The Issue Whether Petitioner failed to obtain workers’ compensation insurance meeting the requirements of Chapter 440, Florida Statutes, and, if so, the penalty that should be imposed.
Findings Of Fact Olender is a Delaware corporation that is registered to do business in Florida and engaged in the business of construction. Primarily, Olender frames the walls of structures and installs siding, windows and moisture barriers to such structures. Such activities are construction activities under the Florida’s workers’ compensation law. See Ch. 440, Fla. Stat., and Fla. Admin. Code R. 69L-6. On June 22, 2006, an investigator for the Department visited the Alta Westgate Apartment complex construction project, located at 6872 Alta Westgate Drive, Orlando, Florida. The visit was prompted by a “confidential tip” received by the Department from Tyler Balsinger, a former employee of Petitioner. The Alta Westgate complex is owned by Alta Westgate, LLC. The general contractor responsible for the construction of the complex was W.P. South Builders. The overall project manager for the general contractor was Robert Beliveau. The on-site representative for the general contractor was Danny Campbell. Mr. Campbell provided the Department’s investigator with a list of subcontractors on the project worksite. The list reflected that the subcontractor for framing was Olender and that John Olender was the person in charge of the company’s work at the project site. Among other things, the contract also included the installation of a moisture barrier, generally known as Tyvek, on the framed structures. Because of the nature of construction work, it is not unusual to have several subcontractors on a construction worksite at the same time. It is unlikely that Olender was the only subcontractor working on the day the Department’s investigator visited the Alta Westgate project. The subcontract required that Olender secure the payment of workers’ compensation on its employees. The evidence was not clear regarding whether the general contractor, under its subcontract with Olender, would provide workers’ compensation insurance on the employees of Olender’s subcontractors. However, the evidence was clear that J.P. Builders did not secure such workers’ compensation insurance on the employees of Olender’s subcontractors. Mr. Campbell also provided the certificate of insurance for Petitioner. The certificate reflected that Modern Business Associates, Inc. (MBA), an employee leasing company, provided workers’ compensation for Olender’s leased employees. See § 468.520, Fla. Stat. MBA entered into a client service agreement with Olender. Under the agreement, Olender would lease employees from MBA and MBA would provide payroll services and workers’ compensation coverage for the employees it leased to Petitioner. The agreement terminated on August 30, 2006. MBA’s Client Service Agreement with Petitioner states on p. 3: Insurance Coverage. MBA is responsible for providing Workers’ Compensation coverage to workers employed by MBA and assigned to Client, in compliance with applicable law, and as specified in the Proposal. Workers performing services for Client not covered by this Agreement and not on MBA’s payroll shall not be covered by the workers’ compensation insurance. Client understands, agrees, and acknowledges that MBA shall not cover any workers with workers’ compensation coverage who has not completed and submitted to MBA an employment application and tri- fold, and which applicant has not been reviewed and approved for hire by MBA. (emphasis supplied) Other than information necessary to supply its services, MBA was not aware of any specific project or projects on which Olender was working when it leased employees from MBA. John Olender and Ruben Rojo were two employees that Olender leased from MBA and for whom MBA provided workers’ compensation insurance. The workers’ compensation policy complied with Florida’s workers’ compensation requirements. After speaking with Mr. Campbell, the Department’s investigator, who is fluent in Spanish, walked around the complex’s worksite. She did not have a hardhat on. She eventually saw about 10 to 12 workers on the third floor of one of the buildings under construction (Building 8 or 9). The Department’s investigator could not say if they were framing. At some point, John Olender, the company’s project superintendent, saw the Department’s investigator, noticed she did not have any safety equipment on, and went to meet her. The investigator yelled to the workers on the third floor and showed her Department badge or identification. She was speaking Spanish to them. The workers ran in an effort to avoid the Department’s investigator. Mr. Olender, who does not speak or understand Spanish, sent for Ruben Rojo. Mr. Rojo is the assistant superintendent for Olender and works under John Olender. He is fluent in Spanish. He does not hire employees for Olender, but oversees the work being performed under Olender’s subcontracts. The Department’s investigator continued to attempt to explain to the workers that she was not interested in their immigration status, but was there to make sure they were covered by workers’ compensation insurance. At least some of the workers came down to talk to her. Mr. Rojo thought the investigator was asking about the workers’ immigration status and told them that they did not have to talk to her. However, apparently some workers very reluctantly gave her limited information. The workers who talked to her were Pedro Antonio Mendez, Jaco Sarmentio, Juan Cardenas, Alvaro Don Juan Diaz, Jose Varela Orellana, Nesto Suarez Ventura, Miguel Martinez Diaz, Jose Perez Renaldo and Antonio Hernandez. She did not obtain any addresses, phone numbers or other identifying information from the employees. The evidence did not show whether these individuals gave the Department’s investigator the correct information. Importantly, they did not tell her who their employer was or what duties they were performing. None of these individuals testified at the hearing. John Olender did not recognize these workers. Mr. Rojo told the investigator that Olender subcontracted the framing portion of its contract to “T-Bo”. T-Bo was also known as Primitivo Torres. In his deposition testimony, Mr. Torres did not recognize these workers’ names. He also thought that most of the workers he employed for his framing subcontract with Olender were illegal immigrants. Mr. Torres was unclear in his testimony regarding his status with Olender. He did indicate that he worked in both Orlando and Tampa. Apparently, at times, he was an employee and at other times he was a subcontractor. He was listed as a leased employee under MBA’s contract with Olender. The evidence suggests, but does not prove, that Mr. Torres was a person who supplied immigrant workers to construction sites. In Orlando, Mr. Torres lived in an apartment complex in the Rosemond area with his employees. The rent was sometimes paid by Olender and then deducted from the remuneration paid to Mr. Torres. Mr. Torres paid his employees from the money he received under his subcontract with Olender. Mr. Torres also testified that when the Department’s investigator contacted him in June 2006, to discuss workers’ compensation insurance, he told her that he neither secured the payment of workers’ compensation for himself nor for the other workers in both Tampa and Orlando. Donna Knoblauch, who oversaw Olender’s main office, received a faxed copy of a certificate of workers’ compensation insurance from Mr. Torres. However, the faxed certificate was an illegible copy of what appeared to be a certificate of liability insurance issued by a company in Texas. The certificate does not have a legible “sent date,” a legible workers’ compensation policy number, legible dates of coverage, a legible producer name, or any information indicating that coverage includes the State of Florida. The document is insufficient to demonstrate that Mr. Torres provided workers’ compensation coverage for his employees that worked under his subcontract with Olender. John Olender testified that Mr. Torres utilized, at most, 20 framers for the construction at Alta Westgate. Mr. Torres corroborates that number and indicates that various people worked in crews of around five. On the other hand, Danny Campbell testified that Olender had approximately 20 workers when the project started, increased to approximately 75 people performing framing duties on the worksite and decreased to about 20 workers by the time the Department’s investigator visited the worksite. Mr. Campbell testified that on January 22, 2006, he believed that Olender had approximately five individuals for the punch-out group, three–to-five cleaners, a forklift operator, approximately two individuals installing the Tyvek moisture- barrier paper, two individuals performing window installation and approximately 15–to-20 individuals installing siding at the worksite. No other testimony supports the number of workers Mr. Campbell believed to be at the jobsite on June 22. On balance, the best evidence of the approximate number of workers was that of Mr. Olender and Mr. Torres. However, these figures were only estimates of the actual number which may have been less than 20 workers. In any event, the employment of these 12 workers on the third floor was not demonstrated by the evidence. Their names did not appear on the list of employees leased by Olender from MBA and were otherwise, unknown to the Mr. Olender, Rojo and Torres. While at the jobsite, the Department’s investigator also spoke with Victor Ibarra. Mr. Ibarra drove a forklift and indicated that he worked for Olender. Again, no address or other identifying information was supplied to the investigator. Later, the investigator spoke with a woman who purported to be Mr. Ibarra’s wife. There was no information on the forklift indicating that it belonged to Olender and Olender denies employing a person named Victor Ibarra. Mr. Campbell testified in his deposition that Olender had forklifts on the jobsite. However, he did not testify that the forklift Victor Ibarra drove on June 22, 2006, was owned by Olender. Likewise, Mr. Campbell did not testify that Mr. Ibarra was an employee of Olender. Mr. Ibarra’s name did not appear on the list of leased employees provided by MBA. The Department's investigator included Mr. Ibarra as an employee of Olender based on Mr. Ibarra’s statements. However, the evidence presented by the Department is not sufficient to establish that Mr. Ibarra was an employee of Olender, since Mr. Ibarra did not testify at the hearing. Mr. Campbell’s testimony does not corroborate the hearsay statements of Mr. Ibarra since the testimony does not indicate the forklift Mr. Ibarra drove belonged to Olender or to another subcontractor on the project. After talking to Mr. Ibarra, the Department’s investigator met Rosa Barden, Martha Alvarado and Ismael Ortiz, who were applying a moisture barrier paper known as “Tyvek” to a building at the construction site. The three individuals told the investigator that that they had been hired by Mr. Rojo on behalf of Olender and had only worked for about a day. The investigator included these three individuals as employees of Olender. No addresses or other contact information was obtained by the investigator. None of these individuals testified at the hearing. Mr. Rojo testified that he did not know the three individuals on the “paper crew” and did not hire them. None of the three individuals were listed as leased employees with MBA. However, Olender’s subcontract clearly lists the application of Tyvek as a part of its contract. Additionally, the payment information supplied by the general contractor shows that Olender was paid for Tyvek application on all the buildings in the complex. Unlike Mr. Ibarro’s testimony, the contract and payment evidence independently corroborates the otherwise hearsay statements of these three individuals and Olender should have provided workers compensation insurance on them. There was no evidence that Olender provided such workers’ compensation insurance; such failure violates Chapter 440, Florida Statutes. See §§ 440.10(1)(g) and 440.38(7), Fla. Stat., and Fla. Admin. Code R. 69L-6.019. In total, the Department’s inspector met with John Olender for approximately one hour discussing the work performed by Olender and the employees retained by Olender. During this meeting, Mr. Olender, identified members of a “punch-out” crew who had worked on the project. The punch-out crew repaired any defects in