.021. Classification codes are four-digit codes assigned to occupations by the NCCI to assist in the calculation of workers' compensation insurance premiums. Rule 69L-6.028(3)(d) provides that “[t]he imputed weekly payroll for each employee . . . shall be assigned to the highest rated workers’ compensation classification code for an employee based upon records or the investigator’s physical observation of that employee’s activities.” Ms. Proano applied NCCI Class Code 5551, titled “Roofing — All Kinds and Drivers,” which “applies to the installation of new roofs and the repair of existing roofs.” The corresponding rule provision is rule 69L-6.021(2)(uu). Ms. Proano used the approved manual rates corresponding to Class Code 5551 for the periods of non-compliance to calculate the penalty. On September 17, 2014, the Department issued an Amended Order of Penalty Assessment in the amount of $214,335.58, based upon an imputation of wages for the employees known to the Department at that time. After Klenk Roofing provided further business records, the Department on December 16, 2014, was able to issue a Second Amended Order of Penalty Assessment in the amount of $87,159.20, based on a mixture of actual payroll information and imputation. The Department eventually received records sufficient to determine Klenk Roofing's payroll for the time period of July 24, 2012, through July 23, 2014. The additional records enabled Ms. Proano to calculate a Third Amended Order of Penalty Assessment in the amount of $19.818.04. The evidence produced at the hearing established that Ms. Proano utilized the correct class codes, average weekly wages, and manual rates in her calculation of the Third Amended Order of Penalty Assessment. The Department has demonstrated by clear and convincing evidence that Klenk Roofing was in violation of the workers' compensation coverage requirements of chapter 440. Jonny Wheeler, Vincent Ashton, and Craig Saimes were employees of Klenk Roofing performing services in the construction industry without valid workers' compensation insurance coverage. The Department has also demonstrated by clear and convincing evidence that the penalty was correctly calculated by Ms. Proano, through the use of the approved manual rates, business records provided by Klenk Roofing, and the penalty calculation worksheet adopted by the Department in Florida Administrative Code Rule 69L-6.027. Klenk Roofing could point to no exemption, insurance policy, or employee leasing arrangement that would operate to lessen or extinguish the assessed penalty. At the hearing, Ronald Klenk testified he was unable to obtain workers’ compensation coverage during the penalty period because it was prohibitively expensive to carry coverage for fewer than four employees. He stated that the insurers demanded a minimum of $1,500 per week in premiums, which wiped out his profits when the payroll was low. Mr. Klenk presented a sympathetic picture of a small business squeezed by high premiums, but such equitable considerations have no effect on the operation of chapter 440 or the imposition of the penalty assessed pursuant thereto.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, assessing a penalty of $19,818.04 against Klenk Roofing, Inc. DONE AND ENTERED this 28th day of April, 2015, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 2015.
The Issue 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, Department of Financial Services, Division of Workers’ Compensation (the Department), properly issued a Stop-Work Order and Penalty Assessment against Respondent, Ogles Construction and Roofing, LLC (Respondent), for failing to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes.1/
Findings Of Fact Based upon the testimony and documentary evidence presented at hearing, the demeanor and credibility of the witnesses, and on the entire record of this proceeding, the following findings of fact are made: On September 30, 2013, the parties filed a Joint Pre- hearing Stipulation, by which the parties stipulated to the facts set forth in the following paragraphs 2 through 12. Those facts are accepted and adopted by the undersigned. The Department is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees and corporate officers. Respondent, a Florida corporation,2/ was engaged in business operations as a roofing company in the State of Florida from June 13, 2010, through June 12, 2013. Respondent received a Stop-Work Order for Specific Worksite Only and Order of Penalty Assessment from the Department on June 12, 2013. Respondent received a Request for Production of Business Records for Penalty Assessment Calculation from the Department on June 12, 2013. The penalty period in this case is from June 13, 2010, through June 12, 2013. Respondent employed Robert Ogles, II, Matthew Ogles, and Stephen Ogles during the period from June 13, 2010, through June 12, 2013. Robert Ogles had no exemption from June 13, 2010, through November 14, 2010, and from November 15, 2012, through January 9, 2013. Respondent was an “employer,” as defined in chapter 440, Florida Statutes, throughout the penalty period. Respondent did not secure workers' compensation insurance coverage for its employees during the period from June 13, 2010, through June 12, 2013. The appropriate class code from the National Council on Compensation Insurance, Inc. (NCCI), Scopes Manual for Respondent's employees is 5551, corresponding to “Roofing - All Kinds and Drivers.” The NCCI manual rates attached to the Prehearing Stipulation as Exhibit “C” are the correct manual rates for NCCI Class Code 5551 during the penalty period. Given the above stipulations, Respondent was in violation of the workers’ compensation coverage requirements of chapter 440 because Respondent employed uninsured employees working as roofers throughout the penalty period. Andre Canellas, penalty auditor for the Department, was assigned to assess the appropriate penalty owed by Respondent. Penalties for workers' compensation insurance violations are based on the amount of evaded insurance premiums over the three-year period preceding the Stop-Work Order, multiplied by 1.5. § 440.107(7)(d)1., Fla. Stat. At the time of his assignment, Mr. Canellas was provided with personal bank statements from Matthew, Stephen, and Robert Ogles, II, some checks that were written to Stephen and Robert Ogles, II, and an excel spreadsheet typed up for Respondent's payroll to Matthew Ogles. The records from Robert Ogles, II, consisted of statements from his personal bank account, which he jointly held with his wife, covering the course of the penalty period; and checks paid from Respondent to Robert Ogles, II, during the years of 2012 and 2013. The bank statements reference the amounts of all transactions in Robert Ogles, II, and his wife's joint personal bank account and do not distinguish the amounts for payroll from Respondent. From the periods of time in which Robert Ogles, II, produced checks from Respondent, Mr. Canellas was able to determine that Robert Ogles, II, did not deposit the entire amount from Respondent into his joint personal bank account. Thus, Robert Ogles, II's, personal joint bank statements covering the course of the penalty period were insufficient to enable the Department to determine his compensation from Respondent for those time periods. With respect to Stephen Ogles, the Department received statements from a joint personal bank account for the period of December 2012 through June 2013; checks paid from Respondent from December 2012 through June 7, 2013; and an IRS Form 1099 for payroll to Stephen Ogles, LLC from Respondent. The Department received personal bank statements from Matthew Ogles for the entire penalty period and an excel spreadsheet setting forth the payroll to Matthew Ogles from Respondent for all but one month of the penalty period. Petitioner did not receive any records at all for the payroll to Robert Ogles or to any of Respondent's subcontractors. Although Robert Ogles testified in deposition that he probably has the records requested by the Department, he stated that he “just chose not to” produce them. Employers in Florida are required to maintain the records that were requested by the Department and produce them upon the Department's request. See Fla. Admin. Code R. 69L- 6.015(1) and 6.032(1). For the time periods