The Issue Whether GMD Carpet, Inc., failed to comply with coverage requirements of the workers’ compensation law, Chapter 440, Florida Statutes, and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency responsible for enforcing provisions of Florida law, specifically Chapter 440 of the Florida Statutes, which require that employers secure workers’ compensation coverage for their employees. Respondent, whose principal is Emmanuel Simone, Jr. (Mr. Simone), is in the business of providing carpet 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 Mr. Simone and four other individuals employed by GMD. On or about May 21, 2004, Petitioner became aware that Mr. Simone and another GMD employee were working a carpet installation job in Broward County, Florida. Upon inquiry, Petitioner accurately determined that GMD had not furnished the required coverage, and that there was no valid exemption from the coverage requirement. Accordingly, on May 21, 2004, a Stop Work and Penalty Assessment Order was properly entered. Thereafter, Petitioner reviewed Respondent's payroll records, which revealed that GMD employed three other individuals under circumstances which obliged Respondent to provide workers’ compensation for these employees. Based upon Respondent's payroll records, Petitioner recalculated the penalty assessment to be imposed in accordance with the requirements of Chapter 440, and issued an Amended Order in the amount of $1,916.65 on May 25, 2004. Respondent did not intend to violate the law. Rather, he mistakenly believed that he held a valid exemption; that his wife was not an employee, but rather a helper; and that the three other carpet installers were subcontractors to whom he had no insurance-related obligations. It is undisputed that Petitioner correctly calculated the penalty prescribed by law in the amount of $1,916.65 based upon Respondent's records and applicable law.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Petitioner enter a final order confirming the Stop Work Order and imposing a penalty in the amount of $1,916.65, as set forth in the Amended Order. DONE AND ENTERED this 15th day of October, 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 October, 2004. COPIES FURNISHED: Colin M. Roopnarine, Esquire Department of Financial Services Division of Workers’ Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Emmanuel Simone, Jr. Debra Simone GMD Carpet, Inc. 717 North 31st Avenue Hollywood, Florida 33021 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
The Issue The issue in this case is whether Petitioner proved that Respondent violated chapter 440, Florida Statutes (2014),1/ by failing to secure the payment of workers' compensation coverage as alleged in the Stop-Work Order and Amended Order of Penalty Assessment.
Findings Of Fact The undersigned makes the following findings of material and relevant facts: The Parties Petitioner is the state agency responsible for enforcing the requirement in chapter 440 that employers in the state of Florida secure the payment of workers' compensation insurance benefits covering their employees. Perez Concrete is a subcontractor/corporation registered to do business in Florida. Its principal business address is 6632 Willow Street, Mount Dora, Florida. Intervenor, KC Curb, is a contractor/corporation registered to do business in Florida. Its principal business address is 4975 Patch Road, Orlando, Florida. A representative of the FFVA Mutual Insurance Company (FFVA) testified. FFVA is a mutual insurance company in Florida which provides, among other things, workers' compensation insurance coverage. The witness was an underwriting supervisor. In general, workers' compensation policies go through a yearly review and renewal process handled by the underwriter. KC Curb had been a client of FFVA since 2006. Perez Concrete has never been a client of FFVA, and Perez Concrete is not a named insured on the workers' compensation insurance policy held by KC Curb from 2013 through 2015. There have been occasions when KC Curb picks up employees of subcontractors and includes them in its self-audits. Under those circumstances, KC Curb pays the premium for those particular subcontractor employees. If KC Curb pays a premium that includes the payroll for a subcontractor's employee, his or her workers' compensation benefits are covered by the KC Curb workers' compensation policy. FFVA performs an audit each year on all of the workers' compensation policies it writes. The final audit is performed, in part, to determine the final premium due on the account for that year. During a final audit, FFVA reviews any payroll paid to subcontractors. If those subcontractors did not have a certificate of insurance, then FFVA would include the payroll paid to that subcontractor to calculate the final premium due from the general contractor. If FFVA identified that there were certain subcontractor employees