Findings Of Fact 11. — The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on February 3, 2009, and the Fourth Amended Order of Penalty Assessment issued on February 5, 2010, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment and the Fourth Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-014-D2, and being otherwise fully advised in the premises, hereby finds that: 1. On February 3, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop- Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-014-D2 to ASSOCIATED WINDOW AND DOOR, INC. (ASSOCIATED). The Stop-Work Order and Order of Penalty Assessment included a Notice of rights wherein ASSOCIATED was advised that any request for an administrative proceeding to challenge or contest the Stop- Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 2. On February 3, 2009, the Stop-Work Order and Order of Penalty Assessment was served via personal service on ASSOCIATED. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On April 10, 2009, the Department issued an Amended Order of Penalty Assessment to ASSOCIATED in Case No. 09-014-D2. The Amended Order of Penalty Assessment assessed a total penalty of $99,761.78 against ASSOCIATED. The Amended Order of Penalty Assessment included a Notice of Rights wherein ASSOCIATED was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569.and 120.57, Florida Statutes. 4. The Amended Order of Penalty Assessment was served on ASSOCIATED by personal service on April 13, 2009. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On April 30, 2009, the Department issued a Second Amended Order of Penalty Assessment to ASSOCIATED in Case No. 09-014-D2. The Second Amended Order of Penalty Assessment assessed a total penalty of $76,081.13 against ASSOCIATED. The Second Amended Order of Penalty Assessment contained a Notice of Rights wherein ASSOCIATED was advised that any request for an administrative proceeding to challenge or contest the Second Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Second Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 6. The Second Amended Order of Penalty Assessment was served on ASSOCIATED by personal service on May 1, 2009. A copy of the Second Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and is incorporated herein by reference. 7. On May 22, 2009, ASSOCIATED filed a timely Petition for a formal administrative hearing in accordance with Sections 120.569 and 120.57, Florida Statutes. The Petition was forwarded to the Division of Administrative Hearings and assigned Case No. 09- 3044. . 8. On February 5, 2010, the Department issued a Fourth Amended Order of Penalty Assessment to ASSOCIATED in Case No. 09-014-D2. The Fourth Amended Order of Penalty Assessment assessed a total penalty of $1,256.24 against ASSOCIATED. The Fourth Amended Order of Penalty Assessment was served on ASSOCIATED through the Division of Administrative Hearings. A copy of the Fourth Amended Order of Penalty Assessment is attached hereto as “Exhibit D” and is incorporated herein by reference. 9. ‘On February 10, 2010, ASSOCIATED filed a Motion to Close File Due to Settlement in DOAH Case No. 09-3044. A copy of the Motion to Close File Due to Settlement filed by ASSOCIATED. is attached hereto as “Exhibit E.” 10. On February 10, 2010, Administrative Law Judge Errol H. Powell entered an Order Closing File, relinquishing jurisdiction to the Department. A copy of the February 10, 2010 Order Closing File is attached hereto as “Exhibit F.”
The Issue The issue to be resolved in this proceeding concerns whether the Respondent was operating its business without workers' compensation coverage for employees in violation of the below-referenced provisions of Chapter 440, Florida Statutes, whether it continued its business operations in violation of a Stop Work Order issued August 11, 2005, in purported violation of Section 440.107(7)(a), Florida Statutes (2005), and what, if any, penalty is warranted.
Findings Of Fact The Department of Financial Services, Division of Workers' Compensation (Department) is an agency of the State of Florida charged with enforcing the statutory requirements requiring employers to secure the payment of workers' compensation benefits by obtaining insurance coverage therefor for employees, as mandated by Section 440.107, Florida Statutes (2005). The Respondent, Krashco, Inc., d/b/a J. Krash's Sports Bar (Krashco, Inc.) is a Florida corporation domiciled in Panama City, Florida. On August 11, 2005, it was engaged in the business of operating J. Krash's Sports Bar at 1508 Calhoun Avenue in Panama City, Florida. Patricia Krossman is a Workers' Compensation Investigator for the Department. She conducts investigations into all types of business to verify that they have required workers' compensation insurance coverage or are statutorily exempt. She visited J. Krash's Sports, Bar accompanied by her supervisor, William Dorney, and another investigator on August 11, 2005. J. Krash's Sports Bar is a business owned by the Respondent Krashco, Inc. Upon entering the bar, Ms. Krossman, observed several customers and a bartender. She inquired of the bartender whether the owner was present. She was then introduced to Mr. Matthew McDonough who identified himself as the accountant for Krashco, Inc. Mr. Dorney was present and witnessed this encounter with Mr. McDonough. Mr. Krossman interviewed Mr. McDonough who stated that he handled all the business for Krashco, Inc., and that Krashco, Inc., had one full-time employee and six hourly employees. Mr. McDonough provided the names of those employees to Ms. Krossman and told her that Krashco, Inc., had no workers' compensation insurance policy to cover those employees. This revelation was corroborated by Mr. Dorney who was also present. Mr. McDonough identified Ms. Janis Kay Porter-Krasno as the sole officer of the corporation, Krashco, Inc. He provided the telephone number for Ms. Krasno and Investigator Krossman telephoned Ms. Krasno. She confirmed the number and the names of the employees of Krashco, Inc., and J. Krash's Sports Bar. She also confirmed that Krashco, Inc., had no workers' compensation coverage. In accordance with Chapter 440, Florida Statutes, insurance carriers report to the Department the issuance to businesses of workers' compensation insurance policies. The Department issues workers' compensation insurance exemptions also. The Department maintains an electronic database of employer coverage and exemptions in its Coverage and Compliance Automated System (CCAS), which allows investigators to determine whether an employer has secured workers' compensation insurance coverage or whether that employer has an exemption from coverage. This database is used in the normal course of the Department's investigations. Ms. Krossman utilized the CCAS data base in the subject investigation. This database confirmed that the Respondent had no workers' compensation coverage and no exemption from coverage from any officer of the Respondent corporation at the time of the investigation. (See Department exhibits three and four in evidence). The Department has a policy or statutory interpretation which it carries out, concerning its duties under Section 440.107(7)(a), Florida Statutes (2005), requiring that if an employer who is required to secure payment of workers' compensation benefits has failed to do so, that failure is deemed an immediate serious danger to public health safety or welfare and results in the issuance of a "Stop Work Order" by the Department. In view of her investigation as described, Investigator Krossman determined that the Respondent was in violation of the