of January 1, 2012, through November 14, 2012, and from January 10, 2013, through June 12, 2013, Mr. Canellas could have potentially ascertained Respondent's payroll to Matthew, Stephen, and Robert Ogles, II- assuming that those individuals had identified all of the payroll they had received from Respondent during those periods. However, Mr. Canellas could not determine Respondent's overall payroll because the Department did not receive any records concerning Respondent's payroll to the subcontractors that Respondent regularly hires. Having not received business records sufficient to determine Respondent's actual payroll for the period of June 13, 2010, through June 12, 2013, Penalty Auditor Canellas calculated an Amended Order of Penalty Assessment of $158,423.82 by imputing the statewide average weekly wage, multiplied by 1.5, to Respondent's payroll for each identified employee during the penalty period. This methodology is required by section 440.107(7)(e), and Florida Administrative Code Rule 69L- 6.028(3). The Statewide Average Weekly Wage is determined by the Agency for Workforce Innovation (now the Department of Economic Opportunity). When the Average Weekly Wage changes, the Department updates its Coverage and Compliance Automated System (CCAS) to reflect the new amounts. The Average Weekly Wage that corresponds to various periods of non- compliance are populated automatically in the penalty worksheet when a penalty auditor selects an imputed penalty in CCAS. The Department has adopted a penalty calculation worksheet to aid in calculating penalties against employers pursuant to section 440.107. See Fla. Admin Code R. 69L-6.027. Mr. Canellas utilized this worksheet in assessing Respondent's penalty. In the penalty assessment calculation, the Department's Penalty Auditor consulted the classification codes listed in the Scopes Manual, which has been adopted by the Department through Florida Administrative Code Rule 69L- 6.021(3). As stipulated by the parties, the appropriate class code from the NCCI Scopes Manual for Respondent's employees is 5551, corresponding to “Roofing - All Kinds and Drivers.” Penalty Auditor Canellas applied the correct manual rates corresponding to class code 5551 for the periods of non- compliance in calculating the penalty. Mr. Canellas utilized the manual rates to satisfy his statutory obligation to determine the evaded workers' compensation insurance premium amounts for the period of June 13, 2010, through June 12, 2013, pursuant to section 440.107(7)(d)l. Respondent did not provide records sufficient to enable the Department to determine his actual total payroll for the period at issue. Accordingly, the Department was required to impute Respondent’s payroll in calculating the penalty assessment set forth in the Amended Order of Penalty Assessment. The Amended Order of Penalty Assessment is calculated correctly, if the manual rates were properly adopted by rule.
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 $158,423.82 against Respondent, Ogles Construction and Roofing, LLC, for its failure to secure and maintain required workers’ compensation insurance for its employees. DONE AND ENTERED this 23rd day of May, 2014, in Tallahassee, Leon County, Florida. S W. David Watkins 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 May, 2014.
The Issue The issue is whether Respondent failed to comply with provisions of the Workers? Compensation Law and implementing rules, and if so, what is the appropriate penalty.
Findings Of Fact Petitioner is responsible for administering the Workers? Compensation Law in a manner which facilitates the self–execution of the system and the process of ensuring a prompt and cost-effective delivery of payments. Respondent National Union Fire Insurance Company of Pittsburgh, Pennsylvania, is a workers? compensation insurance carrier authorized to insure under the Workers? Compensation law. Chartis is a third-party administrator or servicing agent for Respondent. Respondent is substantially affected by Petitioner?s amended Notice of Imposition of Penalties. Under the authority of section 440.525, Petitioner reviewed Respondent?s workers? compensation benefit disbursement and claims handling practices in an audit performed March 14, 2011, through March 18, 2011. The audit addressed the timeliness and accuracy of workers? compensation payments, as well as other claims handling practices concerning certain claims files, for a five-year audit period from March 18, 2006, through March 18, 2011. Respondent paid $5,000.00 in penalties that were assessed for improper case management techniques in Petitioner?s original Notice of Imposition of Penalties. The parties had no disagreement as to this portion of the fine assessed. At issue is the remaining fine amount of $9,200.00 assessed for improper benefit disbursement practices, as set forth in the Petitioner?s Amended Notice of Imposition of Penalties, dated September 20, 2011, which incorporates the amended final audit report. This penalty reflected Petitioner?s determination that there were 152 late payments out of a total of 807 indemnity payments due to injured workers. The Respondent agreed that the number of indemnity payments reviewed during the audit totaled 807, but disputed the number of late indemnity payments. Respondent agreed that 25 payments related to workers? compensation claims files other than the file of R.D. were correctly identified as late by Petitioner. Respondent disputed the number of late payments made to R.D. There was testimony that Respondent had notification of R.D.?s permanent total disability on February 22, 1989. Other testimony stated that R.D. was accepted as permanently and totally disabled as of February 23, 1989. Any discrepancy between these dates was not at issue in the Department?s calculation of the biweekly payment schedule, as discussed below. R.D. is entitled to biweekly indemnity payments for permanent total disability, as well as supplemental permanent total benefits. No evidence was presented at hearing as to whether R.D.?s disability was immediate and continuous for eight calendar days or more after his injury, or in the alternative, if R.D.?s first 7 days of disability after his injury were nonconsecutive or delayed. Joint Exhibit J-6, the indemnity pay out ledger, provided information from Respondent?s records regarding payments made to R.D. It shows the amount of payment and “Trans Date” or transaction date for each payment. As a customary business practice, checks were mailed out one day after the transaction date, so the actual date of each payment is one day after the “Trans Date” shown. In addition, the records contain a column entitled “Service Date From-To” which associates a specific compensation period with the payment in that row. The “Service Date From-To” column is blank for all of the payments to R.D. beginning in 1988 until September of 1998. This column contains dates that Respondent considered to be the compensation period applicable to each payment from September of 1998 through the audit period. The indemnity pay out ledger also indicates that after Respondent was notified of R.D.?s permanent total disability in 1989, over 250 payments were made to R.D. until September of 1998. On average, this was about 28 payments per year or slightly more often than biweekly. Counsel for Petitioner elicited deposition testimony from Ms. Margorit Constantine, Complex Claim Director for Chartis, that Respondent?s records indicated that the initial permanent total disability payment covered 2-22-1989 through 3-7-1989, but this information was evidently not relied upon by Petitioner. Ms. Sharna Amos, Workers? Compensation Specialist at the Division, testified that the Division determines the specific biweekly time period applicable to a permanent total claim based upon the date the first payment went to the injured worker, even if this first payment is a retroactive payment covering an earlier time period. However, Petitioner presented no evidence that the biweekly payment schedule established by Ms. Amos for purposes of the audit of R.D.?s file coincided in any way with a biweekly schedule based upon the date the first installment of compensation for total disability was paid to him. In fact, as Ms. Amos testified, the biweekly payment schedule created for the