during the audit that worked for Perez Concrete, who were doing work on the subcontract with KC Curb, the premium would be calculated based upon those additional Perez Concrete employees. As a result, those Perez Concrete employees would be covered under the KC Curb workers' compensation insurance policy and entitled to benefits if injured on the job. KC Curb's final premium would be based on the final yearly audit including any subcontractor employees of Perez Concrete. The subcontractor employees would be covered for any injuries on the job that might have occurred during the year audited. The premium ultimately charged to the general contractor is based solely on the payroll, and not on named employees. KC Curb also does a monthly self-audit which only includes its payroll. The company makes a monthly premium payment based on what is shown in its monthly audit. If KC Curb picks up or includes an employee of a subcontractor on its monthly self-audit and reports pay going to that person, then that subcontractor employee is covered for workers' compensation benefits. When end-of-the-year audits are performed, the reports provided by KC Curb contains names of its own employees or a description of employees. This report would list the employees of KC Curb, but it would not list the employees of any subcontractors, only the amount of payroll for those subcontractors. The owner of Perez Concrete is Agustin Osorio, who testified. Perez Concrete builds concrete sidewalks, driveways, curbs, and inlets. It also does the framing and finishes the concrete. Perez Concrete had a workers' compensation insurance policy providing benefit to its employees in place from August 2013 through April 2015, with Madison Insurance Company. See, generally, Resp. Exhs. B-D. Perez Concrete's policy was canceled for late payments on April 10, 2015. Apparently, Perez Concrete was late with two payments, and the Madison Insurance Company canceled Perez Concrete's workers' compensation policy. Perez Concrete had two employees, in addition to Osorio, in July 2015, when it was first visited by Petitioner's compliance investigator, Stephanie Scarton. Scarton stopped by while the employees were performing a small sidewalk finished job in Rockledge, Florida, for KC Curb. During this first meeting, Osorio told Scarton that the KC Curb's workers' compensation policy "was covering me." Osorio testified that she responded "everything was all right." Upon questioning by the undersigned, Osorio clarified that the first visit of the investigator was in the middle of July 2015 at a work location in Rockledge, Florida. After discussing his operations and telling the investigator about the KC Curb policy coverage, she left. Osorio testified that Scarton called KC Curb that same day to confirm his comments, and then she told him that everything was "all right." Osorio testified that the same investigator visited again on August 19, 2015. That day, she gave him the Stop-Work Order. Osorio testified that it was during the August 19, 2015, visit that she changed her previous response and said that Perez Concrete was not covered under the KC Curb policy. As the owner, Osorio had a valid exemption for himself from workers' compensation coverage from January 2014 through January 2016. Resp. Exh. E. Osorio had a conversation with "Robin" from KC Curb (date not specified). When he asked her whether Perez Concrete was covered, she told him that his company would be covered under KC Curb's workers' compensation policy. Osorio testified that Perez Concrete pays KC Curb seven percent of the weekly revenue derived from working for KC Curb, in order to be included on KC Curbs workers' compensation policy. Perez Concrete pays an additional one percent to KC Curb to be included on its general liability insurance policy. Perez Concrete had bought its own workers' compensation policy in 2013 and in 2014. Resp. Exhs. B-D. When Perez Concrete's policy was canceled by Madison Insurance Company on April 10, 2015, Osorio contacted KC Curb about the insurance. Osorio understood that by doing so, he had secured the payment of workers' compensation insurance coverage for his employees. When Osorio contacted the KC Curb representatives, he told them that he wanted to continue working with them and asked them about the insurance coverage. Petitioner's compliance investigator, Scarton, testified. She has held that position since approximately April 2013. She conducts random site visits to verify that companies have workers' compensation coverage. She conducts approximately 80 compliance investigations per month. On July 6, 2015, she conducted a random visit at a construction site where concrete work was being performed by Perez Concrete. She spoke with Osorio who told her that he did not have workers' compensation insurance coverage, but that he was covered through another company. In checking her CCAS automated data