workers' compensation law. This was because it employed more than four individuals, for whom the Respondent was required to secure the payment of workers' compensation and yet had no workers' compensation for any of its employees. Investigator Krossman's supervisor, Mr. Dorney, reviewed the results of Ms. Korssman's investigation and agreed with her and authorized her to issue a Stop Work Order to the Respondent due to its failure to comply with the relevant requirements of Chapter 440, Florida Statutes. Indeed, the Respondent ultimately stipulated its liability for the charge that it violated Section 440.107(7), Florida Statutes (2005), by not securing the payment of workers' compensation for the employees in question. The Stop Work Order was served on Krashco, Inc., on August 11, 2005, alerting that employer in accordance with Section 440.107(7)(d), Florida Statutes (2005), that a penalty would be assessed and that the penalty might be amended based on further information obtained, including the production of business records by the employer. The Stop Work Order also advised that if the employer conducted any business operations in violation of the Stop Work Order that a penalty of $1,000.00 per day of violation would be assessed. Under the mandate of Section 440.107(5), Florida Statutes (2005), and Florida Administrative Code Rule 69L-6.015, Florida employers are required to maintain business records that enable the Department to determine whether an employer is complying with the workers' compensation law. On August 11, 2005, Ms. Krossman issued and hand served on Krashco, Inc., a written request for production of business records for purposes of a penalty assessment calculation. On September 14 and 19, 2005, the Respondent's accountant provided business records to the Department. After reviewing those business records, Investigator Krossman again consulted with her supervisor Mr. Dorney, who authorized her to issue an Amended Order of Penalty Assessment. The Amended Order of Penalty Assessment is the Department's Exhibit 9 in evidence. The Amended Order was issued and served on Respondent on September 26, 2005, and assessed a total penalty of $49,979.79 under the authority of Section 440.107(7)(d)1. and (c), Florida Statutes (2005). The penalty calculations pertaining to each of the employees listed appeared in a three page worksheet attached and incorporated as part of Department's exhibit nine in evidence. Investigator Krossman selected the appropriate NCCI class code for Krashco Inc.'s business, and its corresponding premium rate, in order to apply that to each employee's wages. The Department relies on these premium rates and the classification codes for these purposes in the normal course of its regulation of such matters.1/ Ultimately, at hearing, the Respondent stipulated that it did not dispute the charge in the Amended Order and does not dispute the accuracy of the penalty calculation.2/ In light of the requirements of Section 440.107(7)(d)1., Florida Statutes (2005), Investigator Krossman calculated the penalty for the period of non-compliance back to September 1, 2002, pursuant to the three year "reach back standard" in the statute. The premium which had thus been evaded which the Respondent would have paid had it secured workers' compensation insurance was thus shown to be $7,986.43. The statutorily provided penalty on that amount of evaded premium multiplied by the statutory standard of 1.5 times resulted in a penalty amount of $11,979.79. Respondent also stipulated at the hearing that it had violated the Stop Work Order issued on August 11, 2005, by continuing to conduct its business operations of J. Krash's Sports Bar through September 19, 2005. This engendered an additional penalty as provided in Section 440.107(7)(a) and (c), Florida Statutes (2005). Investigator Krossman calculated the additional penalty at $1,000.00 per day of violation time from August 12, 2005 through September 19, 2005, at $38,000.00. This results in a total aggregate assessed penalty, pursuant to the Amended Order, of $49,979.79. The business of Respondent Krashco, Inc., is J. Krash's Sports Bar. Its principal place of business is 1508 Calhoun Avenue, Panama City, Florida 32405. Section 440.107(7)(a), Florida Statutes (2005), requires a cessation of all business operations by an employer when a Stop Work Order is issued by that employer by the Department. The Stop Work Order "shall remain in effect until the Department issues an order releasing the Stop Work Order upon a finding that the employer has come into compliance with the coverage requirements of this Chapter and has paid any penalty assessed under this section."3/ Krashco, Inc., has never paid any part of the assessed penalty pursuant to the Amended Order or the Second Amended Order filed later. The Department has never issued an Order of Release from the Stop Work Order. Nevertheless, the Respondent Krashco, Inc., after September 19, 2005, continued the business operations of J. Krash's Sports Bar. Officers of corporations may elect an exemption from coverage under the workers' compensation law as an employee (see Section 440.05). This exemption is effective, however, only for the corporation listed in the eligible officer's Notice of Election to be Exempt and which is paying that officer's salary or wages. Three new corporations were formed whereby the previous employees of Krashco, Inc., d/b/a J. Krash's Sports Bar became officers of Krashco, Inc., and those three new corporations. This is because Krashco, Inc., needed people to operate the bar on its behalf to buy goods and services to sell and dispense at its business, J. Krash's Sports Bar. Krashco, Inc.'s former employees became officers of these three newly created corporations and two of the former employees became officers of the Respondent Krashco, Inc. Krashco, Inc., d/b/a J. Krash's Sports Bar verbally contracted with these new officers of the new corporations to perform the same services for its business, J. Krash's Sports Bar, that those same individuals had been performing before becoming officers of these corporations, performing security, catering, and bartending services. Krashco, Inc.'s, principals were of the belief that it was necessary to secure the services in this manner in order to continue the operation of its business, without employees, so that it would no longer be required to have workers' compensation coverage for them. After August 11, 2005, and through most of the remainder of 2005, Ms. Janis Krasno, the President of Krashco, Inc., continued to pay these new officers, the former employees, directly with checks drawn on Krashco Inc.'s account and made payable to the individual officers as payees (not to their corporation) for the same services they had performed for the benefit of J. Krash's Sports Bar.4/ Keith Larson, an employee of Krashco, Inc., became an officer of the original Krashco, Inc., as well as Crashco, Inc., one of the three newly created corporations. Keith Larson elected an exemption from Chapter 440 as an officer of Krashco, Inc. Larson's election of exemption with Krashco, Inc., however, did not become effective until November 2, 2005. Consequently, Keith Larson continued to be paid by Krashco, Inc., as an employee through at least November 1, 2005. Six other Krashco, Inc., employees were granted exemptions (as officers of the other corporations) by the Petitioner from the requirement of workers' compensation coverage, which were all effective on August 22, 2005. This reduced the number of employees of record to less than the compliment of four (or more) for which coverage is