The Issue The issues to be resolved in this proceeding concern whether the Petitioner was operating its restaurant business in violation of Chapter 440, Florida Statutes, the Florida Workers' Compensation Law, by failing to have required workers' compensation coverage. The related issues are whether the Department should therefore issue a Stop Work Order, whether a penalty should be imposed for so operating and what the correct penalty should be.
Findings Of Fact The Department is an Agency of the State of Florida charged with enforcing the statutory requirement, specifically Section 440.107, Florida Statutes, which mandates that employers in Florida secure the payment of workers' compensation insurance coverage for the benefit of employees. The Petitioner is a restaurant operating in the vicinity of Crystal River, Florida, which opened for business sometime in the year 2005. At certain times during its operation, which are those times relevant to this proceeding, the restaurant had four or more employees, and was thus subject to the requirement to secure payment of workers' compensation for those employees. Wanda Rivera is an investigator for the Division's Bureau of Compliance. On January 12, 2007, she was referred to investigate a restaurant in Crystal River, Florida. There was another restaurant nearby, the La Paz Mexican Grill, the Petitioner's business. Because she was in the area she made a routine visit to that restaurant as well. When Ms. Rivera entered the restaurant she saw two waitresses as well as another employee and the owner of the restaurant. She made a report of her visit as well as other events and observed facts from her investigation and included them as part of a narrative in her initial investigative report. Ms. Rivera checked the Department's Coverage and Compliance Automated System (CCAS) data base by first looking up the name La Paz Mexican Grill. She spoke to the restaurant's owner, Aswaldo Vazquez, and learned that the actual corporate name was 2 Friends, Inc. She researched that name in the Division's data base and found no indication of workers' compensation coverage for that corporation. She also interviewed workers present at the restaurant. Mr. Vazquez told Ms. Rivera that there were five employees and that the restaurant did not have workers' compensation coverage. Ms. Rivera also checked the CCAS data base, as well as the Department of State, Division of Corporation's data base. She thereby discovered that Mr. Vazquez was an officer of the corporation, but that he did not have an exemption from workers' compensation coverage which corporate officers may apply for and obtain. Ms. Rivera presented her investigative findings to her supervisor and after having done so issued a Stop Work Order, Number 07-012-D3, and served it upon Mr. Vazquez. She hand wrote the Stop Work Order Number on that form, having received that number from her supervisor. She served it on Mr. Vazquez personally on that same day, January 12, 2007. Part of her training as an investigator had emphasized serving documents personally on employers. The Stop Work Order was a three part form; she gave the yellow carbon copy of the Stop Work Order to Mr. Vazquez by hand delivery and, in checking her official file in the case in preparation for hearing, she found that her file contained no yellow copy of the Stop Work Order Form, corroborating her testimony that she had personally served the yellow copy of the Stop Work Order on Mr. Vazquez on January 12, 2007. The Stop Work Order specifically stated that all business operations had to cease immediately and could not resume until the Department issued an order releasing the Stop Work Order. The Order also stated that a penalty of $1,000.00 a day would be assessed the employer who conducted business operations in violation of the Stop Work Order. Ms. Rivera and Mr. Vazquez are fluent Spanish speakers. Ms. Rivera therefore conducted her interview with Mr. Vazquez in Spanish to assure that he understood all facets of the Division's position in his situation. She answered his questions and explained to him that the Stop Work Order was to take effect immediately and that there would be a $1,000.00 dollar per day fine for working in violation of the Stop Work Order. She also issued and served a Request for Production of Business Records for Penalty Assessment Calculation. The records were to be produced within five business days. Two types of records were requested: those that would show how much payroll the establishment had paid over the previous three years and those that would show exemptions. The request for records allows the employer five days to provide the documents; if no records were received within 15 days of the request, the Department could impute the gross payroll. Three weeks after serving the request on Mr. Vazquez, Ms. Rivera received some records by mail on February 2, 2007. They were insufficient for her investigation. Thus, not having received records from which she could calculate payroll and determine when the restaurant had four or more employees, Ms. Rivera, in accordance with statute, imputed the payroll and thereupon calculated a penalty of $34,240.30 based upon the imputed amount. She issued an Amended Order of Penalty Assessment to that effect on February 5, 2007, and it was served by certified