system, she confirmed that Perez Concrete did not carry its own workers' compensation policy.2/ After speaking with Osorio and getting his explanation, she contacted KC Curb and spoke with Robin Sempier. She was informed that KC Curb paid the workers' compensation coverage for Perez Concrete. Sempier told the investigator that KC Curb was allowed to proceed in that fashion with its subcontractors under an arrangement from a previous compliance case handled by Petitioner.3/ After speaking with Sempier about Perez Concrete's situation, Scarton contacted her supervisor, Robert Serrone. He directed her to refer the case involving Perez Concrete to Petitioner's fraud unit and to let them handle the investigation. Scarton's next involvement was in August 2015, when she was contacted by her supervisor and directed to issue a stop-work order to Perez Concrete. She obtained the Stop-Work Order, and served it on Perez Concrete on August 19, 2015. Petitioner also served Perez Concrete with a business records request. Perez Concrete did not comply with the request, nor did it submit any business records to Petitioner. Upon inquiry by the undersigned, the parties stipulated on the record that the appropriate amount of the penalty would be $11,902.20, should a violation be proven. The investigator asked the KC Curb representative to send her documentation confirming that KC Curb pays the workers' compensation coverage for Perez Concrete. The investigator opined on cross-examination that the employees of Perez Concrete were not covered by KC Curb. Scarton concluded that "in accordance with the investigations that we conduct, Perez Concrete would need to carry the coverage." Tr., p. 139, line 7. She later stated that on July 6, 2015, she could not confirm insurance coverage "one way or another." Tr., p. 140, lines 6 and 13. Professor Joseph W. Little of Gainesville, Florida, was called to testify as an expert on behalf of Perez Concrete and KC Curb. He is currently employed as an adjunct faculty member at the University of Florida, College of Law. He is also Professor of Law Emeritus at the University of Florida, College of Law. He had been employed as a professor at the University of Florida, College of Law, since 1967, teaching workers' compensation law. Little is unquestionably an expert in the field of Workers' Compensation Law. Little also authored the legal hornbook entitled "Workers' Compensation," a publication of the West Publishing Company. Little reviewed the facts of the case by reviewing the documentation provided by counsel who retained him. This included the Stop-Work Order, the petition, an amended petition, motions, and orders issued in the case. He also studied the applicable statutes and administrative rules of Petitioner as well as decisional law that he felt was relevant.4/ Little testified, and the undersigned considered, that he was not aware of any decisional law in the state of Florida interpreting the word "secure" to mean "buy" or "must buy," so long as there was an agreement between the subcontractor and the prime contractor that one or the other would purchase the insurance. Tr., p. 180, line 4. Little testified that the concept of the "statutory employer" found in chapter 440 has remained in place and steady throughout the history of the statute. He pointed out other relevant statutes in chapter 440 that needed to be read in pari materia with one another. An insurance agent from Bouchard Insurance, John Manis, also testified. Bouchard Insurance is a commercial insurance agency which sells workers' compensation insurance. Bouchard Insurance represents FFVA and sells workers' compensation insurance as an agent for that company. Manis had worked on the KC Curb account since 2005. He is familiar with how KC Curb and FFVA conduct their workers' compensation business together, including the payment of premiums. When a workers' compensation policy is written, the business will give its payrolls to the agent who determines the class codes that are applied and used in the policy. At the end of each year, an audit is conducted on those payrolls to determine whether or not the business owes money to FFVA, or if a refund from FFVA is in order. Some companies, like KC Curb, do a monthly audit--during which they input their payroll and are told what premium is due for the month. When a subcontractor of KC Curb declines or fails to obtain its own insurance policy, the subcontractor's employee becomes "like an employee of KC Curb," and FFVA will charge KC Curb for those employees, as if they were its own. The names of actual subcontractor employees are provided at audit time, not during the year. Apparently, this is a common practice in the industry. The office manager for KC Curb is Sempier. She testified that KC Curb is a concrete curb construction company that has been in business for 22 years in the Orlando area. It performs concrete construction