required. This would seem, under only these circumstances, to represent the expiration of liability by the Respondent for failure to secure payment of workers' compensation and to also be the date the Stop Work Order should be rescinded and further penalties tolled. The fact is, however, that Ms. Krasno and the Respondent, Krashco, Inc., as found below, continued to pay these "former employees" with Krashco, Inc., checks made to them individually (not to their corporations), for the same job duties, until December 15, 2005. Thus they continued to function as employees of the Respondent, Krashco, Inc., until that date. After that date they were paid by a new corporation, Crashco, Inc. Ms. Janis Krasno, President of Krashco, Inc., continued to operate and run J. Krash's Sports Bar as an officer of and on behalf of Krashco, Inc., through April 28, 2006. This included payment of Krashco's expenses occasioned in the operation of the business. Ms. Krasno, President of Krashco, Inc., wrote checks through December 15, 2005, drawn on Krashco, Inc.'s bank account to pay for Krashco, Inc.'s business operation expenses, all of which were for the benefit of operating J. Krash's Sports Bar. Ms. Krasno as President of Krashco, Inc., issued checks through December 15, 2005, drawn on that corporation's account to pay the individual officers of the three new corporations which had been formed, and of Krashco, Inc., for those officers' bartending, security, and catering services, all of which were performed to continue and perpetuate the operation of J. Krash's Sports Bar. Ms. Krasno issued checks through December 15, 2005, on Krashco, Inc.'s account, to promote sales, by the promotion of upcoming activities to be held at the bar, or to purchase goods for sale at J. Krash's Sports Bar, from various vendors, for non-alcoholic drinks, restaurant supplies, food and other goods for parties. Such payments were also used to pay vendors such as Goldring Gulf Distributing Company and other distributors for alcoholic beverages to be sold in the operation of J. Krash's Sports Bar, and for incidental expenses. From August 12, 2005 through December 15, 2005, and through April 28, 2006, J. Krash's Sports Bar was generally open for business seven days a week from 2:00 p.m. to 4:00 a.m. Since September 19, 2005 through April 28, 2006, Ms. Krasno still controlled the management and operations of Krashco, Inc., d/b/a J. Krash's Sports Bar. On December 21, 2005, however, Krashco, Inc.'s, president, Ms. Krasno, who also became president of Crashco, Inc., began issuing checks drawn on the bank account of Crashco, Inc., to pay for expenses occasioned in the operation of the Respondent's business J. Krash's Sports Bar. These were payments to the same officers she had been paying since September 19, 2005, for their bartending, security, and catering services, as well as to essentially the same vendors for purchases of alcoholic beverages, etc. for sale at J. Krash's Sports Bar. Through the date of the final hearing Ms. Krasno, with checks drawn on the account of Crashco, Inc., purchased alcoholic beverages on behalf of Krashco, Inc., the holder of liquor license BEV1301819, in order to continue the business operations of Krashco, Inc., d/b/a J. Krash's Sports Bar. After December 21, 2005 and through April 28, 2006, income of sales at J. Krash's Sports Bar was deposited in Crashco, Inc.'s account. After entry of the Amended Order on September 26, 2005, the Respondent timely filed its request for a formal proceeding on October 14, 2005. This rendered the initial agency action to be non-final, to await the outcome of this de novo, proceeding.
Recommendation Having considered the foregoing findings of fact, the 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, under the Amended Order of Penalty Assessment, the Second Amended Order of Penalty Assessment and the Stop-Work Order, a penalty in the total amount of $136,979.80, together with an additional assessment for failure to secure coverage for the period of September 19, 2005 through December 15, 2005, in the manner provided in Subsection 440.107(7)(d)1., Florida Statutes (2005). DONE AND ENTERED this 8th day of January, 2007, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of January, 2007.
The Issue Whether Mike Futch, d/b/a Futch Construction Company, (Respondent) violated Sections 440.10 and 440.38, Florida Statutes, and if so, what penalty should be imposed. References to sections are to the Florida Statutes (2004).
Findings Of Fact Petitioner is the state agency responsible for enforcing provisions of Florida law, specifically Chapter 440, Florida Statutes, which requires that employers secure workers’ compensation coverage for their employees. At all times material to this case, Respondent was engaged in the construction business within the meaning of Chapter 440, Florida Statutes. Its individual principal, Mike Futch (Mr. Futch), was responsible for the day-to-day operations of the business. At all times material to this case, Respondent is an employer within the meaning of Section 440.02(16)(a), Florida Statutes. At all times material to this case, Respondent was legally obligated to provide workers' compensation insurance in accordance with the provisions of Chapter 440, Florida Statutes, for all persons employed by Respondent to provide construction services within Florida. Chapter 440 requires that the premium rates for such coverage be set pursuant to Florida law. It is undisputed that Respondent had not furnished the required coverage, and that there was no valid exemption from this requirement. Accordingly, on May 12, 2004, the Stop Work Order was properly entered. Thereafter, Petitioner reviewed Respondent's payroll records, which revealed that Respondent employed individuals whose identities are not in dispute, under circumstances which obliged Respondent to provide workers' compensation coverage for their benefit. Based upon Respondent’s payroll records, Petitioner correctly calculated the penalty amount imposed by law under all the circumstances of the case, and issued the Amended Order imposing a penalty assessment in the amount of $198,311.82. Respondent did not persuasively dispute the factual or legal merits of Petitioner's case. Rather, Respondent suggested that this forum has some type of general equity powers to lessen the penalty on the grounds that Respondent made a good faith effort to provide coverage for its workers. The record does demonstrate that Mr. Futch in good faith engaged a Georgia insurance agent and instructed him to obtain workers' compensation coverage which would satisfy the requirements of Florida law with respect to Respondent's Florida operations. The Georgia agent's failure to obtain coverage that satisfies Florida's requirements is a regrettable circumstance, but it raises no issue over which this forum has authority.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order that affirms the Amended Order in the amount of $198,311.82. DONE AND ENTERED this 28th day of January, 2005, in Tallahassee, Leon County, Florida. S FLORENCE SNYDER RIVAS 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 January, 2005. COPIES FURNISHED: Joe Thompson, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 Patrick C. Cork, Esquire Cork & Cork 700 North Patterson Street Valdosta, Georgia 31601 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue in this case is whether Respondent violated the provisions of chapter 440, Florida Statutes,1/ by failing to secure the payment of workers’ compensation, as alleged in the Stop-Work Order and Third Amended Order of Penalty Assessment.