mail on Mr. Vazquez on February 7, 2007. It was also served by a process server on February 13, 2007. That Amended Order of Penalty Assessment did not reference the Stop Work Order Number nor did it reflect the date it was issued. Ms. Rivera forgot to include this information when she filled out the Order. The Amended Order of Penalty Assessment did, however, have the following language: The Stop Work Order issued in this case shall remain in effect until either (a) the Division issues an order releasing the Stop Work Order upon finding that the employer has come into compliance with the coverage requirements of the workers' compensation law and pays the total penalty in full, or (b) the Division issues an Order of Conditional Release from Stop Work Order pursuant to the employer coming into compliance with the coverage requirements of the workers' compensation law and entering into a payment agreement schedule for periodic payment of penalty. On February 7, 2007, Mr. Vazquez phoned Ms. Rivera asking why his penalty was that high, stating that his accountant could provide additional records. Ms. Rivera had telephone contact at least twice with Mr. Vazquez between February 7, and March 29, 2007. When she contacted him at the restaurant, a voice would answer, "La Paz Mexican Restaurant, how may I help you?" She asked Mr. Vazquez if the restaurant was actually operating, and told him that he could not open for business while a Stop Work Order was in effect. She was assured that the restaurant was not working. Mr. Vazquez also told her that more records would be produced. On March 29, 2007, however, Ms. Rivera had not received any new records, so she visited the restaurant and found that it was open for business in violation of the Stop Work Order. Because the restaurant is open seven days a week, Ms. Rivera assessed an additional penalty of $1,000.00 per day since the Stop Work Order had been issued. She thus issued a Second Amended Order of Penalty Assessment for the sum of $110,240.30. The Second Amended Order of Penalty Assessment referred to Stop Work Order Number 07-012-D3, stating that the Stop Work Order had been filed on January 12, 2007, and noting that the Amended Order of Penalty Assessment was dated February 5, 2007, and the Order showed an issuance date of March 29, 2007. On the next day, March 30, 2007, Ms. Rivera received more business records, from which she could calculate a penalty without imputing the payroll. Ms. Rivera calculated the new penalty at $79,690.36. Before she could issue a new penalty order, however, Mr. Vazquez contacted her and said that his restaurant had been closed for several days while he was traveling. He subsequently provided documents to Ms. Rivera that showed that he was out of the country for nine days. While 76 days had elapsed between the date the Stop Work Order was issued and the date Ms. Rivera found the restaurant had been open, Ms. Rivera determined that she would assess the penalty for only 67 days of that period. This decision was based upon Mr. Vazquez's documentation and her giving him the benefit of the doubt in accepting his representation that he had been out of the country for nine days and not operating. She then re-calculated the penalty as being $70,060.36 and issued a Third Amended Order of Penalty Assessment to that effect. The Third Amended Order of Penalty Assessment made reference to Stop Work Order Number 07-012-D3, and notes that the Stop Work Order was issued on January 12, 2007. The Third Amended Order has "February 5, 2007," in the line on the order for "issuance date." The entry for "issuance date" on the Third Amended Order of Penalty Assessment is incorrect and it should have been April 3, 2007, the date the Amended Order of Penalty Assessment was issued. The penalty worksheet for the Third Amended Order of Penalty Assessment shows that there was $25,793.55 in payroll for the relevant portions of 2005; $8,635.30 for relevant portions of 2006 during which times the restaurant had four employees. There was $1,370.21 in payroll for the relevant first 12 days of 2007, which was up until the time the Stop Work Order was issued. Ms. Rivera did not include the payroll for periods of time when the record showed the restaurant did not have four employees and her work papers so reflect. The payroll was calculated from 2005 forward because the business opened that year. On April 4, 2007, Mr. Vazquez brought his restaurant into compliance by reducing his staff to less than four employees and he entered into an agreement with the Department whereby he would pay down 10 percent of the penalty and agree to pay the remainder in 60 interest free monthly payments. Mr. Vazquez, in effect, does not contest the Division's position that he was required to carry workers' compensation coverage during the pertinent time periods and that he did not have such coverage. In actuality he disputes the amount of the penalty because he maintains that he did not receive the Stop Work Order until March 29, 2007. Mr. Vazquez is the president of the 2 Friends, Inc., Corporation. He speaks English and opined during his testimony that he reads 60 to 70 percent of English text. He knows people who are fluent in English and has people to whom he can show documents written in English if he does not understand any part of such.