audit was based upon dates being used by the Respondent for biweekly payments during the fall of 1998, the first payments for which the Respondent identified service dates. Ms. Amos testified at hearing that she established the biweekly payment schedule for the audit of R.D.'s file as follows: Um, based on the information that was provided to me, um, the pay history that was given to me, um, the first one with the, um, service dates of 9/2 to 9/15, August, all of the other payments were lump sum because they had gotten a new computer or something. Uh, so I started from that time period and ran the bi -– oh, sorry, on the right -– on this left side, I ran the biweekly periods from 9/2/1998 until -– I ran them all the way through, um, 7/9/2011. It was not made clear at hearing why Petitioner considered over 250 nearly biweekly payments that had been paid to R.D. for over nine years prior to September 1998 to be “lump sum” simply because the Respondent was unable to provide the service dates it associated with them. Petitioner has no rules defining “lump sum” in this context, and it is not clear what significance such a determination would have in the calculation of a payment schedule. Ms. Amos did testify that typically with permanent total disability claims the employee is “accepted permanent total” retroactively back to a given date and the biweekly payments are established after a lump sum payment covering the intervening period is made. However, no evidence was presented that R.D. was retroactively accepted as permanently totally disabled in 1998 and the first installment was made to him at that time as a lump sum payment; to the contrary, the evidence indicated he was accepted as permanently totally disabled in 1989. It appears rather that Ms. Amos established the biweekly period for purposes of the audit based on the service dates being used by Respondent in September of 1998 simply because these were the first “service dates” available. However, there was no evidence to show that the service dates being used by Respondent in September of 1998 bore any relationship to the first installment of compensation for total disability paid to R.D. In fact, the evidence would suggest no such connection. The payments made to R.D. prior to September were generally biweekly, but somewhat irregular. The payments made after September of 1998 were generally biweekly, but somewhat irregular. Consistent with Respondent?s interpretation of the statute, Respondent presented deposition testimony that while they generally tried to make biweekly payments, they made no attempt to strictly make the payments on the anniversary of the first installment, but would occasionally start new biweekly periods for various reasons. It is ironic that after basing the audit payment schedule on Respondent?s service dates in September of 1998 rather than on the date of the first installment as required by the statute, that Petitioner went on to categorically reject all of Respondent?s subsequent service dates as inconsistent with statutory requirements. It was similarly unclear as to why Petitioner concluded that Respondent?s acquisition of a new computer would have any effect on the determination of the applicable biweekly payment schedule, because payment data from before that time was available. As Ms. Constantine testified, some data on the indemnity pay out ledger was information entered earlier from check copies and “green cards” that were manual records. The Division used the biweekly payment schedule established by Ms. Amos to determine which payments were late. Had the Division begun its biweekly payment schedule on another date, it would have created a different schedule of due dates, and would then have determined that an entirely different number of payments to R.D. were late. As noted, Respondent paid its biweekly payments in a different manner. No evidence was presented that Respondent?s occasionally-adjusted biweekly periods for total disability payments were consistent with the date that the first installment of compensation had been paid to R.D., or what that date was. Respondent did not adhere to a fixed biweekly schedule, but did generally adhere to biweekly payments. Adjustments in payment due dates were made from time to time. For example, evidence indicated that adjustments were made at the beginning of a new calendar year or when errors were discovered, in which case a new biweekly pattern of payments would begin after the adjustment, without regard to the dates of any previous biweekly payments. This method, while not intrinsically unreasonable, is not consistent with the statute. It is reasonable that missing data, calendar changes, advance payments, or other irregularities in the payment of indemnity might create confusion in the construction of the proper payment schedule, or in the reconstruction of the proper payment schedule for purposes of an audit. The correct and consistent way to deal with such factors is not always addressed by statute. The Department has adopted no administrative rules on this subject. The statute?s requirement of a fixed biweekly schedule that cannot thereafter be changed is not followed by many who regularly administer these payments. Ms. Amos testified in deposition that many of her audits involve carriers who are making biweekly payments covering time periods that are misaligned with the proper schedule as determined by the Department, and that she is frequently asked to go back in time to identify for the carrier the date when the problem started. At another point, Ms. Amos noted that in dealing with payments at the end of a calendar year, “a lot of adjusters in the industry . . . would pay the injured workers 12/22/2006 to 12/31/2006 and then restart the clock, just pay those few days and then restart the clock in January, starting their next payment at January 1.” Mr. Bottjer, holder of workers? compensation and all lines adjusting licenses, and Compliance Reviewer for Chartis, testified in deposition that prior to the audit he was unaware that it was the Department?s position that a biweekly period could not be adjusted after a carrier “goofed” and had caught the injured worker up (and stated that he still does not agree that this is required by the statute). Ms. Constantine testified in deposition that she had never seen a bulletin, gone to a conference, or had any information indicating to her that biweekly payments could not be altered. R.D. was consistently overpaid in his permanent total disability and supplemental benefits, based upon errors unrelated to the issue in this hearing. Additionally, various adjustment payments were made to R.D. from time to time which included penalties and interest. R.D. has received all of the indemnity payments to which he was entitled during the period of the audit and has not been harmed by any late payments at issue here. Petitioner proved by clear and convincing evidence that 25 payments related to workers? compensation claims files other than the file of R.D. were paid late, as stipulated. This constitutes about 3.1 per cent of the 807 indemnity payments that were the subject of the audit. Petitioner proved by clear and convincing evidence the dates on which R.D. was paid his biweekly total disability payments during the audit period. Petitioner failed to prove by clear and convincing evidence the date that the first installment of compensation for total disability was paid to R.D. or the dates by which R.D.?s biweekly total disability payments needed to be paid to him. Petitioner failed to prove by clear and convincing evidence that Respondent was late in paying R.D. his total disability payments. Mr. Bottjer, Respondent?s witness, testified that he believed that “as many as 14” payments to R.D. might have been late. Mr. Bottjer based this conclusion on due dates that appear to bear no relation to the date of payment of the first installment of payments for total disability. Even if 14 additional late payments were added to the 25 late payments that were stipulated, the total number of late payments would be 39, or about 4.8 per cent of the 807 indemnity payments that were audited. Based upon the number of late payments proved by clear and convincing evidence, the timely payment performance standard during the period of the audit was in excess of 95 percent.