Findings Of Fact The Department is the state agency responsible for enforcing the statutory requirement that employers secure workers’ compensation coverage for the benefit of their employees. Respondent is a corporation with its principal office 3981 North W Street, Unit 36, Pensacola, Florida 32505. At all relevant time periods, Respondent has been engaged in business as a contractor in the construction industry. On March 28, 2012, after receiving a public referral regarding alleged uninsured construction activity at 2544 North D Street in Pensacola, Florida (the Site), Department Compliance Investigator Angelia Brown visited the Site. Upon Ms. Brown's arrival, there were plumbers and a siding company at the Site. According to Ms. Brown, she also saw an individual attaching u- shaped metal clips between the inside beams and the roof and soffits of the house that was being constructed at the Site. The plumbers had a workers' compensation policy and the siding workers had exemptions from workers' compensation requirements. Ms. Brown spoke to the man who appeared to be attaching the metal clips. Based upon that conversation, Ms. Brown concluded that the man was a subcontractor and Respondent's employee. The evidence, however, does not support that conclusion. The man, whose name is apparently Robert Madron, was not called as a witness at the final hearing. According to Ms. Brown, Mr. Madron told her he had his own company. Ms. Brown, however, was unable to obtain information verifying that assertion. Further, while Mr. Howard had paid Mr. Madron prior to Ms. Brown's visit for unsolicited work Mr. Madron had performed for Mr. Howard, consisting of picking up trash and repairing some equipment owned by Mr. Howard, Mr. Howard denied that Respondent ever employed Mr. Madron. Rather than showing that Mr. Madron was a subcontractor with his own business or an employee of Respondent, the evidence adduced at the final hearing indicated that Mr. Madron, who was known as "Gomer" by Mr. Howard, was an unemployed, homeless person, living in nearby woods. Mr. Madron would often come to the Site and surrounding neighborhood looking for work and food. Mr. Howard was surprised that Ms. Brown had taken Mr. Madron seriously, because Mr. Howard believes that Mr. Madron's facial expressions and unbalanced, awkward gait are obvious indicators that Mr. Madron is unstable and has mental problems. Ms. Brown issued a Stop-Work Order to Mr. Madron the day of her first visit at the Site, March 28, 2012. The evidence presented at the final hearing, however, failed to show that Mr. Madron was ever employed by Respondent. The next day, March 29, 2012, Ms. Brown returned and observed four other individuals working at the Site. The individuals included Robert Jones, Charles Lyons, Martin Shaughnessy, and Allen Weeden. While Ms. Brown concluded that these individuals were Respondent's employees on March 29, 2012, the evidence shows that they were paid for the work that day by Pacesetter Personnel, an employee-leasing company. Aside from alleging that Respondent employed Mr. Madron, the Third Amended Order of Penalty Assessment is based upon Respondent's alleged employment and failure to provide workers' compensation coverage for Mr. Jones, Mr. Lyons, Mr. Shaughnessy, and Mr. Weeden. In addition, the Third Amended Order of Penalty Assessment alleges that Respondent employed its officer, Mr. Howard, during a lapse in Mr. Howard's exemption from workers' compensation. There was no testimony from Robert Jones, Charles Lyons, Martin Shaughnessy, or Allen Weeden offered at the final hearing and the evidence is otherwise insufficient to show that those individuals were employed by Respondent on March 29, 2012. The Department's investigator, Ms. Brown, further concluded that Pacesetter Personnel had not provided worker's compensation coverage for those four men on March 29, 2012. Her conclusion, however, was based on a conversation she said she had with Pacesetter Personnel. The Department did not offer the testimony from anyone at Pacesetter, nor did it offer any non- hearsay evidence to support Ms. Brown's conclusion that Pacesetter Personnel was not providing workers' compensation to those four individuals. Further, the only evidence that the Department offered to prove that Messrs. Jones, Lyons, Shaughnessy, and Weeden were ever employed by Respondent, or to support the Third Amended Penalty Assessment, consists of Mr. Howard's cancelled checks to those individuals. The Third Amended Penalty Assessment seeks an assessment for Robert Jones from January 1 to March 28, 2012. At the final hearing, Mr. Howard testified that Mr. Jones is a relative, and the payment to Mr. Jones was a loan to help Mr. Jones with moving expenses. There is no contrary evidence. The Third Amended Penalty Assessment provides an assessment for Charles Lyons for the periods from July 1, 2010 to December 31, 2010, and from January 1, 2011 to December 31, 2011. The assessment is based upon one check to Mr. Lyons in the amount to $480. Mr. Howard testified that Mr. Lyons had an exemption from workers' compensation. The Department presented no contradictory evidence. The Third Amended Penalty Assessment seeks an assessment for Martin Shaughnessy for several time periods based upon several checks from Mr. Howard. Mr. Howard testified that Mr. Shaughnessy had an exemption and the Department presented no contrary evidence. The Third Amended Penalty assessment also seeks an assessment for James Howard, individually, from July 17 to August 11, 2011, during which time there was a lapse in his certificate of exemption from workers' compensation. The evidence showed that, other than that 26-day lapse, Mr. Howard has maintained his exemption since 2003. The Department presented no evidence that Mr. Howard provided services to, or was paid by, Respondent during the time that his exemption had lapsed. The only evidence presented was a check from Respondent's checking account showing a payment to Mr. Howard's mother during the lapse period. Mr. Howard testified that the check was to reimburse his mother for the use of her American Express card to purchase materials and supplies. The Department presented no countervailing evidence. In sum, the evidence presented at the final hearing was insufficient to support the Stop Work Order or Third Amended Penalty Assessment.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Division of Workers’ Compensation enter a final order dismissing the Stop-Work Order and Third Amended Order of Penalty Assessment issued against Respondent. DONE AND ENTERED this 28th day of June, 2013, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III 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 28th day of June, 2013.
The Issue The issues in the case are whether J. D. Tree Service, Inc. (Respondent), conducted business in violation of a previously- issued Stop-Work Order, and, if so, whether the Department of Financial Services, Division of Workers' Compensation (Petitioner), properly calculated the applicable penalty assessment.