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 finding that the Petitioner, 2 Friends Inc., d/b/a/ La Paz Mexican Grill, has failed to secure required workers' compensation coverage for its employees in violation of Sections 440.10(1)(a) and 440.38(1), Florida Statutes (2007), and that a penalty against that entity be accessed in the amount of $70,060.36, and that said final order provide for an acceptable installment payment arrangement whereby the amount may be paid over a period of at least 60 months at no interest. DONE AND ENTERED this 30th day of July, 2008, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with Clerk of the Division of Administrative Hearings this 30th day of July, 2008. COPIES FURNISHED: Leon M. Boyajan, II, Esquire Leon M. Boyajan, II, P.A. 2303 West Highway 44 Inverness, Florida 34453-3809 Thomas H. Duffy, Esquire Department of Financial Services 200 East Gaines Street, 6th Floor Tallahassee, Florida 32399 Honorable Alex Sinks 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 32399-0300
Findings Of Fact 12. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on June 11, 2010, the Amended Order of Penalty Assessment issued on August 3, 2010, the 2™4 Amended Order of Penalty Assessment issued on November 9, 2010, and the 3" Amended Order of Penalty Assessment issued on December 15, 2010, and attached as “Exhibit A” “Exhibit B” “Exhibit D” and “Exhibit F” respectively, and fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Jeff Atwater, Chief Financial Officer of the State of Florida, or his designee, having considered the record in this case, including the Petition from DIAGONAL TILE AND MARBLE, INC., the Stop-Work Order and Order of Penalty Assessment, the Amended Order of Penalty Assessment, the 2™ Amended Order of Penalty Assessment, and the 3 Amended Order of Penalty Assessment, and being otherwise fully advised in the premises, hereby finds that: 1. On June 11, 2010, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 10-317-D3 to DIAGONAL TILE AND MARBLE, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein DIAGONAL TILE AND MARBLE, INC. was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 2. On June 11, 2010, the Stop-Work Order and Order of Penalty Assessment was served by personal service on DIAGONAL TILE AND MARBLE, INC. A copy of the Stop- Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On August 3, 2010, the Department issued an Amended Order of Penalty Assessment to DIAGONAL TILE AND MARBLE, INC. The Amended Order of Penalty Assessment assessed a total penalty of $16,241.92 against DIAGONAL TILE AND MARBLE, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein DIAGONAL TILE AND MARBLE, INC. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28- 106.2015, Florida Administrative Code. 4. On August 31, 2010, the Amended Order of Penalty Assessment was served by process server on DIAGONAL TILE AND MARBLE, INC. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On August 31, 2010, DIAGONAL TILE AND MARBLE, INC. timely filed a request for administrative hearing (hereinafter “Petition”) with the Department. The Petition was forwarded to the Division of Administrative Hearings on September 29, 2010, and the matter was assigned DOAH Case No. 10-9374. A copy of the petition is attached hereto as “Exhibit C” and incorporated herein by reference. 6. On November 9, 2010, the Department issued a 2" Amended Order of Penalty Assessment to DIAGONAL TILE AND MARBLE, INC. The 2"! Amended Order of Penalty Assessment assessed a total penalty of $12,793.30 against DIAGONAL TILE AND MARBLE, INC. 7. On November 15, 2010, upon motion by the Department, the Administrative Law Judge entered an order accepting the 2’ Amended Order of Penalty Assessment and allowing it to supersede any previously entered Order of Penalty Assessment. A copy of the 2™ Amended Order of Penalty Assessment is attached hereto as “Exhibit D” and incorporated herein by reference. 8. On December 15, 2010, the Department issued a 3" Amended Order of Penalty Assessment to DIAGONAL TILE AND MARBLE, INC. The 3! Amended Order of Penalty Assessment assessed a total penalty of $2,268.83 against DIAGONAL TILE AND MARBLE, INC. The 3 Amended Order of Penalty Assessment included a Notice of Rights wherein DIAGONAL TILE AND MARBLE, INC. was advised that any request for an administrative proceeding to challenge or contest the 3 Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the 3" Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28- 106.2015, Florida Administrative Code. 9. On January 18, 2011, upon motion of the parties, the Administrative Law Judge issued an Order Relinquishing Jurisdiction and Closing File. A copy of the Order Relinquishing Jurisdiction and Closing File is attached hereto as “Exhibit E” and incorporated herein by reference. 10. On September 10, 2011, the 3 Amended Order of Penalty Assessment was served by certified mail on DIAGONAL TILE AND MARBLE, INC. A copy of the 314 Amended Order of Penalty Assessment is attached hereto as “Exhibit F” and incorporated herein by reference. 11. DIAGONAL TILE AND MARBLE, INC. failed to answer the 3 Amended Order of Penalty Assessment or request a proceeding in accordance with Sections 120.569 and 120.57, Florida Statutes.