Recommendation Upon consideration of the above 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 Respondent paid 25 payments late during the audit period and imposing no fines for improper benefit disbursement practices. DONE AND ENTERED this 8th day of February, 2012, in Tallahassee, Leon County, Florida. S F. SCOTT BOYD 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, 2012.
The Issue The ultimate issue for determination is whether the Petitioner's discharge by the Respondent constituted discrimination on the basis of handicap within the meaning of the Florida Human Rights Act.
Findings Of Fact Having considered all of the evidence in the record, the Hearing Officer makes the following findings of fact: Petitioner was hired as a Mechanic II (Electrician) by Respondent on January 25, 1982 in the Plant Engineering Department. The term "Mechanic II" denoted Petitioner's pay grade. The term "Electrician" designated Petitioner's speciality. Petitioner's pay grade was changed to Electrician and the Mechanic II pay grade was eliminated by Respondent for all such employees on or about November 16, 1983. Petitioner's duties as an Electrician included ladder work, running conduit and wire, repairing laundry and laboratory equipment and appliances, changing ballasts, and repairing electrical beds and nurse-call equipment. Petitioner performed all of the duties of an electrician, including ladder work until approximately November 27, 1985. Three months after he was employed in 1982, Petitioner injured his back while repairing electrical beds. Repairing electrical beds required much bending and stooping. Petitioner filed for Worker's Compensation benefits for the injury he sustained in repairing electrical beds. Petitioner suffered an off-the-job injury in 1983. Respondent permitted Petitioner to go on medical leave for two months. Petitioner again injured his back while working at the Hospital on or about November 27, 1985. Due to his injury, Petitioner was on leave of absence from November 30, 1985, through December 11, 1985. Petitioner returned to work but again went on leave of absence from January 9, 1986, through February 17, 1986. Petitioner returned to work subject to a "light duty" restriction imposed by his physician. On or about June 10, 1986, Petitioner's physician released him for full duty subject to a 15 pound restriction on any lifting. In September, 1986, Petitioner's physician indicated that it was "probably best" for Petitioner to work only 4 hours per day. The Respondent again allowed Petitioner to work 4 hours per day even though he occupied a full-time, 8 hour per day position. In early October, 1986, Petitioner was released by his physician to perform full duty work, even though Petitioner was restricted to half days. Frank Kleese, Petitioner's foreman, asked Petitioner to investigate a problem with an overhead light. Petitioner refused Kleese's directive and stated that, even though he had been released for full duty work, he would not climb a ladder unless his doctor approved it. Petitioner argued with Kleese and used "strong language". Petitioner became belligerent. Petitioner received reprimands for insubordination. When Petitioner refused Kleese's second request to do ladder work, Petitioner received a reprimand for refusing to do the job assigned to him. Both reprimands were discussed with Petitioner. Petitioner later presented a doctor's note stating he could "return to full active duty," but could work only half days with no ladder work. As a result of Petitioner's half day schedule, other electricians were required to do more work. The department as a whole fell behind in its work. Furthermore, light duty work was not always available for Petitioner. While working half days in late 1986, Petitioner was late to work on three occasions. Petitioner's reason for being late, as explained to Frank Kleese, his foreman, was that Petitioner's injury made it difficult for him to get out of bed in the morning. In November, 1986, Clark, Kleese, and Kunz met with Petitioner and advised him that he could not remain on half days indefinitely. Petitioner was advised that unless his condition was found to have improved by his upcoming doctor's appointment on December 1, 1986, he would be placed on medical leave. On December 1, 1986, Petitioner visited his physician, Dr. Richard D. Strain, Jr. Dr. Strain stated that there was no reason to think that Petitioner's condition would change quickly. Dr. Strain was going to send Petitioner home and put him on physician therapy (i.e., not allow him to work at all). Petitioner asked Dr. Strain if he could work half days, and Dr. Strain agreed. Kleese, Kunz, and Clark met with Petitioner and informed him that he would be placed on medical leave as a result of the Petitioner's medical condition. Continuation of his half-day status without any foreseeable cutoff date was not acceptable to the Respondent. On December 4, 1986, Respondent Benefits Supervisor Ralph Rettig advised Dr. Strain that Petitioner had been placed on medical leave of absence because there were no part-time positions available in Petitioner's department. Rettig requested Dr. Strain to advise him as to whether Petitioner's condition was the result of his injury at work and whether Petitioner would ever improve to the level where he could work more than half day duty. Dr. Strain responded to Mr. Rettig in a letter dated December 22, 1986, which indicated that Petitioner's condition was partially caused by degenerative changes. Dr. Strain further stated: Mr. Cabany tells me he is unable to work more than a half day, and I think that is a reasonable thing for him to do. Certainly, a man of his elderly years with the degenerative changes that he has, with super imposed trauma, that would be a good way to go. Petitioner went on medical leave beginning December 17, 1986. Prior to the beginning of his leave, Petitioner failed to fill out the leave of absence request form. When this came to Rettig's attention, Rettig requested that Vernon Clark send Petitioner the form. Clark wrote to Petitioner and informed him that he must fill out the leave of absence request form Clark had enclosed. Clark further informed Petitioner that he would have to request renewal of his leave when it expired in mid-January, 1987, in accordance with Respondent policies. During a telephone conversation several days prior to the expiration of Petitioner's leave, Clark reminded Petitioner that he still had not sent in the original request form for the leave he was then under. Clark also reminded Petitioner that, if he wished to extend his leave, Petitioner would have to submit a written request for extension. Petitioner eventually sent in the signed request form for the leave of absence which he was then under. The signed form stated: "If I do not request an extension of my Leave prior to expiration . . . my employment at Memorial Respondent will be terminated. . . ." Petitioner never submitted a request for an extension of his