framing prior to inspection. The names supplied by Mr. Olender were Juan Gonzalez, Miguel, Sal, William, WI Gerardo (noted as El Guardo in the third Amended Order of Penalty assessment), Pedro, Jacobo and Boso. Mr. Olender did not know their last names. The evidence did not show the period of time that the punch-out crew would have been working at the project site. Presumably, they would have begun some time after the initial building was framed. The Department’s investigator did not personally see the punch-out crew at the project. Mr. Olender also informed the Department’s investigator that he did not handle matters concerning workers’ compensation insurance and that she would have to contact the Company’s main office in Missouri. He provided the number for the office. He also gave the investigator the number for Michael Olender, the president of the company and the number for Mr. Torres. The investigator issued a Workers’ Compensation Request for Production of Business Records to Olender. She left the Request with John Olender. The request for records asked for certain categories of Olender’s business records for the period of January 22, 2004 to June 22, 2004. Of importance here, the Department requested records in categories 1, 4, 5 and 6. In general, category 1 covers all payroll records, including checks and check stubs, time sheets, attendance records and cash payment records. Categories 4, 5 and 6 cover all records that relate to subcontractors, including their identity, contract, payment thereof, workers compensation coverage for all the subcontractor’s employees, and/ or the employees’ exemption status. These records are required to be maintained by a company doing business in Florida. Mr. Campbell testified that some members of the punch- out crew often approached him about whether he had paid Olender so that they in turn could be paid. Again, none of these individuals testified at the hearing. However, given the admissions of Olender’s employee and Mr. Campbell’s testimony, the evidence supports the conclusion that the eight individuals on the punch-out crew were employed by Olender. None of these employees were leased employees and therefore, were not covered by the workers’ compensation policy provided by MBA. There was no evidence that Olender secured any workers' compensation insurance on these eight employees. Such failure violates Chapter 440, Florida Statutes. See §§ 440.10(1)(g) and 440.38(7), Fla. Stat., and Fla. Admin. Code R. 69L-6.019. The Department’s investigator contacted Ms. Knoblauch while she was on her way to a medical appointment. The investigator requested Olender’s proof of workers’ compensation insurance. Ms. Knoblauch told the investigator that she was not at the office where the records were kept, but on the way to a medical appointment. She said she would be returning to the office after the appointment. The investigator said she needed the records immediately. Ms. Knoblauch offered to skip her appointment and requested time to turn around and return to the office. The investigator refused to permit her the time to return to the office. At some point, MBA supplied the Department’s investigator with a list of Olender’s leased employees. The list did not contain any of the names she had gathered during her visit to the worksite. Within a few hours from the beginning of the investigation, the Department's investigator issued a Stop Work Order and an Order of Penalty Assessment on June 22, 2006. The Order was served via certified mail on Michael Olender and Olender’s legal counsel. The Stop Work Order required that Olender "cease all business operations in this state" and advised that a penalty of $1,000.00 per day would be imposed if Olender were to conduct any business in violation of the Stop Work Order. Additionally, along with the Order, the Department issued and served on Petitioner via certified mail a Division of Workers’ Compensation Request for Production of Business Records for Penalty Calculation, requesting records for a period of three years. The request, made pursuant to Section 440.107(7), Florida Statutes, asked the employer to produce, for the preceding three years, documents that reflected payroll, proof of insurance, workers’ compensation audit reports, identity, duration, contracts, invoices and check stubs reflecting payment to subcontractors, proof of workers’ compensation coverage for those subcontractors, employee leasing company information, temporary labor service information, and any certificate of workers’ compensation exemption. The request asked for the same type of records that had been requested earlier. Neither request for records was specific to a particular construction job that Olender may have performed work on. The investigator informed Mr. Campbell that Petitioner was being issued a Stop-Work Order and gave him a copy of the Order. Mr. Campbell faxed the Order to Olender’s office in Missouri. The Department’s investigator also checked the Department’s Coverage and Compliance Automated System (“CCAS”) database. The system tracks workers' compensation insurance policy information provided by workers’ compensation carriers on an insured employer. The database did not contain an entry that reflected a current State of Florida workers' compensation insurance policy for Olender. The database did reference that Olender had a stop-work order served on it on July 12, 2002, which had been lifted on July 31, 2002, with payment of the penalty. Florida law requires that employers maintain a variety of business records involving their business. See § 440.107(5), Fla. Stat., and Fla. Admin. Code R. 69L-6.015. The Rule is limited to records regarding a business’ employees and any payout by the employer to any person. In this case, under the Rule, the only records Olender was required to maintain related to its employees and its subcontractor, Mr. Torres. There was no evidence regarding any other subcontractors Olender may have contracted with. The only records supplied by Olender to the Department were the records from MBA that included workers’ compensation information and W-2 forms for Olender’s leased employees, the illegible proof of insurance for Mr. Torres and copies of checks from Olender to Mr. Torres for the subcontract. Those records reflected that John Olender, Ruben Rojo and Primitivo Torres were leased employees and covered by workers’ compensation insurance under Olender’s contract with MBA. Olender supplied no records regarding workers’ compensation coverage for the eight employees who were members of the punch- out crew, the three workers who were members of the paper crew or the 12 workers who were on the third floor. When an employer fails to provide requested business records that the statute requires it to maintain, the Department is required to impute the employer's payroll using "the statewide average weekly wage as defined in Section 440.12(2)." § 440.107(7)(e), Fla. Stat., and Fla. Admin. Code R. 69L-6.028. The penalty for failure to secure the workers' compensation insurance coverage required by Florida law is 1.5 times the premium that would have been charged for such coverage for each employee identified by the Department. The premium is calculated by applying the approved manual rate for workers' compensation insurance coverage for each employee to each $100.00 of the gross payroll for each employee. In this case, the Department, after several amended assessments, imputed the payroll for Olender for the period beginning January 22, 2004, Petitioner’s date of incorporation, and ending June 26, 2006. Included in the calculation were the eight individuals on the punch-out crew identified by John Olender, the 12 employees who were working on the third floor, the forklift driver Victor Ibarra, and the three individuals on the paper crew. In calculating the premium for workers' compensation insurance coverage, the Department's investigator used the risk classifications and definitions of the National Council of Compensation Insurance, Inc. ("NCCI") SCOPES Manual. The appropriate code for Olender’s employees was classification code 5561 which covers framing of multiple family dwellings. The gross payroll imputed to each of the 27 employees was $683.00 per week. The Department then utilized the imputed payroll for same employees for the years 2004 and 2005. The Department’s calculation resulted in an assessed penalty of $1,205,535.40. However, the evidence establishes that Olender had 11 direct employees rather than 27 employees during the period of the Alta Westgate contract. Olender’s performance under that contract began on April 3, 2006. Other than the period of time involved with the Alta Westgate project, there was no evidence regarding the period of time Olender conducted business in Florida that would require it to comply with Florida law. The date of incorporation of Olender is insufficient to demonstrate that Olender engaged in any business in Florida that would require it to comply with Florida’s workers’ compensation law. Therefore, the penalty calculation must be modified to reflect only those eleven employees for the time period Olender performed under its contract on the Alta Westgate project.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order: Finding that Olender Construction Co., Inc., failed to have Florida workers' compensation insurance coverage for 11 of its employees, in violation of Sections 440.10(1)(a) and 440.38(1), Florida Statutes; and Recalculating the penalty against Olender. DONE AND ENTERED this 14th day of March, 2008, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of March, 2008. COPIES FURNISHED: Colin M. Roopnarine, Esquire Department of Financial Services, Division of Workers Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Jeremy T. Springhart, Esquire Broad and Cassel 390 North Orange Avenue, Suite 1500 Orlando, Florida 32801 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue Whether this cause is barred by a release of all claims.
Findings Of Fact Petitioner filed a Charge of Discrimination with the Florida Commission On Human Relations (FCHR) on or about December 13, 2003, based upon "race" and "national origin." The charge alleges that the employer removed Petitioner from working on a machine with which Petitioner had been familiar for eight years and assigned him to a machine for which he had not been trained, while the old machine was assigned to "a white person who has been working for less than one year." The original Charge did not contain allegations of lost seniority, pay, benefits, or of unlawful termination. On or about December 6, 2004, the FCHR entered its "Determination: No Cause," and notified the parties. On December 27, 2004, Petitioner filed his Petition for Relief, which alleged that the employer constantly assigned Petitioner to very "mterse" [sic.] jobs because the employer wanted Petitioner to leave, and the employer was "neglecting and careless to my needs." The Petition contains no specific allegation of constructive termination, i.e., that Petitioner was somehow forced into leaving Respondent's employ. The case was referred to the Division of Administrative Hearings (DOAH) on or about January 5, 2005. On or about January 18, 2005, Respondent responded to the Division's Initial Order by providing potential hearing dates. Petitioner filed no response. On January 28, 2005, a Notice of Hearing for April 4, 2005, was entered and mailed. On March 1, 2005, Respondent filed a Motion for Summary Final Order, together with supporting documentation including an affidavit of Joseph W. Standley, the attorney who had represented the Respondent Employer in Petitioner's workers' compensation claim against the employer. Petitioner did not timely respond in writing to Respondent's Motion, as he is permitted to do by Florida Administrative Code Rule 28-106.204. Therefore, the undersigned was at liberty to rule upon the pending Motion without a hearing. Furthermore, pursuant to Chapter 120, Florida Statutes, the pending Motion may be treated as a Motion for a Recommended Order of Dismissal. However, it was clear to the undersigned that oral argument or further memoranda on the pending Motion would be helpful, due to specific provisions of Chapter 440, Florida Statutes, The Florida Workers' Compensation Act, and the Administrative Code Rules promulgated thereunder. So, in an abundance of caution, the following provisions were contained in the Order entered March 21, 2005: The disputed-fact hearing now scheduled for April 4, 2005, is hereby