Findings Of Fact 12. The factual allegations contained in the Order of Penalty Assessment issued on February 1, 2010, the Amended Order of Penalty Assessment issued on March 18, 2010, the 2nd Amended Order of Penalty Assessment issued on September 28, 2010, and the 3rd Amended Order of Penalty Assessment issued on December 28, 2010, attached as “Exhibit A”, “Exhibit B”, “Exhibit D“, and “Exhibit F”, respectively, and fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Jeff Atwater, Chief Financial Officer of the State of Florida, or his designee, having considered the record in this case, including the request for administrative hearing received from Wine Warehouse of St. Petersburg, Inc., the Order of Penalty Assessment, the Amended Order of Penalty Assessment, the 2nd Amended Order of Penalty Assessment, and the 3rd Amended Order of Penalty Assessment, and being otherwise fully advised in the premises, hereby finds that: 1. On February 1, 2010, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”), issued an Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-360-D3-OPA to Wine Warehouse of St. Petersburg, Inc. The Order of Penalty Assessment assessed a total penalty of $26,455.55 against Wine Warehouse of St. Petersburg, Inc. for its failure to secure workers’ compensation for its employees as required by Chapter 440, Florida Statutes. The Order of Penalty Assessment included a Notice of Rights wherein Wine Warehouse of St. Petersburg, Inc. was advised that any request for an administrative proceeding to challenge or contest the Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 2. On February 4, 2010, the Order of Penalty Assessment was served on Wine Warehouse of St. Petersburg, Inc. by certified mail. A copy of the Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On March 18, 2010, the Department issued an Amended Order of Penalty Assessment to Wine Warehouse of St. Petersburg, Inc. The Amended Order of Penalty Assessment assessed a total penalty of $12,368.81 against Wine Warehouse of St. Petersburg, Inc. The Amended Order of Penalty Assessment included a Notice of Rights wherein Wine Warehouse of St. Petersburg, Inc. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty- one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 4. On March 24, 2010, the Amended Order of Penalty Assessment was served on Wine Warehouse of St. Petersburg, Inc. by certified mail. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On April 14, 2010, Wine Warehouse of St. Petersburg, Inc. filed a request for an administrative hearing (“Petition”) with the Department, which was forwarded to the Division of Administrative Hearings and assigned DOAH Case No. 10-6375. A copy of the Petition is attached hereto as “Exhibit C”. 6. On September 28, 2010, the Department issued a 2nd Amended Order of Penalty Assessment to Wine Warehouse of St. Petersburg, Inc. The 2nd Amended Order of Penalty Assessment assessed a total penalty of $10,169.99 against Wine Warehouse of St. Petersburg, Inc. 7. On September 29, 2010, the Department filed a Motion to Amend Order of Penalty Assessment with the attached 2nd Amended Order of Penalty Assessment with the Division of Administrative Hearings in DOAH Case No. 10-6375. On December 23, 2010, Administrative Law Judge B. J. Staros entered an Order granting the Department’s Motion to Amend. A copy of the 2nd Amended Order of Penalty Assessment is attached hereto as “Exhibit D” and incorporated herein by reference. 8. On December 28, 2010, the Department issued a 3rd Amended Order of Penalty Assessment to Wine Warehouse of St. Petersburg, Inc. The 3rd Amended Order of Penalty Assessment assessed a total penalty of $10,037.97 against Wine Warehouse of St. Petersburg, Inc. 9. On December 28, 2010, after receiving written notification from Wine Warehouse of St. Petersburg, Inc. that it did not wish to proceed to an administrative hearing in this matter, the Department filed a Joint Motion to Relinquish Jurisdiction in DOAH Case No. 10-6375. As a result, Administrative Law Judge B. J. Staros entered an Order Closing File, relinquishing Jurisdiction of this matter to the Department. A copy of the Order Closing File is attached hereto as “Exhibit E”, 10. OnJanuary 13, 2011, the Department and Wine Warehouse of St. Petersburg, Inc. entered into a Settlement Agreement wherein Wine Warehouse of St. Petersburg, Inc. agreed to pay the Department the penalty assessed in the 3rd Amended Order of Penalty Assessment in the amount of $10,037.97. 11. On January 27, 2011, the 3rd Amended Order of Penalty Assessment was served by certified mail on Wine Warehouse of St. Petersburg, Inc. The 3rd Amended Order of Penalty Assessment included a Notice of Rights wherein Wine Warehouse of St. Petersburg, Inc. was advised that any request for an administrative proceeding to challenge or contest the 3rd Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the 3rd Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. A copy of the 3rd Amended Order of Penalty Assessment is attached hereto as “Exhibit F” and incorporated herein by reference.