leave, and Petitioner was terminated. In February, 1987, Ralph Rettig became aware of a part-time porter position in the Respondent's Dietary Department. Mr. Rettig contacted Petitioner and asked him to meet with Joseph Marino, Administrative Director of Food and Nutrition Services, with regard to a job in the Dietary Department. Marino offered Petitioner a porter position which required only half days and involved no bending or lifting of heavy objects. Marino explained the duties and responsibilities of the position to Petitioner and showed him the work area. Petitioner refused the position because he felt it was "beneath his dignity". Petitioner said virtually the same thing to Rettig. Hospital Benefits Supervisor Rettig, a quadriplegic, was involved throughout in dealing with Petitioner's medical situation. Rettig testified that he has never witnessed discrimination by the Respondent based upon handicap and felt that the Respondent reasonably accommodated Petitioner's back problem. Eighty percent of an Electrician's work at the Respondent involved the use of a ladder. Petitioner could not do ladder work. Petitioner also could not work on ceilings or do much bending or lifting. Petitioner cannot work at all now, still has pain, and has not worked since leaving the Respondent's employ. Petitioner did not know of any available half-day jobs he could have performed at the Hospital other than the porter position that was offered to Petitioner by Mr. Marino. Prior to his 1985 injury, Petitioner had repeatedly requested to work part time as an Electrician because his wife had arthritis and he needed to care for her. Petitioner was consistently turned down because no such part-time position existed in his department. During his employment with Respondent, a few half-day positions existed throughout the Hospital as PBX Operators, Cashiers, and Porters. No part-time Electrician positions in the Plant Engineering Department where Petitioner was employed were ever available. Petitioner occupied a full-time position even though he worked only part-time. Sandy McNeil, a former Electrician, is now a Systems Technician/Welder who works full days on a part-time basis. Mr. McNeil operates a lathe and works full weeks when needed. Petitioner is not a welder and could not perform the duties required of Mr. McNeil. Richmond Blatch is a painter who works a full week every other week. Petitioner is not a painter and could not perform Mr. Blatch's duties. Tom Nottage, another individual who had been working in the Engineering Department, obtained a courier position with the Hospital. For a brief period, Mr. Nottage worked 2 full days a week in the Engineering Department and 3 days week as a courier. Since mid-January, 1987, Mr. Nottage has worked full-time as a courier. His job requires driving over 25,000 miles per year, lifting mail tubs weighing between 20 and 50 pounds, often lifting heavier packages, and getting in and out of his car between 20 and 40 times per day. Petitioner could not perform the duties required of Mr. Nottage. A part-time position could not be created for an Electrician. Electricians are given jobs which frequently carry through from day to day. Permanently employing someone on a half-day, health-restricted basis presented scheduling and work load problems. Jobs that do not carry through from day to day are frequently comprised of so-called bench work. Some bench work requires an entire day to complete. There was not always a half-day's worth of bench work available. During his employment with the Respondent, Petitioner had been receiving Social Security pension benefits. In 1987, Petitioner would have been required to reimburse Social Security for a portion of his pension benefits if he earned more than $8,000,00. Half day employment would have afforded Petitioner the ability to earn the maximum allowed by Social Security. Because Petitioner refused to accept a job for which he was physically qualified, the worker's compensation benefits begun as a result of his injury on the job in 1982, were stopped. If Petitioner had accepted the porter position offered to him by Mr. Marino, his worker's compensation benefits would have compensated him for the wage loss resulting from the lower paying job. Petitioner's termination had no effect on the worker's compensation benefits Respondent was paying Petitioner. Respondent would have gained a financial benefit from retaining Petitioner as a part time Electrician because there would have been less of a wage loss to make up through worker's compensation benefits. Glen Mora and Luis Villanueva, two other Electricians, were injured while Petitioner was working half days. Both individuals were allowed to take medical leave, and return to work on light duty until they returned to full duty status. Both individuals in fact returned to full duty status. Petitioner received a merit pay check from Respondent in 1986 even though Petitioner had not achieved the requisite "fully proficient" rating in his evaluation. Vernon Clark, Director of Plant Engineering, intervened on behalf of Petitioner. Mr. Clark recommended that Petitioner receive the merit pay because Petitioner would have received a higher rating had it not been for Petitioner's injury.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Human Rights Commission issue a Final Order that Respondent is not guilty of discharging Petitioner in violation of the Human Rights Act. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 5th day of October, 1989. DANIEL MANRY 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 5th day of October, 1989. APPENDIX Petitioner submitted no proposed findings of fact. Respondent submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection NONE The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 Included in Findings 1, 2 2-3 Rejected as irrelevant 4-9 Included in Findings 3-10 Included in Finding 35 Included in Finding 11 Included in Finding 25 Included in Finding 26 Included in Finding 31 15-17 Included in Findings 27-30 Included in Finding 17 Included in Finding 36 Included in Finding 32 21-28 Included in Findings 12-21 29 Included in Finding 22 30-31 Included in Findings 33-34 Included in Finding 22 Included in Findings 15, 17 34-35 Included in Findings 23, 24 COPIES FURNISHED: George Cabany 3905 Garfield Street Hollywood, Florida 33021 James S. Bramnick Muller, Mintz, Kornreich, Caldwell, Casey, Crosland & Bramnick, P. A. Hollywood Memorial Respondent Suite 3600 Southeast Financial Center 200 South Biscayne Boulevard Miami, Florida 33131-2338 Donald A. Griffin Executive Director Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925 Dana Baird General Counsel Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32399-1925
The Issue The issue to be determined is whether Respondent complied with coverage requirements of the workers' compensation law, Chapter 440, Florida Statutes. A determination of whether Respondent functioned as an employer is a preliminary issue to be resolved.