Findings Of Fact The Petitioner is the state agency charged with the responsibility to enforce chapter 440, Florida Statutes (2010),1/ which essentially requires that Florida employers secure workers' compensation coverage for their employees. The Respondent is a Florida corporation providing various tree services, including trimming and related activities. On June 11, 2007, the Petitioner issued a Stop-Work Order (07-172-D7) and an Order of Penalty Assessment based on the Respondent's failure to obtain proper workers' compensation insurance coverage for employees. On June 14, 2007, the Petitioner issued an Amended Order of Penalty Assessment for $147,419.52 against the Respondent. The amended order was personally served on the Respondent on the date of issuance. The Respondent did not challenge either the Stop-Work Order or the Amended Order of Penalty Assessment. On June 15, 2007, the Respondent executed a "Payment Agreement Schedule for Periodic Payment of Penalty" (hereinafter "Agreement"). The Agreement permitted the Respondent to satisfy the penalty through a ten percent down payment and 60 subsequent monthly payments. Based on the execution of the Agreement, the Petitioner lifted the Stop-Work Order on the condition that the Respondent complied with the terms of the Agreement. The Agreement specifically stated that failure to meet the terms set forth therein would "result in the immediate reinstatement of the Stop-Work Order, and the remaining unpaid balance of the penalty to be paid by the employer shall become immediately due." The Respondent was provided a copy of the Agreement and acknowledged understanding the terms set forth therein. The Respondent made the down payment required at the time the Agreement was executed, but thereafter made none of the monthly payments due under the Agreement. On May 18, 2007, the Petitioner issued an Order Reinstating Stop-Work Order (the "Reinstatement Order") based on the Respondent's failure to comply with the payment terms of the Agreement. The Reinstatement Order identified the unpaid balance as $132,674.52 and directed the Respondent to "cease all business operations in the State of Florida" until certain conditions were met. Such conditions included satisfaction of the existing unpaid penalty balance as well as any additional penalty related to business operations conducted in violation of the Stop-Work Order and a determination by the Petitioner that the Respondent was in compliance with workers' compensation coverage requirements. The Respondent did not challenge the Reinstatement Order, and it became effective on June 6, 2008. On December 14, 2009, a workers' compensation compliance investigator employed by the Petitioner observed tree service operations being conducted at a recreational vehicle park in Naples, Florida. The investigator observed that there were persons wearing t-shirts bearing the Respondent's identification. Upon inquiry by the investigator, the workers stated that they were working for the Respondent. The investigator observed that the vehicles from which the workers were operating bore the Respondent's insignia. The investigator determined that there was an existing Stop-Work Order against the Respondent. On January 8, 2010, the Petitioner issued a Request for Production of Business Records, seeking to identify the number of days during which the Respondent had operated in violation of the Stop-Work Order, and provided the request to the Respondent. Also on January 8, 2010, the Petitioner issued an Order Assessing Penalty for Working in Violation of Reinstated Stop-Work Order, seeking to impose a penalty of $555,000.00. The penalty calculation was based on the 555 calendar days from June 7, 2008, to December 14, 2009. The Respondent challenged the penalty assessment and requested a formal administrative hearing. On May 21, 2010, the Respondent submitted payroll records for the period of March 21, 2009, through December 11, 2009. The records established that the Respondent had conducted business operations during the period that the Stop- Work Order was effective. The records also indicated that the Respondent routinely conducted business operations from Monday through Friday of each week, but did not operate on Saturdays, Sundays, or usual legal holidays. On January 21, 2011, the Department issued an Amended Order Assessing Penalty for Working in Violation of Reinstated Stop-Work Order in the amount of $381,000.00, based on the Respondent's routine work schedule with the deletion of the Saturdays, Sundays, and legal holidays that had been included in the January 8, 2010, Assessment. On January 25, 2011, the Petitioner filed a Motion to Amend Order of Penalty Assessment. The Motion was granted without objection at the commencement of the hearing. All orders relevant to this dispute were hand- delivered or were mailed to the Respondent's corporate address, which was also the residential address for the principals of the Respondent.
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 assessing a penalty of $381,000.00 against the Respondent for conducting business operations in violation of the reinstated Stop-Work Order. DONE AND ENTERED this 29th day of March, 2011, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of March, 2011.
The Issue Whether Fantastic Construction of Daytona, Inc. (“Respondent”), failed to secure the payment of workers’ compensation coverage for its employees; and, if so, whether the Department of Financial Services, Division of Workers’ Compensation (“Petitioner” or “Department”), correctly calculated the penalty to be assessed against Respondent.
Findings Of Fact The Department is the state agency charged with enforcing the requirement of chapter 440, Florida Statutes, that employers in Florida secure workers’ compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondent is a corporation engaged in the construction industry with headquarters in Daytona Beach, Florida. On November 19, 2015, the Department’s compliance investigator, Scott Mohan, observed five individuals framing a single-family house at 173 Botefuhr Avenue in Daytona, Florida. Mr. Mohan interviewed the individuals he observed working at the jobsite and found they were working for Respondent on lease from Convergence Leasing (“Convergence”). Mr. Mohan contacted Convergence and found that all of the workers on the jobsite were employees of Convergence, except Scott Barenfanger. Mr. Mohan also confirmed that the workers’ compensation policy for Convergence employees was in effect. Mr. Mohan reviewed information in the Coverage and Compliance Automated System, or CCAS, for Respondent. CCAS indicated Respondent’s workers were covered for workers’ compensation by Convergence and that Respondent’s contract with Convergence was active. Mr. Mohan also confirmed, through CCAS, that Foster Coleman, Respondent’s president, had previously obtained an exemption from the workers’ compensation requirement, but that his exemption expired on July 18, 2015. Mr. Mohan then contacted Mr. Coleman via telephone and informed him that one of the workers on the jobsite was not on the active employee roster for Convergence, thus Respondent was not in compliance with the requirement to obtain workers’ compensation insurance for its employees. Mr. Coleman reported to the jobsite in response to Mr. Mohan’s phone call. Mr. Coleman admitted that Mr. Barenfanger was not on the Convergence employee leasing roster. Mr. Coleman subsequently obtained an application from Convergence for Mr. Barenfanger and delivered it to his residence. Mr. Mohan served Mr. Coleman at the jobsite with a Stop-Work Order and a Request for Production of Business Records for Penalty Assessment Calculation (“BRR”). In response to the