cancelled. Petitioner Eligio Orellana is hereby granted to and until April 4, 2005, in which to either (a) file a written response in opposition to the Motion or (b) telephone the secretary to the undersigned at the number below to schedule oral argument by telephone. In the event Petitioner avails himself of neither option above, the Motion will be considered sua sponte. Petitioner requested of the secretary to the undersigned that oral argument by telephone be scheduled. Arrangements were made for a telephonic conference with both parties. However, Petitioner did not appear and participate in the pre-arranged telephonic conference call, so another Order was entered on April 15, 2005. That Order provided as follows: This cause came on for oral argument of Respondent's Motion for Summary Final Order by a telephonic conference on April 13, 2005. Despite Petitioner's request for this opportunity, which request was made late, pursuant to the Order entered March 21, 2005, and despite Petitioner agreeing to that date and time for the conference call, Petitioner did not appear by telephone. Therefore, Respondent was permitted to argue the pending Motion, which will be treated as a motion for a recommended order of dismissal. The undersigned having heard Respondent's argument, the parties are granted 15 days from date of this Order in which to state, in writing, filed with the Division of Administrative Hearings, their respective positions with regard to the pending Motion, specifically addressing the effect, if any, of Rule 4.143, Florida Workers' Compensation Rules and its successor, Florida Administrative Code Rule 60Q-6.123(1)(c). Copies of these rules are attached and incorporated herein as Exhibit "A." Respondent addressed the issues raised by the Petition for Relief, the pending Motion, and the foregoing Order, by timely filing further written argument and exhibits. Once again, Petitioner filed a paper but it failed to address the issues. On July 22, 2005, another Order to clarify facts and law was entered, providing Petitioner a last opportunity to be heard. That Order provided: Petitioner did not file a response in writing to Respondent's Motion for Summary Final Order as permitted by Florida Administrative Code Rule 28-106.204, and did not appear by telephone on April 13, 2005, when oral argument was scheduled for his benefit. Petitioner did file an explanation, of sorts, as to why he did not appear for the April 13, 2005, conference call, but that explanation did not address the Order entered herein on April 15, 2005, which Order allowed Petitioner to send the undersigned a written argument demonstrating his opposition to the pending Motion. Respondent responded in writing to the April 15, 2005 Order, as permitted. On its face, that material sets forth good cause why this case should be dismissed, the reason being that Petitioner entered into a full and complete release of Respondent while fully advised by an attorney. Florida Administrative Code Rule 60Y- 5.006, authorizes dismissal of discrimination complaints on several grounds, including "(2) The complaint has been resolved by negotiated settlement pursuant to subsection 60Y-5.003(10), F.A.C." However, in an abundance of caution, it is ORDERED: Petitioner shall show cause, in writing, filed with the Division of Administrative Hearings, at the address below the signature line of this document why this cause should not be dismissed. Specifically, Petitioner is permitted to send a written response (1) stating why any factual allegation contained in any of Respondent's previously filed materials is not true and correct; (2) giving any reason the Confidential Release and Settlement Agreement and Petitioner's Affidavit provided by Respondent should not be presumed valid; and (3) stating any reason this cause should not be dismissed for the reasons put forth by Respondent. In order to be considered, Petitioner's Response must be filed at the address below not later than August 10, 2005. On July 28, 2005, Petitioner filed a letter-response dated July 25, 2005, asking to speak to the undersigned and requesting that the case "stay alive" and move forward. Petitioner's letter-response disputed no facts or law asserted by Respondent. Accordingly, all the facts and documents presented by Respondent are presumed valid, and Respondent's pending Motion may be treated as a motion for recommended order of dismissal, to be determined upon the pleadings, without further evidence. On February 7, 2005, in a workers' compensation claim by Petitioner against Respondent Employer and the Employer's insurance carrier, Petitioner signed two settlement agreements. One settlement agreement complied with the requirements of Chapter 440, Florida Statutes, with regard to specific issues cognizable under the Florida Workers' Compensation Act and was entitled "Joint Stipulation for Settlement under Florida Statutes Sections 440.20(11)(c), (d) and (e) (2001)." The other settlement agreement, entitled "Confidential Release and Settlement Agreement" was more general and provided in pertinent part: Payment to Employee. The Employer/Carrier shall pay Employee the lump sum of $500.00 within fourteen (14) business days after Employee executes this Agreement and the Employee's withdrawal of the charge of discrimination, if any, which may be pending and is accepted and acted upon by the EEOC and the JEOC through an administrative dismissal of the charge or within fourteen (14) days of the approval of the Motion for Approval of Attorney's Fees, whichever is later. This settlement is being entered into simultaneously with a settlement of the workers' compensation claim and the consideration outlined above is provided for therein. [R]eleases and discharges the Employer [Premium Waters, Inc.] and Carrier, and any affiliated and related companies, and their attorneys, officers, directors, shareholders, agents, and employees of any of them, from all claims, actions demands, rights and causes of action (including any right to demand or receive attorney's fees) whether known or unknown by the Employee, that the Employee may have arising out of, based on, or relating directly or indirectly to, the Employee's employment with the Employer or the termination of that employment, the accident dated 06/25/03, and any events occurring during such employment or thereafter until the date of this Agreement. This release and waiver includes, but is not limited to, a release of any claims, actions, demands, rights or causes of action the employee may have under any federal, state, or local laws or regulations currently in effect and/or applicable to Employee, including, but not limited to Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, Section 1981 of the Civil Rights Act, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1991, the National Labor Relations Act, Chapter 440 of the Florida Statutes, Chapters 448 and 760 of the Florida Statutes, the Equal Pay Act, Fair Labor ad [sic] Standards Act, the Civil Rights Act of 1871, as amended (42 U.S.C. Section 1983 and 1985), and any other statutory or common law claims including, without limitation claims for negligence, gross negligence, wrongful discharge and/or retaliation under state or federal law, including but not limited to, Fla. Stat. 440.205, and all claims of any nature which were raised or could have been raised in any charge, arising out of the injuries, accident, and employment which are the subject of this settlement, in which the Employee now has, has had, or might ever have against the Employer or Servicing Agent, or any of its or their officers, agents, servants, employees, attorneys, directors, successors, predecessors, assigns, or any other person or entity so connected or related to the Employer or Servicing Agent, without any limitation thereof or thereon in the event the United States government or any of its entities or administrative bodies makes any claim against the Employer, its Servicing Agent, and/or its insurance Carrier, for reimbursement of any medical expenses incurred, or that may be incurred in the future as a result of the workers' compensation accident of 06/25/03, the Employee agrees to indemnify and hold the Employer, its Servicing Agent and/or its insurance Carrier harmless from any such claims. The Employee further agrees to indemnify and hold harmless the Employer and Carrier against all liabilities, claims, losses and expenses, including reasonable attorney's fees and costs, arising out of the industrial injuries which are the subject of this settlement. Dismissal/Withdrawal of Charge. As a condition precedent to receipt of payment described in Section 1 hereof, Employee shall deliver to counsel for the Employer/Carrier a copy of an executed document withdrawing the Charge, if any, with evidence that it has been filed with an EEOC and the JEOC. Upon receipt of proof that the EEOC and JEOC have dismissed the Charge, the Employer shall make payment as described above. There were clearly two types of release contemplated, two types of release executed, and two amounts of money were intended to flow from the Employer to the Petitioner. One amount of money was to be paid upon the Judge of Compensation Claims' approval of the workers' compensation settlement, and $500.00 was to be paid when Petitioner dismissed his EEOC claim. The affidavit of Joseph W. Standley, with its attachments, dated February 28, 2005, has established that the foregoing "Confidential Release and Settlement Agreement" (see Finding of Fact 22), was signed by Petitioner, under oath, and was signed by Petitioner's workers' compensation attorney; and that Petitioner's own affidavit averred that he had "read, or . . . had read to [him], and underst[oo]d the terms of the . . . Confidential Release." The affidavit of Joseph W. Standley, dated April 28, 2005, and filed with Respondent's May 2, 2005 Memorandum in response to the April 15, 2005 Order herein, established that Mr. Standley represented the employer, Premium Waters, Inc., and its insurance carrier, Cincinnati Casualty, in the settlement of Petitioner's workers' compensation claim in Eligio Orellana, [Claimant] v. Premium Water[s, Inc., Employer] and Cincinnati Casualty [Carrier], OJCC Case No. 04-029070JDO. Mr. Standley's affidavit is unrefuted that the Claimant in that case (Petitioner herein) had the benefit and assistance of legal counsel throughout his workers' compensation claim, and that Petitioner's attorney received, reviewed, and signed, along with Petitioner, and returned the documents considered in accomplishing the settlement of the workers' compensation case. Mr. Standley has sworn that Petitioner was represented by counsel throughout the workers' compensation claim, through and including accomplishment of the settlement and approval by the Judge of Compensation Claims, and that as parts of the overall settlement of Petitioner's workers' compensation claim, there were a "Joint Stipulation for Settlement" as required by Chapter 440, Florida Statutes, and a separate "Confidential Release and Settlement Agreement," and an affidavit by Petitioner that he had read, or had read to him, and understood "the terms of the Joint Stipulation for Settlement and [the] Confidential Release;" that the Confidential Release was signed under oath by Petitioner and Petitioner's attorney; and that "neither the release signed under oath by Petitioner and his attorney, nor Petitioner's affidavit were included among the papers presented to the Judge of Compensation Claims." Mr. Standley's two affidavits, together with their supporting documents, are unrefuted, because Petitioner did not offer any objection or oppositional response.
Recommendation Based on the foregoing uncontroverted or undisputed Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing the Petition for Relief and Charge of Discrimination herein. DONE AND ENTERED this 26th day of August, 2005, in Tallahassee, Leon County, Florida. S ELLA JANE P. 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 26th day of August, 2005. COPIES FURNISHED: Cecil Howard, Esquire Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Eligio Orellana Post Office Box 1800 Interlachen, Florida 32148 Russell W. LaPeer, Esquire Landt, Wiechens, LaPeer & Ayres 445 Northeast Eighth Avenue Ocala, Florida 34470
The Issue Whether Respondent committed the violations alleged in the Department of Financial Services, Division of Workers' Compensation's (Department's) Stop Work Order and Second Amended Penalty Assessment and if so, what penalty should be imposed?