Findings Of Fact Petitioner is the agency of state government currently responsible for enforcing the requirement of Section 440.107, Florida Statutes, that employers secure the payment of compensation for their employees. Respondent works in the construction industry as a house framer. Petitioner's investigator received a report of a violation of the workers' compensation law on May 21, 2002. When the investigator arrived at the construction site located at 8225 Southwest 103rd Street Road, Ocala, Florida, he observed four men, including Respondent, installing trusses at a residence under construction. Respondent was identified by the other men as the person for whom they were working on the job. All four men told the investigator that they were employees of Dove Enterprises (DOVE). Upon further investigation, the owner of DOVE and also the general contractor of record, Steven Slocumb, stated to the investigator that DOVE operated as the subcontractor for Triple Crown Homes. Slocumb further stated that DOVE, through Slocumb, in turn subcontracted the work to Respondent on a piece rate or square foot basis. Respondent, according to Slocumb, in turn hired the other three men. When Petitioner's investigator returned to the construction site, the four men were gone. None of the four men had an exemption from coverage requirements of the workers' compensation law and none of them had workers' compensation insurance. Consequently, the investigator determined that Respondent was an employer both of himself and the three other workers and that all four were unprotected by workers' compensation insurance. On June 27, 2002, the investigator issued the Stop Work and Penalty Assessment Order at issue in this proceeding. The Order levied the minimum penalty under Section 440.107, Florida Statutes, of $1,100.00. Slocumb and Respondent appeared at the final hearing. Respondent's position was that he and the other three men were employees of DOVE. None of the men produced documentation of such an employment relationship. Rather, documentation presented shows that DOVE paid Respondent for equipment rental. Additionally, payments to Respondent from DOVE for the jobs in question did not include adjustments for employment taxes that would have applied had Respondent been an employee. Respondent's testimony is not credited. Slocumb confirmed the facts determined by the investigator. Slocumb's testimony was candid, direct and creditable.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order confirming the Stop Work and Penalty Assessment Order at issue in this proceeding. DONE AND ENTERED this 8th day of July, 2003, in Tallahassee, Leon County, Florida. S DON W. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of July, 2003. COPIES FURNISHED: Lawrence Simon 1683 Southeast 160th Terrace Oklawaha, Florida 33379 David C. Hawkins, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Lower Level 11 Tallahassee, Florida 32399-0300
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes (2013)1/, by failing to obtain workers? compensation insurance coverage, as alleged in the Stop-Work Order and Amended Order of Penalty Assessment; and, if so, the appropriate penalty.
Findings Of Fact The Department is the state agency responsible for enforcing the requirement that employers secure the payment of workers? compensation insurance coverage, pursuant to chapter 440, Florida Statutes, for their employees. Respondent is a Florida-limited liability company engaged in business operations for the time period of March 16, 2010, through March 15, 2013. Mark Markisen is the managing member of Respondent listed with the State of Florida, Division of Corporations. On March 15, 2013, Jack Gumph, an investigator with the Department, conducted a random on-site compliance inspection of a construction site for a single family residence. Gumph determined that the general contractor for the job was Gulf Shore Homes and that it had subcontracted with Tradewinds Design for certain work inside the home. As Gumph interviewed the different workers present on the worksite, he spoke with Mark and Brett Markisen, who informed him that they worked for Tradewinds Design. Gumph observed Brett Markisen installing a wine cabinet in the home. Gumph confirmed through the Department?s online records that Gulf Shores Homes and Tradewinds Design had current workers? compensation insurance coverage on March 15, 2013. Based on this initial information, Gumph left the worksite. On March 19, 2013, Gumph subsequently learned from a conversation with Mark Markisen that Mark and Brett Markisen were not employees of Tradewinds Design. Rather, Tradewinds had subcontracted with Respondent, Cabinetry by Design of Collier County, L.L.C., to build and install the wine cabinets. Mark Markisen stated that he was the managing member of Cabinetry by Design of Collier County, L.L.C., and that he had selected to be exempt from workers? compensation insurance coverage. Gumph confirmed that Mark Markisen had selected to be exempt from workers? compensation insurance coverage. However, because Respondent did not have worker?s compensation coverage for Brett Markisen, the Department issued a Stop-Work Order on March 19, 2013, and Request for Production of Business Records for Penalty Assessment Calculation on April 8, 2013. Mark Markisen possessed an exemption from the workers? compensation insurance coverage requirement during the penalty period of March 16, 2010, through March 15, 2013. Brett Markisen did not possess an exemption from the workers? compensation insurance coverage requirement during the penalty period. Brett Markisen was employed by Respondent throughout the penalty period. During the penalty period, Brett Markisen received approximately $187,000.00 from Respondent. The amount of this money attributed to wages is unclear, based on the fact that Mark Markisen indicated that some of the payments reflected loans, not wages. Respondent was an “employer” as defined in chapter 440, Florida Statutes, throughout the penalty period. On March 15, 2013, Brett Markisen was Respondent?s “employee” working on the installation of cabinets in the single family residence.2/ On March 15, 2013, Respondent failed to provide workers? compensation insurance coverage for Brett Markisen. Respondent also failed to provide coverage during the penalty period of March 16, 2010, through March 15, 2013. Therefore, the Department properly entered a Stop-Work Order on March 19, 2013. Respondent failed to provide sufficient business records in order to establish a payroll. Therefore, the Department correctly imputed payroll against Respondent. The Amended Order of Penalty Assessment used the proper class code for the calculation of the penalty, concerning the installation of cabinets, and correctly followed the procedure set out in section 440.107(7)(d)1, Florida Statutes, and Florida Administrative Code Rule 69L-6.028.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order upholding the Stop-Work Order and Amended Order of Penalty Assessment, assessing a penalty against Respondent in the amount of $21,436.61. DONE AND ENTERED this 30th day of December, 2013, in Tallahassee, Leon County, Florida. S THOMAS P. CRAPPS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 2013.