Findings Of Fact 11. The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on February 18, 2010, and the 2"! Amended Order of Penalty Assessment issued on August 5, 2011, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Jeff Atwater, Chief Financial Officer of the State of Florida, or his designee, having considered the record in this case, including the Stop- Work Order and Order of Penalty Assessment and the 2" Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 10-053-D4 and being otherwise fully advised in the premises, hereby finds that: 1. On February 18, 2010, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 10-053-D4 to McDonnell Painting, d/b/a Painting and Wallcovering by McDonnell (McDonnell). The Stop-Work Order and Order of Penalty Assessment included a Notice of rights wherein McDonnell was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 2. On March 3, 2010, the Stop- Work Order and Order of Penalty Assessment was served via certified mail on McDonnell. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On February 19, 2010, the Department issued an Amended Order of Penalty Assessment to McDonnell in Case No. 10-053-D4. The Amended Order of Penalty Assessment assessed a total penalty of $10,058.88 against McDonnell. The Amended Order of Penalty Assessment included a Notice of Rights wherein McDonnell was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 4. The Amended Order of Penalty Assessment was served on McDonnell by certified mail on February 25, 2010. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On March 15, 2010, McDonnell timely filed a Petition requesting a formal administrative hearing. The Petition failed to satisfy the requirements of Rule 28-106.2015(S), Florida Administrative Code, in that it did not contain a statement requesting an administrative hearing which identified those material facts in dispute, or in the alternative a statement that there were no disputed issues of material fact. As a result, on April 23, 2010, the Department issued an Order Dismissing Petition for Section 120.57(1), Florida Statutes, Hearing Without Prejudice, giving McDonnell 21 days to file a Petition that satisfied the requirements of Rule 28- 106.2015(5), Florida Administrative Code. 6. The Order Dismissing Petition for Section 120.57(1), Florida Statutes, Hearing Without Prejudice was served on McDonnell by certified mail on April 27, 2010. 7. On May 19, 2010, McDonnell timely filed an Amended Petition requesting an administrative hearing pursuant to Section 120.57(1), Florida Statutes. A copy of the Amended Petition is attached hereto as “Exhibit C” and incorporated herein by reference. The matter was referred to the Division of Administrative Hearings, where it was assigned Case No. 10-2788. 8. On January 10, 2011, the Department and McDonnell reached a negotiated settlement in which the Department agreed to issue a 2"! Amended Order of Penalty Assessment assessing a penalty in the amount of $2,379.00, and McDonnell agreed to pay the total penalty of $2,379 and to no longer contest the Stop- Work Order and Order of Penalty Assessment and gn Amended Order of Penalty Assessment. 9. On January 10, 2011, the Department filed a Notice of Settlement with the Division of Administrative Hearings, advising the Administrative Law Judge that the parties had resolved all issues pending in Case No. 10-2788. A copy of the Notice of Settlement is attached hereto as “Exhibit D.” 10. On January 10, 2011, Administrative Law Judge R. Bruce McKibben entered an Order Closing File, relinquishing jurisdiction to the Department. A copy of the Order Closing File is attached hereto as “Exhibit E.” 11. On August 5, 2011, the Department issued a 2"™ Amended Order of Penalty Assessment to McDonnell in Case No. 10-053-D4. The 2™ Amended Order of Penalty Assessment lowered the penalty assessed against McDonnell to $2,379.00 pursuant to the negotiated settlement. The 2"? Amended Order of Penalty was served on McDonnell by email on August 11,2011. A copy of the 2"! Amended Order of Penalty Assessment is attached hereto as “Exhibit F” and incorporated herein by reference.