Findings Of Fact The Department is the state agency charged with enforcement of the laws related to workers' compensation pursuant to Chapter 440, Florida Statutes. On August 15, 2006, Katina Johnson, a workers' compensation compliance investigator for the Division, observed two men painting the exterior of a home at 318 First Street, in Jacksonville. The two men were identified as William Furr and his son, Corey Furr. Upon inquiry, Mr. Furr stated that he held a lifetime exemption from workers' compensation requirements. He provided to Ms. Johnson a copy of his exemption card, which was issued April 30, 1995, in the name of Arby's Painting & Decorating. The exemption card had no apparent expiration date. 4. In 1998, Sections 440.05(3) and 440.05(6), Florida Statutes, were amended, effective January 1, 1999, to limit the duration of construction workers' compensation exemptions to a period of two years. Express language in the amended statute provided that previously held "lifetime exemptions" from workers' compensation requirements would expire on the last day of the birth month of the exemption holder in the year 1999. Ms. Johnson researched Respondent's status on the Department's Compliance and Coverage System (CCAS) database that contains all workers compensation insurance policy information from the carrier to an insured, and determined that Respondent did not have a State of Florida workers' compensation insurance policy. The CCAS database indicated that Respondent previously held an exemption as a partner for Arby's Painting and Decorating, and that the exemption expired December 31, 1999. Ms. Johnson also checked the National Council on Compensation Insurance ("NCCI") database which confirmed that Respondent did not have a current workers' compensation insurance policy in the State of Florida. After conferring with her supervisor, Ms. Johnson issued a Stop-Work Order and Order of Penalty Assessment to Respondent on August 15, 2006. She also made a request for business records for the purpose of calculating a penalty for lack of coverage. Respondent submitted a written payroll record for his son, Corey Furr, along with a summary of what Respondent had earned on various jobs he performed from 2004 through 2006 and a Miscellaneous Income Tax Form 1099 for himself. On August 30, 2006, he also provided to the Department a copy of his occupational license with the City of Jacksonville. Based on the financial records supplied by Respondent, Ms. Johnson calculated a penalty for a single day, August 15, 2006, for Corey Furr. She calculated a penalty from January 1, 2005, through August 15, 2006, for William Furr. Ms. Johnson assigned a class code to the type of work performed by Respondent using the SCOPES Manual, multiplied the class code's assigned approved manual rate with the payroll per one hundred dollars, and then multiplied the result by 1.5. The Amended Order of Penalty Assessment assessed a penalty of $5,296.37. A Second Amended Order of Penalty Assessment was issued November 1, 2006, with a penalty of $5,592.95. This Second Amended Order of Penalty Assessment was issued because Ms. Johnson used the incorrect period of violation for Respondent when she initially calculated the penalty. On August 25, 2006, Respondent entered into a Payment Agreement Schedule for periodic payment of the penalty, and was issued an Order of Conditional Release from Stop-Work Order by the Department. Respondent paid ten percent of the assessed penalty, provided proof of compliance with Chapter 440, Florida Statutes, by forming a new company and securing workers' compensation exemptions for both himself and his son, Corey Furr, and agreed to pay the remaining penalty in sixty equal monthly payments. Respondent claims that he was not aware of the change in the law and continued to operate under the belief that his "lifetime exemption" remained valid. Although under no statutory obligation to do so, the Department sent a form letter to persons on record as holding exemptions to inform them of the change in the law and the process to be followed to obtain a new exemption.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That the Division of Workers' Compensation enter a Final Order affirming the Stop Work Order issued August 15, 2006, and the Second Amended Order of Penalty Assessment issued to Respondent on November 1, 2006. DONE AND ENTERED this 23rd day of February, 2007, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON 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 23rd day of February, 2007.
The Issue The issue in this case is whether Respondent, Sunburst Construction, Inc. ("Sunburst"), failed to properly maintain workers' compensation insurance coverage for his employees and, if so, what penalty should be assessed.
Findings Of Fact The Department is the state agency responsible for ensuring that all employers maintain workers' compensation insurance for themselves and their employees. It is the duty of the Department to make random inspections of job sites and to answer complaints concerning potential violations of workers' compensation rules. Sunburst is a business created by Cecil Moore and has been in operation for 35 years in the construction industry. At all times relevant hereto, Sunburst was duly-licensed to do business in the State of Florida. Construction work is assigned a Class Code of 5651 for purposes of calculating workers' compensation insurance coverage. On April 30, 2014, the Department’s investigator, Stephanie Scarton, was driving on South Peninsula Drive in Daytona Beach, Florida, when she noticed what appeared to be construction activity going on. As she is charged with doing, Scarton went to find out whether people working at the construction site were legally covered by workers’ compensation insurance. She talked to four people at the job site and made a determination that workers’ compensation coverage was missing. Scarton’s and Sunburst’s statements of the facts surrounding the coverage are significantly different in detail. Each will be set forth below. Scarton’s Version of the Facts According to Scarton, she observed three people working at the site: Two men were engaged in carpentry, specifically, securing bolts to beams on a form used for pouring concrete. One man was grinding a screw or some other metal object. Scarton identified herself to the man who was grinding the metal object. The man was Carlos Barbecho. The man did not speak English very well, but conversed with Scarton, telling her that he (Barbecho) worked for Sunburst. According to Scarton, Barbecho also told her that the other two men, Edlezar “Eddie” Cano-Lopez and Jeronimo Cano-Lopez, also worked for Sunburst. Neither of the two men (who were brothers) spoke English. Barbecho acted as an interpreter for Scarton as she asked the brothers if they worked for Sunburst. They allegedly “shook their heads up and down,” i.e., they nodded affirmation. However, Scarton could not verify exactly what question Barbecho posed to the brothers in Spanish. Meanwhile, another man, Raley, showed up at the site on his bicycle. He reported that he was an independent contractor and was not related to Sunburst. He was doing some pressure washing on the house located at the site. The investigator then went to her vehicle to research Sunburst, finding it to be a duly-registered Florida corporation. She checked the building permit which had been issued by the City of Daytona Beach and found that it had been pulled by Sunburst. She then checked the Coverage and Compliance Automated System (CCAS) used by the Department to track workers’ compensation coverage by businesses and individuals. According to CCAS, there was no coverage for Sunburst but Moore had a personal exemption. When she found there was no coverage for Sunburst but that its employees were working at the job site, Scarton contacted Moore directly via telephone. Barbecho had provided Scarton with Moore’s number. Scarton testified that Moore admitted the men were his employees, but that he believed he had up to 24 hours to obtain workers’ compensation coverage for them. Scarton eventually ascertained that Sunburst did have appropriate workers’ compensation coverage for Barbecho through a leasing company, but neither of the Cano-Lopez brothers was on the policy. Sunburst’s Version of the Facts Moore has owned Sunburst for over 35 years. He has always maintained workers’ compensation coverage for his employees and has never been cited for failing to do so. In April 2014, Sunburst was in the midst of renovations at the South Peninsula Drive job site. Barbecho was the foreman on the job. He had been working for Sunburst for about two years as a foreman or job manager. Moore had obtained workers’ compensation coverage for Barbecho through a leasing company. On April 30, 2014, Barbecho was working at the job site when the Cano-Lopez brothers came up and asked if there was work for them to do. They had been referred to the site by Pillo, a man who had worked with Moore for many years and often found laborers for him. Barbecho called Moore to see if he wanted to hire the brothers or not. Meanwhile, the men stood around talking as they waited for a determination from Moore. Raley had also been at the site on that date. He was preparing to pressure-wash the outside of the house so that it could be painted. Just about the time he was leaving on his bicycle to retrieve a chair from his nearby home, the Cano-Lopez brothers arrived. Raley paid them no mind as he had never seen them before at the job site. When he returned with his chair, Raley met Scarton, who identified herself as an investigator for the Department. Although Raley told Scarton that he was an independent contractor, he was actually doing the pressure- washing because he owed a favor to Moore. Raley watched Scarton talk to the brothers and could see that there was a large communication problem based upon language. Scarton then began talking more to Raley because he spoke English much better than the other men there. Barbecho says he only met the Cano-Lopez brothers the morning that Scarton showed up at the work site. He did not have authority to hire them on behalf of Sunburst, but put a call into Moore to see if he wanted to hire the men. Barbecho maintains that he never told Scarton the men were employees of Sunburst. He does not remember being asked to ask the brothers, in Spanish, whether they were employees of Sunburst. The men had arrived on the job site just minutes prior to Scarton’s arrival, and Barbecho had not really talked to them at all other than to give a casual greeting. Edlezar Cano-Lopez says he is not now nor has he ever been an employee of Sunburst. He has never done any work for or received any money from Moore or Sunburst. (He was hoping that Moore would pay him for his time traveling to Tallahassee and appearing at the final hearing, but there was no specific agreement in that regard.) When Moore got a call from Scarton, he told her that he did not know who the Cano-Lopez brothers were, that they were not his employees, and that he had coverage for all of his bona fide employees. He has no recollection of telling Scarton that he believed he had 24 hours to get the workers covered by insurance. Scarton asked Moore to come to the job site and he complied with her request. At the job site, Scarton served Moore with a Stop Work Order (SWO) and explained that he needed to cease doing business until it was addressed. The basis of the SWO was that two putative employees, the Cano-Lopez brothers, did not have workers’ compensation insurance coverage. The Stop Work Order and Penalty Assessment At the same time, Scarton made a request for business records in order to determine what penalty should be assessed. The request had a list of various types of documents needed by the Department to make its penalty assessment. Moore was given 20 days to produce the records to the Department. Moore contacted his bank about obtaining the requested records. He was told that it would take five to seven days to pull the records together, but in fact it took more than three weeks. The records were therefore not timely submitted to the Department. Based upon the absence of business records, the Department calculated a penalty assessment which imputed income to the Cano-Lopez brothers for a period of three years. This assessment was in accordance with the Department’s rules and guidelines. A penalty assessment of $61,568.36 was imposed on Sunburst. After the penalty assessment was calculated by the Department, the requested business records were eventually received from the bank by Moore. The records contained summaries of statements, but did not include check images. The check images were provided at a later date. However, the check images showed a large number of checks made out to “cash” so the Department could not really ascertain whether any of them were for payroll or not. Moore explained that his employee leasing company required cash, so each week he would find out what amount was needed and issue a check made payable to “cash” and obtain the needed funds. Moore’s explanation is plausible. The Department did not take heed of the business records provided by Moore because they did not arrive within the prescribed 20-day window. The Department’s auditor did, however, create a draft penalty assessment based upon the records.1/ The Cano-Lopez Brothers The dispositive issue in this case appears to be the employee status of Eddie and Jeronimo Cano-Lopez. Eddie testified at final hearing (through an interpreter) that he has never been an employee of Sunburst. He and his brother were at the job site on April 30 for the purpose of obtaining employment, but they were never hired and have never been paid for doing any work for Sunburst. There are no check images or other business records that reflect Sunburst ever paid the Cano-Lopez brothers for doing work. Moore did not hire them and did not know they were at the work site on April 30 until advised by Barbecho and Scarton that very day. Moore’s denial that he told Scarton he was intending to add the Cano-Lopez brothers to his insurance coverage within 24 hours is credible. Scarton inspects 45 to 55 business sites per month and could easily be confused about who told her they were adding employees. After 35 years in the industry, it is unlikely Moore would be confused about the requirements for coverage of his employees. The foreman, Barbecho, met the Cano-Lopez brothers for the first time on April 30 at the job site. He knew that in order to work for Sunburst, the brothers would first have to fill out an application. In fact, the Cano-Lopez brothers filled out an application after the SWO had been entered. The applications were delivered to Sunburst’s employee leasing company the next day in hopes of alleviating the SWO. But as the SWO was still in place, the Cano-Lopez brothers never engaged in work for Sunburst, and have not to this day. And in the words of the Department’s investigator, “An employee is someone who is being paid by the business.” Scarton testimony, transcript page 46. The Department calculated its penalty assessment as follows: It ascertained the average wage for construction laborers and assigned that figure to each of the Cano-Lopez brothers. The appropriate class code was assigned. A period of three years of non-compliance was imputed, per rule. The gross payroll for that three-year period was assigned to each of the brothers. The gross payroll amount was divided by 100. The resulting sum was multiplied by the manual rate, resulting in a premium. The premium was then multiplied by 1.5 to reach the penalty amount. The calculation of the penalty was based upon the mistaken presumption that the Cano-Lopez brothers were employees of Sunburst. It is clear from the evidence presented that neither Eddie nor Jeronimo Cano-Lopez were ever employees of Sunburst. Scarton’s recollection of the events (without the benefit of any contemporaneous note) was refuted by the testimony of Moore, Barbecho, Raley, and Eddie Cano-Lopez, thus her testimony does not constitute clear and convincing evidence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services rescinding the Stop-Work Order and Amended Penalty Assessment. DONE AND ENTERED this 5th day of January, 2015, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of January, 2015.