The Issue The issues in this case are whether Professional Staffing and Payroll Services, LLC, failed to secure the payment of workers' compensation coverage for its employees in violation of chapter 440, Florida Statutes (2014), and, if so, the penalty that should be imposed.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation insurance coverage for their employees, pursuant to chapter 440, Florida Statutes. Respondent, Professional Staffing and Payroll Services, LLC, is a registered Florida limited liability company. At all times relevant to this proceeding, its business address was 1400 Colonial Boulevard, Suite 260, Fort Myers, Florida. Respondent actively engaged in business during the period from February 1, 2015, to June 17, 2015. On June 2, 2015, Petitioner's compliance investigator, Jack Gumph, conducted a workers' compensation compliance investigation at a worksite located at 8530 Palacio Terrace North, Lot 67, Hacienda Lakes, Naples, Florida. At the worksite, Gumph observed five workers nailing down plywood on the trusses of the roof of a house under construction. One of the workers, Fernando Fernandez, identified himself as the job foreman. Mr. Fernandez and the other four workers were employed by J.S. Valdez, Inc. ("JSV"). These workers were engaged in carpentry work installing plywood. This type of carpentry work is classified as National Council on Compensation Insurance ("NCCI") class code 5403 and is considered a type of construction activity under Florida Administrative Code Rule 69L-6.021(2)(cc). The evidence established that JSV was a client company of Global Staffing Services, LLC ("GSS"), and that GSS supplied the workers to JSV. The evidence further established that all five workers Gumph observed at the Palacio Terrace jobsite were employees of GSS. Using the State of Florida's Coverage and Compliance Automated System ("CCAS") computer database, Gumph determined that JSV did not have workers' compensation insurance covering any of its employees, and that GSS had workers' compensation coverage only for two secretarial/clerical employees. Through research in the Florida Department of State, Division of Corporations Sunbiz database ("Sunbiz"), Gumph discovered that GSS was part of three related——as Gumph characterized it, "commingled"——business entities; these entities were GSS, Global Staffing Payroll, LLC ("GSP"), and Professional Staffing and Payroll Services, LLC, the named Respondent in this case. Ivan Hernandez was shown in Sunbiz as being the managing member of GSS and GSP. At that time, the managing member of Respondent was shown as being Martha Coloma. Gumph suspected that Respondent was leasing construction workers, who are engaged in hazardous work, through a staffing company that was characterized as a secretarial/clerical business (NCCI code 8810)——a substantially less hazardous occupation. The effect of classifying of these business as "secretarial/clerical" is that a much lower workers' compensation premium rate applies.2/ Gumph prepared requests for production of business records ("RPBR") for each of the related business entities and visited the business address listed in Sunbiz for GSS to personally serve them on Hernandez. The business was located in a strip mall that housed various types of businesses. As he was entering the business, he noted that the name shown at the entrance was "Professional Staffing." The business manager explained that GSS was opened in 2013, and that on February 1, 2015, the business name had been changed to Professional Staffing and Payroll Services——the named Respondent in this proceeding. Upon inquiry, Gumph was told that Hernandez was "out of state." Almost as soon as he left Respondent's business office, Gumph received a call from Hernandez, who confirmed that he was the owner and chief executive officer of both GSS and Respondent. Gumph scheduled an appointment with Hernandez for June 16, 2015. However, Hernandez did not keep that appointment or call Gumph back to reschedule the appointment. It was obvious to Gumph that Hernandez was avoiding him. In researching the Sunbiz records for Respondent, Gumph also noted that on June 16, 2015, the managing member's name had been changed from Martha Coloma to Ivan Hernandez. He also rechecked the CCAS and NCCI databases for Respondent and noted that only a few days before, a workers' compensation policy had been issued for Respondent. The policy listed the business as "secretarial/clerical" and had a total exposure of $143,000 to cover four secretarial/clerical employees. He also noted that GSS had a workers' compensation policy that was effective from August 15, 2014, to August 15, 2015, and that this policy did not cover any additional insured entities, so its coverage did not extend to Respondent or its employees. Gumph contacted Martha Coloma, who was employed by All Florida Financial Services, LLC, a payroll preparation and bookkeeping firm. Coloma told Gumph that in January 2015, Hernandez had asked her to amend the Sunbiz records for Respondent to be shown as Respondent's managing member. Coloma also told Gumph that Hernandez requested that she find a Professional Employer Organization ("PEO") leasing company that would secure workers' compensation coverage for approximately 40 to 50 of his employees who were engaged in construction work.3/ Coloma was unsuccessful, so Hernandez directed her to obtain another policy for secretarial/clerical employees. She obtained the policy covering the four secretarial/clerical employees. Thereafter, Gumph spoke directly with Hernandez, who confirmed that he employed 40 to 50 construction workers. He told Gumph that he had tried to obtain a policy but had been unable to do so. On June 17, 2015, Gumph issued a Stop-Work Order and Order of Penalty Assessment to Respondent, and also served a RPBR on Respondent. In response, Respondent provided business records consisting of bank statements from a Regions Bank account covering the period from February 1, 2015, to February 28, 2015. Respondent did not provide any copies of checks written during this period. Respondent also provided business records consisting of bank statements and copies of checks from a Fifth Third Bank payroll account for Respondent for the period of March 1, 2015, through June 17, 2015. The evidence establishes that between February 1, 2015, and June 12, 2015, Respondent employed 437 employees—— the great majority of whom worked in construction jobs——for whom Respondent failed to secure workers' compensation insurance coverage. For the period between June 13, 2015, and June 17, 2015, Respondent secured workers' compensation coverage for four secretarial/clerical employees. Based on the business records provided, Lynne Murcia, Petitioner's penalty auditor, calculated the penalty to be assessed against Respondent. Pursuant to section 440.107(7)(d)1., the penalty for failing to secure workers' compensation is equal to two times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during the period for which the employer failed to secure coverage during the two-year period preceding issuance of the Stop-Work Order. Here, because Respondent became a business entity on or about February 1, 2015, the penalty period applicable to this proceeding commenced on February 1, 2015, and ran through June 17, 2015, the date on which the Stop-Work Order and Penalty Assessment were served on Respondent.4/ Respondent did not obtain any exemptions from the workers' compensation coverage requirement for the period between February 1, 2015, and June 17, 2015. The business records Respondent provided in response to the RPBR were not sufficient to enable Petitioner to calculate Respondent's payroll for the period commencing on February 1, 2015, and ending on February 28, 2015. Accordingly, Petitioner imputed the gross payroll for Respondent's employees identified in the taxable wage report for the period covering February 1, 2015, through February 28, 2015, the statewide average weekly wage effective at the time of the Stop-Work Order, multiplied by two. The imputed wages for these employees over this period amounted to $2,544,907.68. For the period commencing on March 1, 2015, and ending on June 17, 2015, Respondent provided records sufficient to enable Petitioner to determine Respondent's actual gross payroll. For this period, Respondent's gross payroll amounted to $1,202,781.88. The evidence shows that for the period from February 1, 2015, through June 12, 2015, Respondent failed to secure workers' compensation coverage for any of its employees. On June 13, 2015, Respondent secured workers' compensation covering four secretarial/clerical employees. This coverage did not extend to Respondent's employees engaged in work other than secretarial/clerical work. For the period from June 13, 2015, to June 17, 2015, Respondent's gross payroll was calculated as $22,507.37. In calculating the applicable penalty, Respondent received a credit of $923.98 for the premium paid on the policy secured on June 12, 2015. This amount was deducted from the penalty owed. In calculating the penalty, Murcia determined the NCCI class code applicable to each employee according to his or her job, and applied the pertinent approved NCCI rates to determine the amount of the evaded premium for each employee. Pursuant to this method, Murcia calculated a total penalty of $645,019.36, which was reflected in the Amended Order of Penalty Assessment. In sum, Petitioner demonstrated, by clear and convincing evidence, that Respondent failed to secure workers' compensation coverage for its employees, in violation of chapter 440. The clear and convincing evidence further establishes that Petitioner correctly calculated a penalty of $645,019.36 to be assessed against Respondent pursuant to sections 440.107(7)(d)1. and 440.107(7)(e) and rule 69L-6.028.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: The Department of Financial Services, Division of Workers' Compensation, enter a final order determining that Respondent Professional Staffing and Payroll Services, LLC, violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage and imposing a penalty of $645,019.36. DONE AND ENTERED this 10th day of February, 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 10th day of February, 2016.