Findings Of Fact 10. The factual allegations in the Stop- Work Order and Order of Penalty Assessment issued on January 28, 2009, and the Second Amended Order of Penalty Assessment issued on January 22, 2010, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment and the Second Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-005- D5, and being otherwise fully advised in the premises, hereby finds that: 1. On January 28, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-005-D5 to LAZARO DELIVERY CORPORATION (LAZARO). The Stop-Work Order and Order of Penalty Assessment included a Notice of rights wherein LAZARO was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 2. On January 28, 2009, the Stop-Work Order and Order of Penalty Assessment was served via personal service on LAZARO. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On February 18, 2009, the Department issued an Amended Order of Penalty Assessment to LAZARO in Case No. 09-005-D5. The Amended Order of Penalty Assessment assessed a total penalty of $181,479.49 against LAZARO. The Amended Order of Penalty Assessment included a Notice of Rights wherein LAZARO was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 4. The Amended Order of Penalty Assessment was served on LAZARO by personal service on February 18, 2009. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On February 18, 2009, LAZARO entered into a Payment Agreement Schedule for Periodic Payment of Penalty (Periodic Payment Agreement), pursuant to which the Department entered a Conditional Release of Stop-Work Order which would remain in effect for so long as LAZARO complied with the conditions of the Periodic Payment Agreement. 6. On March 11, 2009, LAZARO filed a timely Petition for a formal administrative hearing in accordance with Sections 120.569 and 120.57, Florida Statutes. The Petition was forwarded to the Division of Administrative Hearings and assigned Case No. 09-1607. 7. On January 22, 2010, the Department issued a Second Amended Order of Penalty Assessment to LAZARO in Case No. 09-005-D5. The Second Amended Order of Penalty Assessment assessed a total penalty of $7,184.55 against LAZARO. The Second Amended Order of Penalty Assessment was served on LAZARO through the Division of Administrative Hearings. A copy of the Second Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and is incorporated herein by reference. 8. On February 12, 2010, LAZARO filed a Notice of Voluntary Dismissal in DOAH Case No. 09-1607. A copy of the Notice of Voluntary Dismissal filed by LAZARO is attached hereto as “Exhibit D.” 9. On February 12, 2010, Administrative Law Judge R. Bruce McKibben entered an Order Closing File, relinquishing jurisdiction to the Department. A copy of the February 12, 2010 Order Closing File is attached hereto as “Exhibit E.”
The Issue The issue is whether Respondent complied with the requirements of the Workers' Compensation Law and, if not, what is the appropriate penalty?
Findings Of Fact The Division is charged with the regulation of workers' compensation insurance in the State of Florida. Respondent, River City Roofing Sheet Metal, Inc. (River City Roofing), is a Florida corporation located in Jacksonville, Florida, and is engaged in the construction industry. Michael Robinson is an insurance analyst/compliance investigator employed by the Division. His duties include making site visits at locations where work is being conducted and determining whether the employers in the state are in compliance with the requirements of the workers' compensation law and related rules. On August 17, 2010, Mr. Robinson visited a residential job site at 4206 Katanga Drive, Jacksonville, Florida, and observed five individuals reroofing the property at the site. Mr. Robinson called up to the workers and asked them to come down from the roof so that he could speak to them. One of the workers identified himself as David Hannans, and informed Mr. Robinson that he and the others were employees of River City Roofing. Mr. Robinson proceeded to get the names of the other workers. However, during this time, one of the men wandered away and left the worksite without speaking to Mr. Robinson. Mr. Robinson inquired about the name of the worker who left the worksite, and was informed his name was "Shorty." During his conversation with Mr. Hannans, Mr. Robinson also learned that the worksite supervisor, Gary Pittman, had been at the worksite but left to go to the store. Mr. Robinson confirmed with Mr. Hannans that the men at the worksite, including Mr. Hannans, were employees of River City Roofing. Mr. Robinson inquired about the owner of the business and learned the owner is Robert Olszanowski. Mr. Robinson then called Mr. Olszanowski. According to Mr. Robinson, Mr. Olszanowski verified that three of the men at the worksite were his employees, but claimed not to know the other two men. Mr. Robinson advised Mr. Olszanowski to contact Mr. Pittman to find out who the other two men were. During a follow-up telephone call with Mr. Olszanowski, Mr. Robinson was told that one of the individuals was a friend of Mr. Hannans and the other was a man from the neighborhood. According to Mr. Robinson, Mr. Olszanowski informed him that he was unaware of the other two men. Mr. Robinson then inquired about what type of workers' compensation coverage had been procured and learned that Mr. Olszanowski held an exemption and used Phoenix Resources, Inc., a staffing company, to cover his employees. Mr. Robinson contacted Phoenix Resources and was informed that River City Roofing was a client and as of August 17, 2010, had four individuals on the payroll: Gary Pittman, Miguel Hernandez Lopez, Ancelmo Perez Fernandez, and Simon Aguilar Sanchez. Mr. Robinson requested written confirmation of this and received an e-mail communication from Phoenix Resources which provided written confirmation. David Hannans and "Shorty" were not listed. Mr. Robinson inquired as to whether Phoenix Resources carried workers' compensation coverage on the listed individuals, and learned that those listed