The Issue Whether Petitioner, Department of Financial Services, Division of Workers’ Compensation (“Petitioner” or “Department”) properly issued a Stop-Work Order and Penalty Assessment against Respondent, Barber Custom Builders, Inc. (“Respondent” or “Barber”) for failing to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes.
Findings Of Fact On January 31, 2014, 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, was engaged in business operations in the construction industry in the State of Florida from June 6, 2010 through June 5, 2013. Respondent received a Stop-Work Order and Order of Penalty Assessment from the Department on June 5, 2013. The Department had a legal basis to issue and serve Stop-Work Order 13-273-1A on Respondent. Respondent contests the validity of the Department’s Stop-Work Order as a charging document. Respondent received a Request for Production of Business Records for Penalty Assessment Calculation from the Department on June 5, 2013. Respondent received an Amended Order of Penalty Assessment from the Department on June 17, 2013. Respondent executed a Payment Agreement Schedule for Periodic Payment of Penalty and was issued an Order of Conditional Release from Stop-Work Order on August 6, 2013. Respondent received a 2nd Amended Order of Penalty Assessment from the Department on September 25, 2013. Respondent employed more than four non-exempt employees during the periods of June 10, 2010 through June 30, 2010; July 2, 2010 through December 31, 2010; January 14, 2011 through December 29, 2011; January 30, 2012 through December 16, 2012; and January 4, 201[3] through June 5, 2013. Respondent was an “employer” as defined in chapter 440. All of the individuals listed on the Penalty Worksheet of the [2nd Amended Order of Penalty Assessment], except Buffie Barber and Linda Barber, were “employees” in the State of Florida (as that term is defined in section 440.02(15)(a), Florida Statutes), of Respondent during the periods of non- compliance listed on the penalty worksheets. In addition to the foregoing, in their March 12, 2014, Joint Stipulations and Status Report, the parties stipulated to the facts set forth in the following paragraphs 14 and 15. Those facts are accepted and adopted by the undersigned. Based on business records received from Respondent, the Department has recalculated the assessed penalty. The penalty has been reduced from $36,387.03 to $2,272.31. The 3rd Amended Order of Penalty Assessment is calculated correctly, if the manual rates were properly adopted by rule. A review of the stipulated 3rd Amended Order of Penalty Assessment reveals assessed penalties for employees engaged in work described as class code 5403 (carpentry - NOC) and class code 8810 (clerical office employees - NOC). Given the stipulations of the parties, further findings are unnecessary.
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 $2,272.31 against Respondent, Barber Custom Builders, Inc., for its failure to secure and maintain required workers’ compensation insurance for its employees. DONE AND ENTERED this 30th day of April, 2014, in Tallahassee, Leon County, Florida. S E. GARY EARLY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2014.
The Issue At issue in this proceeding is whether Respondent failed to abide by the coverage requirements of the Workers' Compensation Law, Chapter 440, Florida Statutes (2002), by not obtaining workers' compensation insurance for her employees; and whether Petitioner properly assessed a penalty against Respondent pursuant to Section 440.107, Florida Statutes (2002).
Findings Of Fact Based upon observation of the witnesses and their demeanor while testifying; documentary materials received in evidence; stipulations by the parties; evidentiary rulings made pursuant to Section 120.57, Florida Statutes (2003); and the record evidence submitted, the following relevant and material finding of facts 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 for their employees. § 440.107, Fla. Stat. (2002).1 On August 8, 2003, Respondent was a sole proprietor in the construction industry by framing single-family homes. On that day, Respondent was the sub-contractor under contract with Marco Raffaele, general contractor, providing workers on a single-family home(s) located on Navigation Drive in the Panther Trace subdivision, Riverview, Florida. It is the responsibility of the Respondent/employer to secure and maintain workers' compensation coverage for each employee. During the early morning hours of August 8, 2003, Donald Lott, the Department's workers' compensation compliance investigator, was in the Panther Trace subdivision checking on site workers for potential violations of the workers' compensation statute. While driving down Navigation Drive in the Panther Trace subdivision, Mr. Lott approached two houses under construction. There he checked the construction workers on site and found them in compliance with the workers' compensation statute. Mr. Lott recognized several of the six men working on the third house under construction next door and went over to investigate workers' compensation coverage for the workers.2 At the third house Mr. Lott interviewed Darren McCarty, Henry Keithler, and Mike Sabin, all of whom acknowledged that they worked for Respondent, d/b/a Riopelle Construction. Mr. Lott ascertained through Southeast Leasing Company (Southeast Leasing) that three of the six workers, Messrs. Keithler, Sabin, and McCarthy were listed on Southeast Leasing Company's payroll through a valid employee lease agreement with Respondent as of August 8, 2003. The completed employee lease agreement provided for Southeast Leasing Company to provide workers' compensation coverage for only those employees whose names, dates of birth, and social security numbers are contained in the contractual agreement by which Southeast Leasing leased those named employees to the employing entity, Respondent, d/b/a Riopelle Construction. Mr. Lott talked with the other three workers on site, Ramos Artistes, Ryan Willis, and Robert Stinchcomb. Each worker acknowledged working for (as an employee) Respondent on August 8, 2003, in the Panther Trace subdivision. In reply to his faxed inquiry to Southeast Leasing regarding the workers' compensation coverage status for Messrs. Artistes, Willis, and Stinchcomb, Southeast Leasing confirmed to Mr. Lott that on August 8, 2003, Southeast Leasing did not have a completed employee leasing contractual agreement with Respondent for Messrs. Artistes, Willis or Stinchcomb. Southeast Leasing did not provide workers' compensation coverage for Messrs. Artistes, Willis or Stinchcomb on August 8, 2003.3 Southeast Leasing is an "employee" leasing company and is the "employer" of "leased employees." As such, Southeast Leasing is responsible for providing workers' compensation coverage for its "leased employees" only. Southeast Leasing, through its account representative, Dianne Dunphy, input employment applications into their system on the day such application(s) are received from employers seeking to lease employees. Southeast Leasing did not have employment applications in their system nor did they have a completed contractual employment leasing agreement and, therefore, did not have workers' compensation coverage for Messrs. Artistes and Willis at or before 12:08 p.m. on August 8, 2003. After obtaining his supervisor's authorization, Mr. Lott served a Stop Work and Penalty Assessment Order against Respondent on August 8, 2003, at 12:08 p.m., requiring the cessation of all business activities and assessing a penalty of $100, required by Subsection 440.107(5), Florida Statutes, and a penalty of $1,000, as required by Subsection 440.107(7), Florida Statutes, the minimum penalty under the statute. On August 12, 2003, the Department served a Corrected Stop Work and Penalty Assessment Order containing one change, corrected federal identification number for Respondent's business, Riopelle Construction. Mr. Stinchcomb, the third worker on the construction job site when Mr. Lott made his initial inquiry, was cutting wood. On August 8, 2003, at or before 12:00 p.m., Mr. Stinchcomb was not on the Southeast Leasing payroll as a leased employee covered for workers' compensation; he did not have individual workers' compensation coverage; and he did not have a workers' compensation exemption. On that day and at that time, Mr. Stinchcomb worked as an employee of Riopelle Construction and was paid hourly by Riopelle Construction payroll check(s). Respondent's contention that Mr. Stinchcomb, when he was working on the construction job site between the hours of 8:00 a.m. and 1:00 p.m. on August 8, 2003, was an independent contractor fails for the lack of substantial and competent evidence in support thereof. On August 8, 2003, the Department, through Mr. Lott, served an administrative request for business records on Respondent. Respondent failed and refused to respond to the business record request. An Order requiring Respondent to respond to Petitioner's discovery demands was entered on December 1, 2003, and Respondent failed to comply with the order. On December 8, 2003, Respondent responded that "every effort would be made to provide the requested documents by the end of the day" to Petitioner. Respondent provided no reliable evidence and Mr. Stinchcomb was not called to testify in support of Respondent's contention that Mr. Stinchcomb was an independent contractor as he worked on the site on August 8, 2003. Respondent's evidence, both testamentary and documentary, offered to prove that Mr. Stinchcomb was an independent contractor on the date in question failed to satisfy the elements required in Subsection 440.02(15)(d)1, Florida Statutes. Subsection 440.02(15)(c), Florida Statutes, in pertinent part provides that: "[f]or purposes of this chapter, an independent contractor is an employee unless he or she meets all of the conditions set forth in subparagraph(d)(1)." Subsection 440.02(15)(d)(1) provides that an "employee" does not include an independent contractor if: The independent contractor maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations; The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal requirements; The independent contractor performs or agrees to perform specific services or work for specific amounts of money and controls the means of performing the services or work; The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform; The independent contractor is responsible for the satisfactory completion of work or services that he or she performs or agrees to perform and is or could be held liable for a failure to complete the work or services; The independent contractor receives compensation for work or services performed for a commission or on a per-job or competitive-bid basis and not on any other basis; The independent contractor may realize a profit or suffer a loss in connection with performing work or services; The independent contractor has continuing or recurring business liabilities or obligations; and The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures. The testimony of Respondent and the testimony of her husband, Edward Riopelle, was riddled with inconsistencies, contradictions, and incorrect dates and was so confusing as to render such testimony unreliable. Based upon this finding, Respondent failed to present evidence sufficient to satisfy the requirement of Subsection 440.02(15)(d)1, Florida Statutes, and failed to demonstrate that on August 8, 2003, Mr. Stinchcomb was an independent contractor. Petitioner proved by a preponderance of the evidence that on August 8, 2003, Mr. Stinchcomb, while working on the single-family construction site on Navigation Drive in the Panther Trace subdivision was an employee of Respondent and was not an independent contractor. Petitioner proved by a preponderance of the evidence that Mr. Stinchcomb did not have workers' compensation coverage on August 8, 2003. On August 8, 2003, Mr. Willis was a laborer on the single-family construction site on Navigation Drive in the Panther Trace subdivision as an employee of Respondent, who paid him $7.00 per hour. Mr. Willis was not listed on the employee list maintained by Southeast Leasing, recording those employees leased to Respondent. Mr. Willis did not have independent workers' compensation coverage on August 8, 2003. Mr. Willis had neither workers' compensation coverage nor a workers' compensation exemption on August 8, 2003. Petitioner proved by a preponderance of the evidence that Mr. Willis did not have workers' compensation coverage on August 8, 2003. On August 8, 2003, Mr. Artises was a laborer on the single-family construction site on Navigation Drive in the Panther Trace subdivision and was an employee of Respondent. Mr. Artises had been in the employment of Respondent for approximately one week before the stop work order. Mr. Artises did not have independent workers' compensation coverage on August 8, 2003. Mr. Artises did not have a workers' compensation coverage exemption on August 8, 2003. Petitioner proved by a preponderance of the evidence that Mr. Aristes did not have workers' compensation coverage on August 8, 2003.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleading 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, affirming and adopting the Corrected Stop Work and Penalty Assessment Order dated August 12, 2003. DONE AND ENTERED this 29th day of March, 2004, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE 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, 2004.