services using a combination of in- house crews and subcontractors. One of Sempier's duties is to monitor subcontractor compliance with the Workers' Compensation Laws. She characterized KC Curb as being "very on top of that." Subcontractors are required to provide KC Curb with certificates of insurance before they start any work. Subcontractors are required to produce a certificate of workers' compensation insurance, or they go under the KC Curb policy as an uninsured subcontractor. Although KC Curb requires subcontractors to get their own insurance because this is much less expensive, some of them cannot or do not secure their own, so KC Curb secures it. The subcontractor is back-charged for this coverage. In monthly workers' compensation self-audits, Sempier includes a sheet that shows payroll for KC Curb's uninsured contractors and its own employees. Those numbers are combined together along with other clerical classes and the insurance premium payment is calculated. Tr., p. 221, line 3. Although not required by the FFVA, KC Curb includes payroll numbers for its uninsured subcontractors in each monthly self-audit. Tr., p. 221, line 11. Respondent's Exhibit J, entitled "Self-Reported Payroll," was explained by the witness. The document, prepared and issued by KC Curb for 2015, includes an entry reflecting the total payroll paid each month for KC Curb. This included both KC Curb's own W-2 employees and employees of subcontractors. Tr., p. 227, line 19. The second page of Respondent's Exhibit J (with information regarding other subcontractors redacted) shows that the payroll for employees of Perez Concrete was included beginning April 2, 2015. Tr., p. 224, line 16. Respondent's Exhibit J indicates, bottom right, the number of employees that were picked up from Perez Concrete.5/ Monthly premiums are paid by KC Curb instantaneously "on-line" and are based on the total payroll numbers listed in Respondent's Exhibit J, beginning with page 2. The payment comes directly out a KC Curb's checking account. Sempier testified that once payment was made, all employees included in the payroll amounts are covered by KC Curb's workers' compensation policy, including the Perez Concrete employee number listed. Tr., p. 224, line 23, and p. 253, line 14. See Resp. Ex. J, p. 2, bottom right. Work orders are received from the subcontractors for KC Curb. Those work orders are supposed to list the names of the subcontractor's employees. In this manner, KC Curb is able to determine how many employees are going to be covered by insurance for a particular subcontractor. When KC Curb was informed that the policy of insurance for Perez Concrete had been canceled, KC Curb called Perez Concrete's insurance agent to get the exact date of cancellation. When Perez Concrete's workers' compensation insurance cancellation was confirmed, KC Curb notified Perez Concrete in writing that it needed to promptly provide new certificates of insurance. See Resp. Exh. H. Perez Concrete was likewise notified in writing of KC Curb's requirements for "KC Curb to provide Workers' Compensation Insurance for your Company." See Resp. Exh. I. Osorio testified that Perez Concrete chose to have KC Curb secure the insurance for Perez Concrete after April 10, 2015, and he signed Respondent's Exhibit I agreeing to follow the guidelines for workers' compensation insurance. Thereafter, KC Curb began to pick up and include Perez Concrete's employees on its monthly self-audits. Likewise, it started to pay a premium amount for insurance which included payroll related to Perez Concrete's employees. Sempier was contacted by Petitioner's investigator, Scarton. When she informed the investigator that KC Curb was compliant with the law and was following a procedure previously permitted, the investigator called back that same day and asked for her to get something from her agent verifying that Perez Concrete was covered. Sempier testified that she promptly obtained a letter from KC Curb's insurance confirming coverage for Perez Concrete and thought she attached it with her email back to the investigator. Tr., p. 256, line 18. She subsequently learned that she attached the wrong document to the email, and the investigator did not receive the confirmation letter.6/ The evidence indicated that in the year 2015, KC Curb provided workers' compensation insurance coverage as a "statutory employer" for the employees of approximately seven of its subcontractors.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner, Department of Financial Services, Division of Workers' Compensation, issue a final order withdrawing or dismissing the proposed penalty and finding that Respondent was in compliance with the statute during the relevant period of time. DONE AND ENTERED this 5th day of April, 2016, in Tallahassee, Leon County, Florida. S ROBERT L. KILBRIDE 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 April, 2016.