employees were covered under a policy procured from Business Personnel Solutions. Mr. Robinson contacted Business personnel Solutions and verified that there was a policy that covered those employees of Phoenix Resources. Mr. Robinson again contacted Phoenix Resources and inquired as to whether it had received any new applications from River City Roofing, and learned that it had not received any new applications. Mr. Robinson then consulted the Department of State, Division of Corporations website, to find information concerning the corporate status of River City Roofing. He verified from the website that River City Roofing is an active corporation and that Robert Olszanowski is the Chief Executive Officer. Mr. Robinson then consulted the Division's Coverage and Compliance Automated System (CCAS) database, which is routinely used by the Department and contains both the workers' compensation policy information for each employer that has a Florida policy, as well as all information concerning workers' compensation exemptions that have been applied for and issued to individuals by the Department. Mr. Robinson learned that Respondent previously had a policy that expired on August 25, 2008, and confirmed that Mr. Olszanowski held an exemption. Based upon his investigative findings, Mr. Robinson concluded that Mr. Hannans and "Shorty" were employees of River City Roofing who were not covered by a workers' compensation policy or a valid exemption in violation of chapter 440, Florida Statutes. On August 18, 2010, Mr. Robinson issued Stop-Work Order No. 10-253-D1 to Respondent and issued a Request for Production of Business Records for Penalty Assessment Calculation. Both were personally served by Mr. Robinson on Mr. Olszanowski. The Request for Production of Business Records requested records for the time period August 26, 2008 through August 18, 2010. Respondent did not produce business records as requested. Cathe Ferguson is a Penalty Calculator for the Division. She reviews business records such as payroll, bank statements, and copies of checks, and calculates the amount of penalty for non-compliance with workers' compensation laws. As required by Chapter 440, Ms. Ferguson imputed Respondent's payroll as a result of Respondent's failure to provide business records. Mr. Robinson then issued and served by certified mail an Amended Order of Penalty Assessment to Respondent in the amount of $116,240.82. Subsequent to this and subsequent to Respondent's request for an administrative hearing, Ms. Ferguson determined there was an internal error and amended the penalty amount downward. On February 7, 2011, Mr. Robinson issued a second Amended Order of Penalty Assessment in the amount of $71,028.94. In calculating the penalty for failure to comply with chapter 440, Ms. Ferguson first sought to determine the amount of premium that Respondent would have paid had Respondent obtained the proper workers' compensation insurance in place for the period of August 26, 2008 through August 17, 2010. In determining the premium that Respondent avoided by not obtaining workers' compensation insurance coverage for all of its employees, Ms. Ferguson utilized a penalty worksheet. Ms. Ferguson identified the individual employees of Respondent not covered by a workers' compensation policy or an exemption and listed them on the penalty worksheet. For each individual listed on the penalty worksheet, Ms. Ferguson assigned a class code reflecting the work done by each employee as observed by Mr. Robinson (i.e., the class code for roofing). The amount of the penalty was imputed using the Average Weekly Wage as determined by the Agency for Workforce Innovation, across the entire period of non-compliance. Ms. Ferguson imputed the penalty because Respondent did not produce business records from which the Division could have calculated the gross payroll from the employees in question. Ms. Ferguson then took 1/100th of the payroll and multiplied that figure by the approved manual rate applicable to the applicable class code, as adopted by the Office of Insurance Regulation. Ms. Ferguson then took the previously obtained product and multiplied it by 1.5 to determine the penalty for the period of August 26, 2008 through August 17, 2010, the time period requested in the business records request. Based upon her calculations, Ms. Ferguson determined the appropriate penalty to be assessed against Respondent to be $71,028.94. Respondent disputed portions of the penalty worksheet attached to the Amended Order of Penalty Assessment, which gave rise to this proceeding. Specifically, Respondent wrote the word "Dispute" next to David Hannans and "Shorty's" names for all time periods on the penalty worksheet except for the time period July 1, 2010 through August 17, 2010, next to which Respondent wrote "not disputed". Thus, in its request for hearing, Respondent did not dispute that Hannans and "Shorty" were employees of Respondent; rather, Respondent disputed that they were employees during most of the periods of time listed on the penalty worksheet.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is, RECOMMENDED: That the Division of Workers' Compensation enter a Final Order upholding the Second Amended Order of Penalty Assessment, assigning a penalty of $71,028.94, and the Stop-Work Order issued to Respondent on August 8, 2010. DONE AND ENTERED this 29th day of March, 2011, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS 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 29th day of March, 2011. COPIES FURNISHED: Jamila Georgette Gooden, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Robert L. Olszanowski River City Roofing Sheet Metal, Inc. 10650 Haverford Road, Suite 2 Jacksonville, Florida 32218 Honorable Jeff Atwater Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 P. J. Jameson, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issues are whether Petitioner was in violation of the workers' compensation requirements of Chapter 440, Florida Statutes (2006),1/ and, if so, what penalty should be assessed.