The Issue The issue in this case is whether Respondent failed to provide workers' compensation insurance coverage for employees, and, if so, what penalty should be assessed.
Findings Of Fact Petitioner is the state agency responsible for, inter alia, monitoring businesses within the state to ensure that such businesses are providing the requisite workers' compensation insurance coverage for all employees. The Division's headquarters are located in Tallahassee, Florida, but its investigators are spread throughout the state in order to more effectively monitor businesses. Respondent is a construction company that has been operating in excess of 30 years. It is a small company and usually only has a few employees at any given time. The company is located in Charlotte Harbor, Florida. Workers' compensation coverage is required if a business entity has one or more employees and is engaged in the construction industry in Florida. Workers' compensation coverage may be secured via three non-mutually exclusive methods: 1) The purchase of a workers' compensation insurance policy; 2) Arranging for the payment of wages and workers' compensation coverage through an employee leasing company; or 3) Applying for and receiving a certificate of exemption from workers' compensation coverage, if certain statutorily-mandated criteria are met. On January 8, 2009, Ira Bender, investigator for the Division, was doing on-site inspections in Port Charlotte, Florida. Bender stopped at the site on Edgewater Drive where new construction was underway at a YMCA. Bender observed a man (later identified as Thomas Woodall) sweeping the floor. Bender questioned Woodall and was told that Woodall worked for Respondent. When asked about his workers' compensation insurance coverage, Woodall advised that his insurance was maintained through Frank Crum Leasing Company ("Crum"). Bender called Crum and found that although Woodall had been carried as an employee of Respondent in the past, he had been released from coverage. The reason for his release was that his employment had been terminated for lack of business. Bender called Respondent to inquire about workers' compensation coverage. He was told that Respondent did not realize Woodall had been dropped from the Crum insurance coverage and that he would be reinstated immediately. In fact, coverage was restarted on that same day. Based on his finding that an employee had been working without coverage, Bender called his supervisor and provided his findings. The supervisor authorized issuance of a SWO based on the findings. The SWO was served on Respondent via hand- delivery at 11:45 a.m., on January 8, 2009. The SWO was also posted at the work site. The Division then requested business records from Respondent in order to determine whether there were any violations. If there were violations, then the Division would ascertain the amount of penalty to assess. Respondent cooperated and submitted the business records, as requested. After review of the business records, the Division issued its first Amended Order of Penalty Assessment ("Order") on January 14, 2009. The process employed by the Division was to locate all uncovered employees, i.e., those working without workers' compensation insurance for any period of time. The employees were then assigned a class code from the National Council on Compensation Insurance (NCCI) publication. Each trade or type of employment is assigned a code which sets the rate to be applied to an individual depending on the type of work he/she is performing. The Division assigned codes to the employees, determined how much the employee had been paid during the period of non-coverage, assigned the rate to the gross pay, and calculated the insurance premium needed to cover the worker for the time in question. A penalty of 1.5 times the premium was then assigned. The Order assessed a total penalty of $21,165.98 against Respondent. Respondent objected to the amount and refused to sign it due to errors contained in the Penalty Worksheet attached to the Order. Signing the Order would have allowed Respondent to return to work, but he refused to sign because he knew it was not correct. Pursuant to discussions between the parties and "additional records received," the Division issued a second Order on January 16, 2009, assessing a penalty of $6,501.27. Respondent believed that the Division was still in error and provided yet additional information--some verbal--to the Division. A third Order was issued on January 21, 2009, reducing the penalty to $3,309.56. However, Respondent still believed the penalty worksheet contained errors. Again, Respondent refused to sign and provided additional information to the Division. The Division issued a fourth Order on January 28, 2009, assessing a penalty of $2,822.24. That Order had an error concerning the spelling of an employee's name, but the penalty amount was correct. Respondent would not sign the fourth Order, because he did not believe he had intentionally violated any statute or rule concerning workers' compensation coverage for his employees. A corrected (fifth amended) Order was ultimately issued on May 19, 2009.1 The fifth Order asserts the amount of penalty now in dispute, which is the same amount appearing in the fourth amended Order. Respondent signed the fifth Order and entered into a payment plan for payment of the penalty, paying a down payment of $1,000 and monthly payments of $30 until paid in full. Respondent takes great offense to the fact that the penalty assessments were not faxed to him more quickly. He maintains that he had every intention to resolve this matter as quickly as possible, but the Division delayed and dragged out the process. The penalty worksheet attached to the fifth Order listed nine "Employee Names" that are subject to the penalty assessment. Each will be discussed below. The first "employee" is listed as "Cash" and is assigned Class Code 5403. This "employee" represents checks found in Respondent's records with the payee listed as "cash- casual labor" totaling $2,178.00 in gross payroll. Code 5403 was assigned because that is the code used by Crum for Respondent's general business. The manual rate for Code 5403 is $24.74. A penalty of $808.26 was assessed for that employee. The second employee is Jacob Prewitt. Prewitt was assigned Class Code 5221, due to the word "driveway" appearing on a check issued to him. Driveway work falls under a lower approved manual rate ($10.37) than general construction. The gross payroll amount was $1,960, and the penalty assigned to Prewitt was $304.88. The third employee is Woodall, assigned a Class Code of 5606, with a manual rate of $3.84. That code is used for supervisors and is, again, not as dangerous an occupation as general construction. The gross payroll for this entry was $1,008, and the penalty assessed for Woodall was $58.07. Cash is the fourth employee and has been covered in the discussion in paragraph 16, above. Barry Lawrence is the fifth employee; he is assigned Class Code 5437 as a cabinet maker/installer with a manual rate of $13.01. Lawrence had a Verification Letter issued by the Division indicating he was exempt from workers' compensation coverage. However, that exemption was limited to cabinet- making. By installing the cabinets, Lawrence performed work outside his exemption status. The gross payroll for his work was $6,200, and the penalty assessed for Lawrence was $1,209.33. Respondent was completely unaware that the exemption letter did not cover installation and had, in fact, always allowed cabinet- makers to install the cabinets as well. Brunderman Builders is listed as the sixth employee. It is assigned Class Code 5403 with a manual rate of $14.39. The gross payroll for this entry was $550, resulting in a penalty assessment of $118.73. The seventh employee is Jorge Gonzolas, assigned Class Code 5403, the general contracting code. Gonzolas was the employee of a contractor who was subcontracting with Respondent. The contractor died unexpectedly, and Gonzolas was left without payment for the work he had performed. Respondent generously decided to pay Gonzolas for his work, thereby, effectively making Gonzolas a de facto employee. The amount paid Gonzolas was $599.00; the penalty assessed for Gonzolas was $129.30. Woodall is again listed as employee number eight, this time with Class Code 5610, reflecting casual labor he did on one date that his insurance was not in place. The payroll amount for this work was $37.50. The penalty assessed for Woodall was $4.02. The ninth employee was Julio Garcia, assigned Class Code 8742 for outside sales, with a manual rate of $.64. The payroll amount for Garcia was $1,300. His penalty assessment amount was $12.48. Garcia was another one of the deceased subcontractor's employees that Respondent volunteered to pay for work Garcia had performed. The total payroll at issue for Respondent was $14,477.50. The total premium for that amount of payroll would have been $1,881.48, and the penalty assessed was $2,822.84. This is a fairly insignificant portion of Respondent's $5.5 million annual payroll. Respondent did not intentionally attempt to avoid the payment of workers' compensation insurance for its employees. There is no pattern of avoidance or indication that non-payment was Respondent's goal. Rather, there are plausible and reasonable explanations about the unpaid premiums. For Woodall, Respondent believed he was still covered through the Crum policy. For Gonzolas and Garcia, Respondent was simply attempting to be a nice guy. For Prewitt, the employee's exemption had unknowingly lapsed. For Lawrence, Respondent relied upon a Verification Letter from the state, but misinterpreted its scope. The Division, on the other hand, only pursued Respondent based on an actual finding of non-coverage. But for Woodall's presence at a work site doing manual labor (sweeping the floor), the Division would not have looked at Respondent's records. There is no indication the Division acted other than in strict accordance to its governing rules.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Financial Services, Division of Workers' Compensation, upholding the assessment of a penalty of $2,822.24 against Respondent, Brunderman Building Company, Inc. DONE AND ENTERED this 9th day of October, 2009, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of October, 2009.
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 are whether Respondent violated Sections 440.10 and 440.38, Florida Statutes (1997), by not securing workers' compensation insurance for its Florida employees; and if so, whether Petitioner properly issued a Stop Work Order and assessed civil penalties pursuant to Sections 440.107(5) and 440.107(7), Florida Statutes (Supp. 1998).