The Issue The issues in this case are whether Respondent, Raul A. Correa, M.D. (Dr. Correa), failed to provide workers' compensation coverage, and if so, what penalty should be imposed.
Findings Of Fact The Department is the state agency responsible for enforcing section 440.107, Florida Statutes (2013). That section mandates, in relevant part, that employers in Florida secure workers’ compensation insurance coverage for their employees. § 440.107(3), Fla. Stat. At all times relevant, Dr. Correa was a Florida small business engaged in the practice of medicine, with his principal office located at 2505 Manatee Avenue West, Bradenton, Florida. Dr. Correa is not incorporated. On February 12, 2014, Ms. Green conducted an on-site workers’ compensation compliance investigation (compliance investigation) of Dr. Correa’s office. After identifying herself to the receptionist, Ms. Green met Dr. Correa and explained the reason for her presence, a compliance investigation. Dr. Correa telephoned his wife who handles his office management from their residence. Mrs. Correa immediately faxed a copy of the liability insurance policy to the office. However, that liability policy did not include workers’ compensation coverage. After a telephonic consultation with her supervisor, Ms. Green served a Request for Production of Business Records (Request) on Dr. Correa at 11:50 a.m. on February 12, 2014. This Request encompassed records from October 1, 2013, through February 12, 2014, for all of Dr. Correa’s payroll documents, account documents, disbursements, and workers’ compensation coverage policies. Ms. Green consulted the Department’s Coverage and Compliance Automated System (CCAS) database to determine whether Dr. Correa had secured workers’ compensation coverage or an exemption from the requirements for coverage for his employees. CCAS is a database Ms. Green consults during the course of her investigations. Ms. Green determined from CCAS that Dr. Correa did not have any current workers’ compensation coverage for his employees and he did not have an exemption from such coverage from the Department. The records reflected that Dr. Correa’s last active workers’ compensation coverage was in 2004. Dr. Correa obtained workers’ compensation coverage on February 20, 2014. Approximately one month later, Ms. Green served a Request for Production of Business Records for Penalty Assessment Calculation on Dr. Correa. Dr. Correa produced the requested records. These records were given to Lynne Murcia, one of the Department’s penalty auditors, to calculate the penalty. Ms. Murcia determined that the appropriate classification code for Dr. Correa’s employees was 8832, which incorporates physicians and clerical workers. This code was derived from the Scopes Manual, which lists all of the various jobs that may be performed in the context of workers’ compensation. The manual is produced by the National Council on Compensation Insurance, Inc., the nation’s most authoritative data collecting and disseminating organization for workers’ compensation. Dr. Correa listed seven employees on the Florida Department of Revenue Unemployment Compensation Tax (UCT-6) form for the time period of the non-compliance. The UCT-6 form lists those employees who are subject to Florida’s Unemployment Compensation Law. Ms. Murcia reasonably relied upon the UCT-6 filings for the relevant time period to calculate Dr. Correa’s gross payroll in Florida. Using Dr. Correa’s payroll chart, the UCT reports, and the classification codes for each employee, Ms. Murcia calculated the penalty assessment for the three-year penalty period preceding the investigation. This three-year period is the allocated time for reviewing coverage for those who do not have the appropriate workers’ compensation coverage. On April 9, 2014, Ms. Murcia determined the penalty to be $4,287.12. However, upon receipt of additional information regarding a former employee of Dr. Correa, an Amended Order of Penalty Assessment of $3,898.77 was issued on July 28, 2014. Dr. Correa’s position is that his practice is a small “mom and pop” operation. He employs members of his family to run the business side of his practice. His daughter, Antonia, works as Dr. Correa’s “doctor’s assistant.” She works at the various nursing homes that Dr. Correa services. Antonia believed that the nursing homes’ liability insurance would cover her, and she was not subject to workers’ compensation coverage. However, she was, in fact, paid by Dr. Correa. Dr. Correa’s daughter-in-law, Valeria, works from her home computer completing the medical billing for her father-in- law. She has been working in this capacity for approximately 14- 16 years, and it never occurred to her that she needed workers’ compensation coverage. She was paid by Dr. Correa. Dr. Correa’s brother-in-law, Mr. Collado, runs all the errands for the practice. He may go to the bank, take care of car maintenance, buy office supplies or fix things, all in support of Dr. Correa’s practice. Mr. Collado receives regular pay checks from Dr. Correa. Dr. Correa testified that his wife is his office manager and has been since he opened the practice in 1978. Mrs. Correa works from their home, in a small home office. She does all the paper work related to the practice. Dr. Correa firmly believed that he did not require workers’ compensation coverage because some of his employees were “independent contractors” or never worked in his office, but at other locations (individual homes, nursing homes, or just outside the office). Dr. Correa believed his insurance agent who did not think Dr. Correa needed the workers’ compensation coverage. Based upon the testimony and exhibits, the amended penalty assessment in the amount of $3,898.77 is accurate.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, issue a final order upholding the Amended Order of Penalty Assessment, and assessing a penalty in the amount of $3,898.77. DONE AND ENTERED this 24th day of September, 2014, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of September, 2014.