Findings Of Fact The Department is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees. § 440.107, Fla. Stat. Respondent is a corporation, incorporated in the State of Florida, which conducted business operations in Florida during the period of February 8, 2004, through February 8, 2007. At all times relevant to this proceeding, David Griswold was the president, secretary, and registered agent of Griswold, Inc., as well as its sole employee. Lloyd Hillis is an investigator for the Department's Division of Workers' Compensation, Bureau for Compliance. As part of his job responsibilities, Mr. Hillis visits work sites of construction and non-construction businesses to determine if they are complying with applicable workers' compensation laws. On February 8, 2007, Mr. Hillis, on behalf of the Department, conducted a routine compliance check of all contractors in the Sunset Point Subdivision in Clearwater, Florida. During this compliance check, Mr. Hillis observed that Mr. Griswold was about to install kitchen cabinets at a house under construction at 2523 Colony Reed Lane. Cabinet installation is considered carpentry and is defined as construction work. As such, employees performing this work are required to have workers' compensation coverage unless they are exempted from such coverage. The type of work being performed by Mr. Griswold, cabinet installation or carpentry, has been designated by the SCOPES Manual as Class Code 5437. The Department has adopted the SCOPES Manual by reference in Florida Administrative Code Rule 69L-6.021. If and when there have been violations of the workers' compensation laws, the class codes are used in calculating the appropriate penalty. On the day of the inspection, Mr. Griswold told Mr. Hillis that he was employed by Griswold, Inc., that he was the sole employee of the corporation, and that he had an exemption from having workers' compensation coverage. Upon checking the computer database maintained by the Department, Mr. Hillis determined that Mr. Griswold did not have an exemption and had not had an exemption since 2002. Moreover, the same computer database showed that Griswold, Inc., did not have workers' compensation coverage. On February 8, 2007, Mr. Hillis issued a Stop Work Order against Griswold, Inc., after he determined that Mr. Griswold did not have workers' compensation insurance. That same day, Mr. Hillis issued to Mr. Griswold a Request for Production of Business Records for Penalty Assessment Calculation (hereinafter referred to as "Request for Production of Business Records") to determine the amount of the penalty assessment. In response to the Request for Production of Business Records, Mr. Griswold provided the Department with payroll documents for the period from 2004 to 2007 and an unsigned 2006 Federal Income Tax Return. The payroll documents submitted by Petitioner consisted of pay stubs, which reflected that Texwood Industries, a company in Texas, had issued payroll checks to Mr. Griswold as an employee of Petitioner. According to the records, during the time period from 2004 through 2007, the only employee who worked for Petitioner was Mr. Griswold. During this proceeding, Petitioner did not dispute that from February 8, 2004, through February 8, 2007, Mr. Griswold was not covered by workers' compensation coverage and did not have an exemption from such coverage. Mr. Hillis used the payroll documents provided to him by Mr. Griswold as the basis for calculating the penalty assessment for the period from February 8, 2004, through February 8, 2007. However, Mr. Hillis was unable to consider the 2006 Federal Income Tax Return because it was not signed.2/ Even if the 2006 Federal Income Tax Return had been signed, the 2004 and 2005 tax records were also needed. The tax records for all three years, if provided to the Department, would have been considered and may have affected or altered the amount of the penalty assessment. The Department correctly calculated the penalty assessment using the statutory guidelines in Subsection 440.107(7)(d), Florida Statutes. The calculation was based on the money paid to Petitioner's sole employee, Mr. Griswold; the class code assigned to the job being performed by Mr. Griswold, utilizing the SCOPES Manual; and the applicable approved manual rate. Based on that calculation, the correct penalty assessment in this case is $52,685.67.
Recommendation Based upon 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 that affirms the Stop Work Order issued February 8, 2007, and the Amended Order of Penalty Assessment issued February 21, 2007, which assigns a penalty of $52,685.67. DONE AND ENTERED this 7th day of November, 2007, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD 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 7th day of November, 2007.