BRR, Respondent provided to the Department business bank statements, check stubs, copies of checks, certificates of liability insurance for various suppliers and subcontractors, and an employee leasing roster for most of the audit period from November 20, 2013, to November 19, 2015.1/ Respondent did not produce any check stubs for November and December 2013. Mr. Coleman testified, credibly, that his bookkeeper during that time period did not keep accurate records. Mr. Coleman did produce his business bank statements and other records for that time period. Based on the review of initial records received, the Department calculated a penalty of $17,119.80 and issued an Amended Order of Penalty Assessment in that amount on February 18, 2016. On March 17, 2016, Respondent supplied the Department with additional records. Altogether, Respondent submitted over 400 pages of records to the Department. The majority of the records are copies of check stubs for checks issued on Respondent’s business bank account. The check stubs are in numerical order from 1349 to 1879, and none are missing. The check stubs were hand written by Mr. Coleman, who is 78 years old. Some of his writing on the check stubs is difficult to discern. On April 4, 2016, following review of additional records received, the Department issued a Second Amended Order of Penalty Assessment in the amount of $9,629.36. The Department assigned penalty auditor Sarah Beal to calculate the penalty assessed against Respondent. Identification of Employees Ms. Beal reviewed the business records produced by Respondent and identified Respondent’s uninsured employees first by filtering out payments made to compliant individuals and businesses, and payments made for non-labor costs. However, the evidence demonstrated that the Department included on its penalty calculation worksheet (“worksheet”) payments made to individuals who were not Respondent’s employees. Neal Noonan is an automobile mechanic. Mr. Noonan was neither an employee of, nor a subcontractor for, Respondent for any work performed by Respondent during the audit period. Mr. Noonan performed repairs on Mr. Coleman’s personal vehicles during the audit period. Checks issued to Mr. Noonan during the audit period were for work performed on Mr. Coleman’s personal vehicles. The Department’s worksheet included a “David Locte” with a period of noncompliance from June 19, 2014, through December 31, 2014. The basis for including Mr. Locte as an employee was a check stub written on December 10, 2014, to a business name that is almost indiscernible, but closely resembles “Liete & Locke” in the amount of $100. The memo reflects that the check was written for “architect plans.” Mr. Coleman recognized the worksheet entry of David Locte as pertaining to David Leete, an architect in Daytona. Mr. Leete has provided architectural services to Respondent off and on for roughly five years. Mr. Leete signs and seals plans for, among others, a draftsman named Dan Langley. Mr. Langley provides drawings and plans for Respondent’s projects. When Respondent submits plans to a local governing body which requires architectural drawings to accompany permit applications, Mr. Leete reviews and signs the plans. Mr. Leete was neither an employee of, nor a subcontractor for, Respondent during the audit period. The single payment made to Mr. Leete by Respondent during the audit period was for professional architectural services rendered. Mr. Langley was neither an employee of, nor a subcontractor for, Respondent during the audit period. Payments made to Mr. Langley during the audit period were for professional drafting services rendered. Among the names on the Department’s worksheet is R.W. Kicklighter. Mr. Kicklighter is an energy consultant whose office is located in the same building with Mr. Leete. Mr. Kicklighter prepares energy calculations, based on construction plans, to determine the capacity of heating and air-conditioning systems needed to serve the planned construction. Mr. Kicklighter was neither an employee of, nor a subcontractor for, Respondent during the audit period. Payments made to Mr. Kicklighter during the audit period were for professional services rendered. Respondent made a payment of $125 on September 15, 2014, to an entity known as Set Material. Set Material is a company that rents dumpsters for collection of concrete at demolition and reconstruction sites. Removal and disposal of the concrete from the jobsite is included within the rental price of the dumpster. The Department included on the worksheet an entry for “Let Malereal.” The evidence revealed the correct name is Set Material and no evidence was introduced regarding the existence of a person or entity known as Let Malereal. Set Material was neither an employee of, nor a subcontractor for, Respondent during the audit period. The single payment made to Set Material during the audit period was for dumpster rental. The Department’s worksheet contains an entry for “CTC” for the penalty period of January 1, 2014, through May 1, 2014. Respondent made a payment to “CTC” on April 11, 2014, in connection with a job referred to as “964 clubhouse.” The records show Respondent made payments to Gulfeagle Supply, Vern’s Insulation, John Wood, Bruce Bennett, and Ron Whaley in connection with the same job. At final hearing, Mr. Coleman had no recollection what CTC referred to. Mr. Coleman’s testimony was the only evidence introduced regarding identification of CTC. CTC could have been a vendor of equipment or supplies for the job, just as easily as an employee. The evidence is insufficient to support a finding that CTC was an employee of, or a subcontractor for, Respondent during the audit period. The check stub for check 1685 does not indicate to whom the $60 payment was made. The stub reads “yo for Doug.” The Department listed “Doug” as an employee on its worksheet and included the $60 as wages to “Doug” for purposes of calculating workers’ compensation premiums owed. At hearing, Mr. Coleman was unable to recall ever having employed anyone named Doug, and had no recollection regarding the January 7, 2015, payment. The evidence was insufficient to establish that “Doug” was either Respondent’s employee or subcontractor during the audit period. Ken’s Heating and Air was not an employee of, nor a subcontractor to, Respondent for any work undertaken by Respondent during the audit period. Ken’s Heating and Air conducted repairs on, and maintenance of, Mr. Coleman’s personal residence during the audit period. Checks issued to Ken’s Heating and Air during the audit period were payments for work performed at Mr. Coleman’s personal residence. Barry Smith is an electrical contractor. Mr. Smith was neither an employee of, nor subcontractor to, Respondent for any work performed by Respondent during the audit period. Mr. Smith did make repairs to the electrical system at Mr. Coleman’s personal residence during the audit period. Checks issued to Mr. Smith during the audit period were payments for work performed at Mr. Coleman’s personal residence. The remaining names listed on the Department’s penalty calculation worksheet were accurately included as Respondent’s employees.2/ Calculation of Payroll Mr. Coleman’s exemption certificate expired on July 18, 2015, approximately four months shy of the end of the audit period. Payments made by Respondent to Mr. Coleman during the time period for which he did not have a valid exemption (the penalty period) were deemed by the Department as wages paid to Mr. Coleman by Respondent. Respondent’s business records show seven checks written either to Mr. Coleman or to cash during that time period in the total amount of $3,116.52. The Department included that amount on the worksheet as wages paid to