Findings Of Fact Petitioner is the state agency that is charged with the responsibility of enforcing the statutory requirements for employers to provide their employees with workers' compensation coverage. Respondent is a business, located in Savannah, Georgia, that supplies workers on a temporary basis to client businesses. The services that Respondent provides to its client businesses include the payment of payroll, taxes, and workers' compensation insurance for the temporary employees. American Interstate Insurance Company (AIIC) provided Eastern Personnel Services II, Federal Employers Identification Number (FEIN) 58-2340211, with workers' compensation insurance from November 18, 1997, through November 18, 1998, in the state of Georgia. AIIC's policy number 97WAGA1109996 did not provide coverage for any of Respondent's workers in Florida. AIIC is not authorized in Florida to write insurance for an employer with Respondent's assigned risk classification. Safeco Insurance Company of America (SICA) provided Respondent, FEIN 58-2340211, with workers' compensation insurance from December 29, 1998, through December 29, 1999, in the states of Georgia and South Carolina only. SICA's policy number WC7260735 as originally drafted, and as it existed on March 2, 1999, did not provide coverage for any workers in Florida. Paul Day is Respondent's president and sole officer and shareholder. He is also the owner of Eastern Personnel Services II, a sole proprietorship. According to AIIC's and SICA's insurance policies, both entities have the same FEIN. The record here indicates that there is no substantive difference between Respondent and Eastern Personnel Services II. Respondent's testimony to the contrary is not persuasive. 1/ For all practical purposes, Respondent and Eastern Personnel Services II were under the exclusive management and control of Mr. Day at all relevant times. Beginning as early as August 28, 1997 and continuing through March 2, 1999, Respondent provided employees to Foley & Associates Construction Co., Inc. (Foley) at one or more work sites on Amelia Island, Florida. Respondent did not secure workers' compensation insurance for these workers. Stanley Benner was one of the first of Respondent's employees to begin working at Foley's Amelia Island job site. On November 9, 1998, Mr. Benner was injured while working for Respondent. Mr. Benner filed a workers' compensation claim against Respondent and AIIC seeking compensation for his injuries. He subsequently learned that AIIC did not provide workers' compensation insurance for Respondent in Florida. Mr. Benner has received no compensation from Respondent or any insurance carrier for his work-related injury. On March 2, 1999, Mr. Benner's attorney filed a complaint with Petitioner regarding Respondent's lack of workers' compensation coverage. Robert Lambert, Petitioner's investigator immediately went to Foley's job site to investigate the complaint. Upon his arrival at the construction site, Mr. Lambert learned that Respondent had 21 employees performing general contract labor for Foley that day. Foley's office manager informed Mr. Lambert that Respondent had provided Foley with between 15 and 20 laborers per day for one year. Next, Mr. Lambert called Mr. Day who provided a certificate of insurance from SICA by facsimile transmission. However, the certificate listed Saxon and Associates, a business located in Georgia, as the certificate holder. It did not reference coverage for employees provided to Foley in Florida. Mr. Lambert then called Linda Burtchett of HGI, Inc. She is an insurance agent and the authorized representative of SICA. HGI, Inc. is the producer of SICA's policy number WC7260735. Ms. Burtchett informed Mr. Lambert that SICA's policy number WC7260735 did not cover Respondent's employees in the state of Florida. To her knowledge, Respondent had never reported any wages on a Florida payroll. Mr. Lambert issued a Stop Work Order dated March 2, 1999. The Stop Work Order required Respondent to immediately cease all work at the Foley construction site. It advised Respondent that a civil penalty in the amount of $100 would be assessed for each day that it failed to provide the required workers' compensation coverage. Later on March 2, 1999, Respondent requested HGI, Inc. to provide coverage for its Florida employees working at the Foley job site under SICA's policy number WC7260735. HGI, Inc. complied with Respondent's request. Accordingly, Petitioner correctly assessed Respondent with a civil penalty in the amount of $100 in conjunction with the Stop Work Order. Mr. Day testified that the endorsement to the SICA policy provided coverage for Respondent's Florida employees retroactive to September 29, 1998. He also testified that another of Respondent's Florida employees was injured at the Foley construction site on January 18, 1999, and received compensation under the SICA policy. Mr. Day's testimony is not credited in light of Ms. Burtchett's testimony. On March 2, 1999, Petitioner informally requested Respondent to provide business records to establish the value of its Florida payroll during the three years before Petitioner issued the Stop Work Order. Respondent refused to provide Petitioner with any payroll records. Petitioner obtained records maintained by Foley regarding Respondent's employment activities at the Amelia Island job site. Foley's records showed the number of employees that Respondent employed, the number of hours worked by each employee, and their hourly rate of pay. Respondent admitted and Foley's records confirmed that Respondent's payroll at the Foley construction site was $209,249.86 between January 5, 1998 and March 1, 1999. The National Council of Compensation Insurance (NCCI) classifies Respondent as a temporary labor service. According to the NCCI, the employment activities conducted by Respondent's employees at the Foley construction site have an assigned insurance premium rate in the conservative amount of $22.34 for each $100 of payroll. Therefore, Respondent's evaded insurance premium on a payroll of $209,249.86 is $46,746. The administrative penalty is twice the evaded premium of $46,746 or $93,492. On March 31, Petitioner properly issued a Notice and Penalty Assessment Order requiring Respondent to pay an administrative penalty in the amount of $93,492. Respondent's untimely discovery responses indicated that its Florida payroll was $196,701.62 in 1998 and $65,165.36 in 1999. Petitioner could have assessed Respondent with an administrative penalty in the amount of $115,743.26.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That Petitioner enter a final order affirming the Stop Work Order and Notice and Penalty Assessment Order with their associated penalties, plus any lawful interest. DONE AND ENTERED this 12th day of October, 1999, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of October, 1999.
The Issue The issues are whether Respondent had workers' compensation insurance coverage for the relevant time period as required by Sections 440.10(1)(a) and 440.38(1), Florida Statutes, and if not, what penalty should be imposed.
Findings Of Fact Petitioner is the agency responsible for enforcing the requirement that employers secure the payment of workers' compensation insurance for their employees. Respondent is a Florida corporation, incorporated on October 3, 2001. Paul Gilbert is Respondent's only officer and the corporation's managing member. Zurich-American Insurance Group (Zurich) issued a workers' compensation and employer's liability insurance policy (Policy No. WC 3617144) to Mitchell Construction Company (Mitchell) in October 1999. Zurich also provided Mitchell with general liability and business automobile insurance. At that time, Paul Gilbert was the risk manager for Mitchell, which was a large commercial contractor doing business in several states. Mitchell's offices were located in Vidalia, Georgia. In October 2000, Zurich renewed Mitchell's workers' compensation policy (Policy No. WC 3617144-01) for the period October 1, 2000 through October 1, 2001. The original and renewed policies listed other combinable entities as named insureds. Mitchell owned at least 51 percent of its combinable companies, one of which was Wood-Hopkins Contracting Company of Georgia, LLC. The company was also registered in Florida as Wood-Hopkins Contracting Company, LLC. The company was located in Jacksonville, Florida, with a mailing address in Vidalia, Georgia. The type of workers' compensation insurance that Zurich provided to Mitchell was known as a rolling contractor- controlled insurance policy (CCIP). It had endorsements for large deductible reimbursements for paid losses and a set monthly premium based in part on the projected payroll and experience rating modifiers for Mitchell and its combinable entities. The CCIP also covered subcontractors that had a contract with Mitchell for such coverage. The CCIP was renewable on an annual basis. Zurich did not need to re-underwrite the policy each year because the policy was created using three-year parameters. Additionally, Zurich had the option of auditing Mitchell's operations to determine whether there was a substantial change in the business. Palmer and Cay of Georgia (Palmer and Cay) was the producer and the broker of record for Mitchell's original and renewed CCIP. Stephen McMillan, an associate with Palmer and Cay at its offices in Savannah, Georgia, was the insurance agent that helped Mr. Gilbert negotiate and service Mitchell's CCIP with Zurich. In the Fall of 2001, Mr. Gilbert and Mr. McMillan contacted Zurich about renewing Mitchell's CCIP for the period October 1, 2001 through October 1, 2002. In a meeting with Zurich's representatives at its offices in Atlanta, Georgia, Mr. Gilbert advised Zurich that a company bearing the Wood-Hopkins name was going to complete Mitchell's then on-going projects. Zurich's employees believed Mr. Gilbert was referring to Wood- Hopkins Contracting Company, LLC. During the trip to Atlanta, Mr. Gilbert told Mr. McMillan that he was attempting to form a new company. However, Mr. Gilbert did not make it clear in the meeting with the Zurich representatives that he intended to incorporate Respondent, an independent company with a similar name to Wood- Hopkins Contracting Company, LLC, but unrelated to Mitchell. After the meeting in the Fall of 2001, Zurich was unaware that Mitchell and its combinable entities were or soon would be out of business as a general contracting group. Zurich's employees mistakenly believed that Mr. Gilbert continued to work for Mitchell. Mr. Gilbert resigned his position with Mitchell on September 1, 2001. After he incorporated Respondent, it purchased the assets of Mitchell and Wood-Hopkins Contracting Company, LLC, and hired about 100 of Mitchell's employees. Respondent planned to complete Mitchell's on-going projects and then operate primarily as a marine and civil contractor. Respondent was a new company, smaller than Mitchell, with a different risk exposure. Mr. Gilbert provided Zurich's underwriters with the payroll projections and other information necessary to renew Mitchell's CCIP. The data related to Mitchell's on-going projects and loss history as well as Respondent's planned projects. Zurich subsequently issued Policy No. WC 3617144-02 for the period October 1, 2001 through October 1, 2002. The policy designated Mitchell as the primary named insured and Wood-Hopkins Contracting Company, LLC, as one of the combinable entities and an additional named insured. The policy listed Palmer and Cay as the broker of record. The policy did not list Respondent as a named insured. Mr. Gilbert did not receive a copy of the policy until March 2002. However, Mr. Gilbert learned that Zurich had not added Respondent as a named insured to Mitchell's CCIP at least by February 2002. After learning that Zurich had not named Respondent as an insured, Mr. Gilbert continued to operate Respondent as if it had workers' compensation insurance. He was convinced that Respondent's assumption of Mitchell's business presented no additional risk exposure to Zurich. In fact, Mr. Gilbert had a history of spending sufficient funds on safety to reduce a company's loss ratio by half. Additionally, Respondent had suffered no workers' compensation losses. For these reasons, Mr. Gilbert