The Issue The issue is whether Section 11B(3) of the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2004 Second Edition, is an invalid exercise of delegated legislative authority.
Findings Of Fact The petitions filed by FFVA and TIC challenge the validity of Section 11B(3) of the 2004 Manual,4/ which prior to October 1, 2007, was adopted by reference as part of Florida Administrative Code Rule 69L-7.501(1). Florida Administrative Code Rule 69L-7.501(1) was amended effective October 1, 2007, to adopt by reference the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2006 Edition ("the 2006 Manual"). Florida Administrative Code Rule 69L-7.501(1), as it existed when the petitions were filed and as it currently exists, adopts by reference the 2006 Manual, not the 2004 Manual. The 2004 Manual is no longer adopted by reference as part of Florida Administrative Code Rule 69L-7.501, or any other rule. AHCA applied the 2004 Manual in the reimbursement dispute initiated by HRMC against FFVA under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on October 24, 2007, which was attached to FFVA's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 07-5414. AHCA applied the 2004 Manual in a reimbursement dispute involving TIC under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on January 9, 2008, which was attached to TIC's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 08-0703.
Findings Of Fact 13. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on February 11, 2009, the Amended Order of Penalty Assessment issued on March 5, 2009, the 2"4 Amended Order of Penalty Assessment issued on March 11, 2009 and the 3 Amended Order of Penalty Assessment issued on October 30, 2009, 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 F inancial 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 Amended Orders of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-036-D1, and being otherwise fully advised in the premises, hereby finds that: 1. On February 11, 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. 09-036-D1 to BEST WELDING AND FABRICATION, INC. 2. On February 11, 2009, the Stop-Work Order and Order of Penalty Assessment was served by personal service on BEST WELDING AND FABRICATION, INC. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On March 5, 2009, the Department issued an Amended Order of Penalty Assessment in Case No. 09-036-D1 to BEST WELDING AND FABRICATION, INC. The Amended Order of Penalty Assessment assessed a total penalty of $196,980.30 against BEST WELDING AND FABRICATION, INC. 4. On March 16, 2009, the Amended Order of Penalty Assessment was served by certified mail on BEST WELDING AND FABRICATION, INC. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On March 11, 2009, the Department issued a 2°4 Amended Order of Penalty Assessment in Case No. 09-036-D1 to BEST WELDING AND FABRICATION, INC. The an Amended Order of Penalty Assessment assessed a total penalty of $50,968.94 against BEST WELDING AND FABRICATION, INC. . 6. On March 26, 2009, the 2°4 Amended Order of Penalty Assessment was served by certified mail on BEST WELDING AND FABRICATION, INC. A copy of the 2"! Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and incorporated herein by reference. 7. The Employer requested a formal hearing on April 6, 2009. A copy of the Request for Hearing is attached hereto as “Exhibit D” and incorporated herein by reference. 8. On April 21, 2009, the request for formal hearing was forwarded to the Division of Administrative Hearings for assignment of an Administrative Law Judge. The matter was assigned to Administrative Law Judge Barbara Staros and given case number 09-2138. 9. On October 30, 2009, the Department issued a 3rd Amended Order of Penalty Assessment in Case No. 09-036-D1 to BEST WELDING AND FABRICATION, INC. The 3rd Amended Order of Penalty Assessment assessed a total penalty of $10,179.61 against BEST WELDING AND FABRICATION, INC. 10. On October 30, 2009, the 3™ Amended Order of Penalty Assessment was served on legal counsel for BEST WELDING AND FABRICATION, INC. A copy of the 3" Amended Order of Penalty Assessment is attached hereto as “Exhibit E” and incorporated herein by reference. 11. On November 9, 2009, BEST WELDING AND FABRICATION, INC. filed a Notice of Voluntary Dismissal. A copy of the Notice of Voluntary Dismissal is attached hereto as “Exhibit F” and incorporated herein by reference. 12. On November 12, 2009, an Order Closing File was entered. The Order Closing File relinquished jurisdiction to the Department. A copy of the Order Closing File is attached hereto as “Exhibit G” and incorporated herein by reference.