Mr. Coleman. Check 1873 was written to cash, but the check stub notes that the payment of $1,035.69 was made to Compliance Matters, Respondent’s payroll company. Check 1875 was written to cash, but the check stub notes that the payment of $500 was made to Daytona Landscaping. The evidence does not support a finding that checks 1873 and 1875 represented wages paid to Mr. Coleman. The correct amount attributable as wages paid to Mr. Coleman during the penalty period is $1,796.52. Respondent’s employees Tyler Eubler, Brian Karchalla, Keith Walsh, and John Strobel, were periodically paid by Respondent during the audit period in addition to their paychecks from Convergence. Mr. Coleman testified that the payments were advances on their wages. He explained that when working on a job out of town, the crew would arrive after Convergence had closed for the day, and Mr. Coleman would pay them cash and allow them to reimburse him from their paychecks the following day. Unfortunately for Respondent, the evidence did not support a finding that these employees reimbursed Mr. Coleman for the advances made. The Department correctly determined the payroll amount attributable to these employees. The Department attributed $945 in payroll to “James Sharer.” The Department offered no evidence regarding how they arrived at the name of James Sharer as Respondent’s employee or the basis for the payroll amount. James Shores worked off-and-on for Respondent. Mr. Coleman recognized the worksheet entry of “James Sharer” as a misspelling of Mr. Shores’ name. Respondent’s records show payments totaling $535 to Mr. Shores during the audit period. The correct amount of payroll attributable to Mr. Shores from Respondent during the audit period is $535. The Department included wages totaling $10,098.84 to Mr. Barenfanger during the period of noncompliance from November 20, 2013, to December 31, 2013. The Department imputed the average weekly wage to Mr. Barenfanger for that period because, in the Department’s estimation, Respondent did not produce records sufficient to establish payroll for those two months in 2013. See § 440.107(7)(e), Fla. Stat. The voluminous records produced by Respondent evidenced not a single payment made to Mr. Barenfanger between January 2014, and November 19, 2015. Even if Mr. Coleman had not testified that he did not know or employ Mr. Barenfanger before November 19, 2015, it would be ludicrous to find that he worked weekly for Respondent during the last two months of 2013. Mr. Coleman testified, credibly, that Mr. Barenfanger worked the jobsite for Respondent on November 18 and 19, 2015, but not prior to those dates. The evidence does not support a finding that the worksheet entry for Mr. Barenfanger in the amount of $10,098.84 accurately represents wages attributable to Mr. Barenfanger during the period of noncompliance. The Department’s worksheet includes an employee by the name of Ren W. Raly for the period of noncompliance from January 1, 2014, through May 1, 2014, and a Ronnie Whaley for the period of noncompliance from June 19, 2014 through December 31, 2014. Mr. Coleman testified that he never had an employee by the name of Raly and he assumed the first entry was a misspelling of Ronnie Whaley’s name. Mr. Coleman testified that Ronnie Whaley was a concrete finisher and brick layer who did work for Respondent. Mr. Coleman testified that he submitted to the Department a copy of Mr. Whaley’s “workers’ comp exempt,” but that they must not have accepted it. The records submitted to the Department by Respondent do not contain any exemption certificate for Ronnie Whaley. However, in the records submitted to the Department from Respondent is a certificate of liability insurance dated February 25, 2014, showing workers’ compensation and liability coverage issued to Direct HR Services, Inc., from Alliance Insurance Solutions, LLC. The certificate plainly states that coverage is provided for “all leased employees, but not subcontractors, of Ronald Whaley Masonry.” The certificate shows coverage in effect from February 1, 2013, through February 1, 2015. Petitioner did not challenge the reliability of the certificate or otherwise object to its admissibility.3/ In fact, the document was moved into evidence as Petitioner’s Exhibit P1. Petitioner offered no testimony regarding whether the certificate was insufficient proof of coverage for Mr. Whaley during the periods of noncompliance listed on the worksheet. The evidence does not support a finding that Mr. Whaley was an uninsured individual during the periods of noncompliance. Thus, the wages attributed to Mr. Whaley by the Department were incorrect. Ms. Beal assigned the class code 5645—Carpentry to the individuals correctly identified as Respondent’s uninsured employees because this code matched the description of the job being performed by the workers on the jobsite the day of the inspection. Ms. Beal correctly utilized the corresponding approved manual rates for the carpentry classification code and the related periods of noncompliance to determine the gross payroll to the individuals correctly included as Respondent’s uninsured employees. Calculation of Penalty For the employees correctly included as uninsured employees, Ms. Beal applied the correct approved manual rates and correctly utilized the methodology specified in section 440.107(7)(d)1. and Florida Administrative Code Rules 69L-6.027 and 69L-6.028 to determine the penalty to be imposed. For the individuals correctly included as uninsured employees, and for whom the correct payroll was calculated, the correct penalty amount is $2,590.06. The correct penalty for payments made to Mr. Coleman during the penalty period is $571.81. The correct penalty for payments made to James Shores is $170.24. The correct total penalty to be assessed against Respondent is $3,332.11. The Department demonstrated by clear and convincing evidence that Respondent was engaged in the construction industry in Florida during the audit period and that Respondent failed to carry workers’ compensation insurance for its employees at times during the audit period as required by Florida’s workers’ compensation law. The Department demonstrated by clear and convincing evidence that Respondent employed the employees named on the Second Amended Order of Penalty Assessment, with the exception of Ken’s Heating and Air, CTC, Don Langly, Ren W. Raly, R.W. Kicklighter, Dave Locte, Let Malereal, Ronnie Whaley, and “Doug.” The Department did not demonstrate by clear and convincing evidence that it correctly calculated the gross payroll attributable to Mr. Coleman and Mr. Shores. The Department demonstrated by clear and convincing evidence that Ms. Beal correctly utilized the methodology specified in section 440.107(7)(d)1. to determine the appropriate penalty for each of Respondent’s uninsured employees. The Department did not demonstrate by clear and convincing evidence that the correct penalty is $9,629.36. The evidence demonstrated that the correct penalty to be assessed against Respondent for failure to provide workers’ compensation insurance for its employees during the audit period is $3,332.11.
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, Division of Workers’ Compensation, finding that Fantastic Construction of Daytona, Inc., violated the workers’ compensation insurance law and assessing a penalty of $3,332.11. DONE AND ENTERED this 18th day of August, 2016, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK 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 18th day of August, 2016.
The Issue Whether Gio & Sons, Inc. (Respondent) violated Sections and 440.38, Florida Statutes, and if so, what penalty should be imposed. References to sections are to the Florida Statutes (2004).