hoped to persuade Zurich to add Respondent retrospectively as a named insured on Mitchell's CCIP policy. Towards the end of 2001 or the beginning of 2002, Zurich learned that Mitchell was going out of business or was no longer in business. Michael Esposito, Mitchell's account manager at Zurich, began to realize that something was wrong when Zurich received a premium payment for Mitchell's CCIP drawn on Respondent's bank account. At that time, Mitchell was behind in making deductible and premium payments to Zurich. Mitchell also was behind in paying Palmer and Cay its fees. On or about January 2, 2002, Mr. Gilbert signed one of Respondent's checks made payable to Palmer and Cay in the amount of $28,740.23. The check included a premium payment in the amount of $3,818.00 for October 2001 workers' compensation insurance. Mr. Gilbert wrote the check pursuant to a Palmer and Cay invoice addressed to The Mitchell Group. The record indicates that Respondent sent its check to Palmer and Cay's lockbox in Atlanta, Georgia, and that it was cashed. By letter dated February 7, 2002, Palmer and Cay advised Mitchell that it resigned as broker of record for The Mitchell Group. The most persuasive evidence indicates that Palmer and Cay resigned due to a dispute with Respondent over fees, not premium payments. By the end of February 2002, Mr. Esposito became aware that Mr. Gilbert wanted Zurich to continue Mitchell's CCIP with Respondent, a totally new company, listed as a named insured. Mr. Esposito then told Mr. Gilbert that Respondent would have to pay Mitchell's past-due premiums and provide Zurich with the necessary information to re-underwrite the policy, reflecting the change in ownership and operations. There is no persuasive evidence that Palmer and Cay or Mr. Gilbert ever provided Zurich with this information. Despite its resignation as broker of record for Mitchell's CCIP, Palmer and Cay agreed to continue servicing the policies until Zurich advised otherwise. For example, on or about February 22, 2002, Mr. Gilbert asked Palmer and Cay to add Respondent as a named insured, along with Wood-Hopkins Contracting Company, LLC, to Mitchell's railroad protection policies. Palmer and Cay referred this request to Zurich. Effective February 26, 2002, Zurich issued a Notice of Cancellation for Mitchell's Policy No. WC 3617144-02. The notice indicates that the policy was cancelled due to nonpayment of premium. About that time, Mr. Gilbert began trying to find a replacement for Palmer and Cay as broker of record. Willis of Florida, an affiliate of Willis of North America, Inc. (Willis), is an insurance broker with offices located in Tampa, Florida. Robert Allen is an insurance agent associated with Willis of Florida. Mr. Allen and Mr. Gilbert had a social and business relationship for many years prior to the time frame at issue here. Toward the end of February 2002, Mr. Allen and Mr. Gilbert had a telephone conference with Mr. Esposito. During that conversation, Mr. Allen indicated that his company was not interested in becoming the broker of record for Mitchell. However, Mr. Allen agreed that, in order to assist Zurich, Willis would issue Certificates of Liability Insurance for Respondent. At that time, Mr. Allen was under the impression that Respondent was a named insured under the Mitchell CCIP. As authorized by Zurich, Palmer and Cay issued three Certificates of Liability Insurance to the Florida Department of Transportation on March 4, 2002. The certificates indicate that Zurich provided commercial general liability and railroad protection insurance for CSX Transportation, Inc., Norfolk Southern Corporation, and Florida East Coast Railway as the named insureds. The certificates state that Wood-Hopkins Contracting Company, LLC, and Respondent were the contractors. Palmer and Cay issued these certificates for the Beaver Street viaduct bridge replacement in Jacksonville, Florida, a project begun by Wood-Hopkins Contracting Company, LLC, during the time that Palmer and Cay was acting as Mitchell's broker of record. On or about March 6, 2002, Mr. Gilbert signed one of Respondent's checks made payable directly to Zurich in the amount of $24,848.00. The check included premium payments in the amount of $3,818.00 for Policy No. WC 3617144-02 for the months of February and March 2002. The record indicates that this check was sent to Zurich's lockbox in Chicago, Illinois, and that it was cashed. On or about March 7, 2002, Zurich reinstated Policy No. WC 3617144-02 without lapse of coverage. The Notice of Reinstatement indicates that Mitchell was the named insured and that Palmer and Cay was the broker of record. On or about March 20, 2002, Zurich sent Mitchell a Notice of Cancellation. The notice states that Mitchell's Policy No. WC 3617144-02 would be cancelled effective June 8, 2002, due to a material change in exposures. Mr. Gilbert did not receive a copy of this cancellation notice. Mr. Gilbert and Mr. Allen did not learn about the cancellation until November 2002. On or about April 17, 2002, Mr. Gilbert signed one of Respondent's checks made payable directly to Zurich in the amount of $12,424.00. The check included a premium payment in the amount of $3,818.00 for Policy No. WC 3617144-02 for the month of April 2002. The record indicates that this check was sent to Zurich's Illinois lockbox and cashed. On April 25, 2002, Willis issued a Certificate of Liability Insurance to American Home Assurance with Respondent as the named insured. The certificate indicates that Zurich provided commercial general liability, automobile liability, and workers' compensation insurance for Respondent on the Beaver Street viaduct bridge replacement project with American Home Assurance and the Florida Department of Transportation as additional named insureds with respect to the general liability coverage. Mr. Allen signed this certificate. On May 6, 2002, Willis issued a Certificate of Liability Insurance to the University of Georgia Athletic Association with Respondent as the named insured. The certificate indicates that Zurich provided commercial general liability, automobile liability, and workers' compensation insurance for Respondent on an academic achievement center project. Mr. Allen signed this certificate. On or about June 13, 2002, Mr. Gilbert signed one of Respondent's checks made payable directly to Zurich in the amount of $12,424.00. The check included a premium payment in the amount of $3,818.00 for Policy No. WC 3617144-02 for the month of May 2002. The record indicates that this check was sent to Zurich's Illinois lockbox and cashed. On July 18, 2002, Willis issued a Certificate of Liability Insurance to Crowley Maritime Corporation with Respondent as the named insured. The certificate indicates that Zurich provided general liability, automobile liability, and workers' compensation insurance to Respondent for a barge loading ramp concrete removal and replacement in Jacksonville, Florida, and that Crowley Maritime Corporation was an additional named insured with respect to general liability coverage. Mr. Allen did not know the policy was cancelled when he signed this certificate. On August 12, 2002, Willis issued a Certificate of Liability Insurance to Martin K. Eby Construction Company with Respondent as the named insured. The certificate indicates that Zurich provided general liability, automobile liability, and workers' compensation insurance for Respondent on the Wonderwood Expressway channel excavation with the Jacksonville Transit Authority and J. E. Sverdrup (Engineer) as additional named insureds as to general liability coverage. Mr. Allen did not know the policy was cancelled when he signed this certificate. On or about August 15, 2002, Mr. Gilbert signed one of Respondent's checks made payable directly to Zurich in the amount of $12,424.00. The check included a premium payment in the amount of $3,818.00 for Policy No. WC 3617144-02 for the month of June 2002. The record indicates that this check was sent to Zurich's Illinois lockbox and cashed. On or about October 1, 2002, Mr. Gilbert signed one of Respondent's checks made payable directly to Zurich in the amount of $12,424.00. The check included a premium payment in the amount of $3,818.00 for Policy No. WC 3617144-02 for the month of September 2002. The record indicates that this check was sent to Zurich's lockbox in Illinois and cashed. In November 2002, Petitioner issued a Stop Work and Penalty Assessment Order for failing to secure workers' compensation insurance. In November and December 2002, Mr. Gilbert and Mr. Allen attempted to persuade Seth Hausman, Zurich's regional manager, to provide retroactive coverage for Respondent under the Mitchell workers' compensation policy, to reinstate the coverage, and to let the policy continue until it lapsed at expiration. Mr. Hausman concluded that Zurich could not assume the exposure without an underwriting evaluation. Mr. Hausman told Mr. Gilbert what information he had to provide in order for Zurich to conduct such an evaluation. In January 2003, Mr. Hausman advised Mr. Gilbert that Zurich had been unable to collect on a surety bond and that Mitchell owed Zurich approximately $750,000.00 in uncollected deductible payments. Mr. Hausman stated that in order to amend the workers' compensation policy to include Respondent as a named insured and to rescind the cancellation retroactively to allow the policy to run full term, Zurich would have to be paid for all outstanding balances. In that event, Zurich was willing to talk about extending workers' compensation coverage to Respondent as requested. When Petitioner issued the Stop Work and Penalty Assessment Order in November 2002, Respondent had about 20 employees. For the period October 1, 2001 through December 31, 2001, Respondent had the following amounts of payroll by class code: Class Code Payroll 5213 $126,739.96 5606 $170,615.31 5610 $5,391.51 6003 $5,777.00 6217 $62,691.54 7335 $73,434.08 8227 $135,572.71 8810 $27,503.88 41. For the period October 1, 2001 through December 31, 2001, the workers' compensation premium rates per $100.00 of payroll for each relevant Class Code class code were as follows: Premium Rates 5213 $33.02 5606 $4.76 5610 $18.08 6003 $62.53 6217 $14.27 7335 $25.97 8227 $9.80 8810 $0.59 For the period October 1, 2001 through December 31, 2001, the premium Respondent would have paid for workers' compensation coverage Class Code by class codes was as follows: Premium 5213 $41,849.53 5606 $8,121.29 5610 $974.79 6003 $3,612.36 6217 $8,946.08 7335 $19,070.83 8227 $13,286.13 8810 $162.27 For the period January 1, 2002 through November 5, 2002, Respondent had the following amounts of payroll by class code: Class Code Payroll 5213 $360,825.22 5403 $7,969.23 5606 $355,253.16 5610 $93,981.09 6003 $17,977.19 6217 $237,889.32 7335 $212,654.00 8227 $261,091.70 8810 $162,068.41 For the period January 1, 2002 through November 5, 2002, the workers' compensation premium rates per $100.00 of payroll for each relevant Class Code class code were as follows: Premium Rates 5213 $32.31 5403 $30.39 5606 $4.91 5610 $17.91 6003 $57.57 6217 $13.52 7335 $29.60 8227 $10.80 8810 $0.65 For the period January 1, 2002 through November 5, 2002, the premium Respondent would have paid for workers' compensation coverage by class codes was as follows: Class Code Premium 5213 $116,582.63 5403 $2,421.85 5606 $17,442.93 5610 $16,832.01 6003 $10,349.46 6217 $32,162.64 7335 $62,945.58 8227 $28,197.90 8810 $1,053.44 Respondent was out of compliance with the workers' compensation law for 398 calendar days between October 1, 2001 and November 5, 2002. Petitioner properly assessed penalty of $100.00 per day, totaling $39,800.00. Respondent would have paid a premium of $384,011.72 to secure workers' compensation insurance for its employees and owes a $39,800.00 penalty for the days it operated without coverage during the period October 1, 2001 through November 5, 2002. Accordingly, Respondent owes a total penalty in the amount of $423,811.72.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Petitioner enter a final order affirming the Amended Stop Work Penalty Assessment Order and directing Respondent to pay a penalty in the amount of $423,811.72. DONE AND ENTERED this 10th day of November, 2003, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of November, 2003.