Findings Of Fact Petitioner is the state agency responsible for enforcing provisions of Florida law, specifically Chapter 440, Florida Statutes, which require that employers secure workers’ compensation coverage for their employees. Respondent, whose principal is Giovanny Martinez, Jr. (Mr. Martinez), is in the business of providing drywall installation services. At all times material to this case, Respondent is an employer within the meaning of Section 440.02(16)(a), Florida Statutes. At all times material to this case, Respondent was legally obligated to provide workers' compensation insurance in accordance with the provisions of Chapter 440, Florida Statutes, for all persons employed by Respondent to provide drywall installation services within Florida. In particular, Chapter 440 requires that the premium rates for such coverage be set pursuant to Florida law. At all times material to this case, Respondent failed to obtain workers' compensation coverage on behalf of over 150 employees. It is undisputed that Respondent had not furnished the required coverage, and that there was no valid exemption from this requirement. Accordingly, on February 26, 2004, the Stop Work Order was properly entered. Thereafter, Petitioner reviewed Respondent's payroll records, which revealed that Respondent employed the individuals referred to in paragraph 5, whose identities are not in dispute, under circumstances which obliged Respondent to provide workers' compensation coverage for their benefit. Based upon Respondent’s payroll records, Petitioner correctly calculated the penalty amount imposed by law under all the circumstances of the case, and issued the Amended Order imposing a penalty assessment in the amount of $107,885.71. Mr. Martinez does not dispute the factual or legal merits of Petitioner's case.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order that affirms the Amended Order in the amount of $107,885.71. DONE AND ENTERED this 15th day of December, 2004, in Tallahassee, Leon County, Florida. S FLORENCE SNYDER RIVAS 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 15th day of December, 2004. COPIES FURNISHED: Joe Thompson, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 Giovanny Martinez, Jr. Gio & Sons, Inc. 6910 Southwest 18th Court Pompano Beach, Florida 33068 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florid a 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact 14. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on June 14, 2008, the Amended Order of Penalty Assessment issued on July 21, 2008, and the Second Amended Order of Penalty Assessment issued on August 20, 2008, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop- Work Order for Specific Worksite Only and Order of Penalty Assessment and the Amended Orders of Penalty Assessment served in Division of Workers’ Compensation Case No. 08-185-D1, and being otherwise fully advised in the premises, hereby finds that: 1. On July 14, 2008, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 08-185-D1 to F. PALHANO CONSTRUCTION CORPORATION (hereinafter “F. PALHANO”.). The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein F. PALHANO was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 2. On July 14, 2008, the Stop-Work Order and Order of Penalty Assessment was served by personal service on F. PALHANO. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3, On July 21, 2008, the Department issued an Amended Order of Penalty Assessment in Case No. 08-185-D1 to F. PALHANO. The Amended Order of Penalty Assessment assessed a total penalty of $24,758.10 against F. PALHANO. The Amended Order of Penalty Assessment included a Notice of Rights wherein F. PALHANO. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in _ accordance with Sections 120.569 and 120.57, Florida Statutes. 4, On August 11, 2008, the Amended Order of Penalty Assessment was served on F. PALHANO by personal service. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On August 13, 2008, F. PALHANO filed a petition for administrative review with the Department. . | 6. On August 20, 2008, the Department issued a Second Amended Order of Penalty Assessment 1 in Case No. 08- 185-D1 to F. PALHANO. The Second Amended Order of Penalty Assessment assessed a total penalty of $25,846.54 against F. PALHANO. The Second Amended Order of Penalty Assessment included a Notice of Rights wherein F. PALHANO was advised that . any request for an administrative proceeding to challenge or contest the Second Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Second Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, F lorida Statutes. 7. On August 21, 2008, the Second Amended Order of Penalty Assessment was served on F. PALHANO. by personal service. A copy of the Second Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and incorporated herein by reference. 8. On August 26, 2008, the employer entered into a Payment Agreement Schedule for Periodic Payment of Penalty, in which the employer agreed to pay its penalty to the Department in set installments. The employer was granted an Order of Conditional Release From Stop-Work Order, which notified the employer that should the employer become delinquent on the Payment Agreement Schedule for Periodic Payment of Penalty, the Stop-Work Order would be reinstated. 9. The petition for administrative review was forwarded to the Division of Administrative Hearings on September 5, 2008, and the matter was assigned DOAH Case No. 08- 4396. 10. On February 5, 2009, the Administrative Law Judge issued an Order Granting Continuance, requiring the parties to advise the Administrative Law Judge of the case’s status no later than February 13, 2009. 11. The parties did not advise the Administrative Law Judge of the case’s status on or before February 13, 2009. On March 5, 2009, the Administrative Law Judge issued an Order Closing File, dismissing the case and closing its file at the Division of Administrative Hearings. A copy of the Order Closing File is attached hereto as “Exhibit D” and incorporated herein by reference. 12. On June 3, 2009, the Department reinstated the Stop-Work Order issued to F. PALHANO for failure to make timely payments on the Payment Agreement Schedule for Periodic Payment of Penalty. The last payment made by F. PALHANO was on January 5, 2009, leaving an outstanding balance of $21,696.78. 13. On July 27, 2009, F. PALHANO filed a Notice of Voluntary Dismissal of Petition for Formal Hearing with the Division of Administrative Hearings. A copy of the Notice of Voluntary Dismissal of Petition for Formal Hearing is attached hereto as “Exhibit E” and incorporated herein by reference.
The Issue The issue to be determined is whether Respondent complied with coverage requirements of the workers' compensation law, Chapter 440, Florida Statutes. A determination of whether Respondent functioned as an employer is a preliminary issue to be resolved.
Findings Of Fact Petitioner is the agency of state government currently responsible for enforcing the requirement of Section 440.107, Florida Statutes, that employers secure the payment of compensation for their employees. Respondent works in the fence construction industry and employs four people. Petitioner's investigator identified three people preparing a worksite for the erection of a privacy fence at 3000 Majestic Oaks Lane South in Jacksonville, Florida. The investigator then contacted Respondent and confirmed that the three identified individuals in addition to Respondent, were employed by Respondent for a total of four employees. The investigator determined none of the employees had workers’ compensation exemptions nor had Respondent secured the payment of workers’ compensation to his employees. On April 27, 2005, the investigator served a SWO on Respondent. The SWO required Respondent to cease all business operations in Florida. At the same time, the investigator served a Request for Business Records for Penalty Calculation on Respondent, requesting payroll records from Respondent for the period April 27, 2002, through April 27, 2005 (the audit period for penalty calculation). Respondent provided no records to the investigator. On May 23, 2005, the investigator determined 520 days had passed between the beginning of the audit period and September 30, 2003, and the penalty for noncompliance during this period was $52,000.00. The investigator also determined that during the period October 1, 2003, through the end of the audit period, the statewide average weekly wage paid by employers was $651.38; Respondent had four (4) employees; the imputed weekly payroll for Respondent’s employees was $320,848.00; using approved manual rates Respondent should have paid $97,969.40 in workers’ compensation premium; and the penalty for noncompliance during this period was calculated to be $146,954.12. On May 26, 2005, Investigator Bowman served the Amended Order of Penalty Assessment on Respondent. The Amended Order assessed Respondent with a penalty for the entire audit period in the amount of $198,954.12. The investigator obtained records created by Respondent demonstrating Respondent placed a bid on a job on June 1, 2005, and Respondent completed the job on July 1, 2005. On July 19, 2005, the investigator served a Corrected Amended Order of Penalty Assessment on Respondent, which assessed a penalty in the amount of $3,000.00 for violating the terms of the SWO. Respondent violated the SWO on two separate days, the day of the bid and the day the work was completed. No competent substantial evidence was presented regarding intervening business operations.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order affirming the Stop Work Order and Order of Penalty Assessment, Amended Order of Penalty Assessment, and Corrected Amended Order of Penalty Assessment, requiring Respondent to pay a penalty in the amount of $200,594.12 to Petitioner, and requiring Respondent to cease all business operations in Florida. DONE AND ENTERED this 15th day of September, 2005, in Tallahassee, Leon County, Florida. S DON W. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of September, 2005. COPIES FURNISHED: John M. Iriye, Esquire Department of Financial Services Division of Workers Compensation 200 East Gaines Street Tallahassee, Florida 32399-422 Martin D. Snyder 10367 Allene Road Jacksonville, Florida 32219 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Carols G. Muniz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