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 issue is whether Respondent’s request for an administrative hearing was timely filed by virtue of the doctrine of equitable tolling.
Findings Of Fact The Division is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees and corporate officers. § 440.107, Fla. Stat. Respondent is a Florida limited liability company engaged in the construction business. Its offices are located at 2474 Ambassador Avenue, Spring Hill, Florida. To enforce this requirement, the Division performs random inspections of job sites and investigates complaints concerning potential violations of workers’ compensation rules. On June 6, 2018, James Acaba, a Division compliance inspector, conducted a compliance investigation at a job site in Lutz, Florida. Mr. Acaba observed two individuals working at the job site: Respondent’s owner, Mr. Smith; and Mr. Smith’s step- son. Mr. Smith claimed he had an exemption for himself. Mr. Acaba ascertained that Mr. Smith’s exemption expired on January 19, 2017. Mr. Acaba determined that: Mr. Smith’s step-son was working for $12.00 an hour; had been working for Respondent for about a week; and did not have workers compensation coverage. On June 6, 2018, a Stop-Work Order and a Request for Production of Business Records for Penalty Assessment Calculation purposes were hand-served on Mr. Smith at the job site. The Stop-Work Order contained an Order of Penalty Assessment, which explained how a penalty is calculated, but gave no specific amount pending a review of Respondent’s financial records. Mr. Smith was advised to provide the requested business records within 10 business days or by June 16, 2019. Mr. Smith requested information on how to have the Stop- Work Order removed. Mr. Acaba explained to Mr. Smith several options available to him to have the Stop-Work Order released: obtain a workers’ compensation policy; engage an employee leasing company; or terminate the step-son’s employment. On June 14, 2018, Mr. Smith provided Mr. Acaba a letter reflecting Respondent’s “reduction in (its) workforce.” On June 15, 2018, Mr. Smith secured the reinstatement of his exemption to work for Respondent. However, Mr. Smith did not provide the requested business records. On November 10, 2018, the Division served an Amended Order of Penalty Assessment (Amended Order) at the address Mr. Smith provided during the June 6, 2018, job site encounter. This Amended Order provided the total penalty amount of $35,769.16. According to Mr. Smith, his girlfriend, Samantha Nigh, signed for the Amended Order on November 10, 2018, saw the large amount of the penalty assessment, and “decided not to show” it to Mr. Smith. Ms. Nigh did not testify during the hearing. The Amended Order contained a Notice of Rights, which stated that, if Respondent wished to contest the penalty, a petition seeking a hearing had to be filed with the Division within twenty-one calendar days of the Amended Order. It also stated that the petition “must be filed with Julie Jones, DFS Agency Clerk, Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399- 0300.” The Amended Order included the following: FAILURE TO FILE A PETITION WIHTIN TWENTY-ONE(21) CALENDAR DAYS OF RECEIPT OF THIS AGENCY ACTION CONSTITUTES A WAIVER OF YOUR RIGHT TO ADMINISTRATIVE REVIEW OF THIS AGENCY ACTION. This meant that a petition had to be filed, and in the hands of the Agency Clerk no later than December 3, 2018. Although the actual due date was Saturday, December 1, 2018, Respondent could have filed the petition by the close of business on Monday, December 3, 2018. Florida Administrative Code Rule 18.106.103. Mr. Smith did not provide the date on which he became aware of the Amended Order. However, once he was aware of it, Mr. Smith knew the 21-day period to file a petition had expired, and admitted at hearing “it was already too late.” On December 14, 2018, 33 days after the Division served the Amended Order, and 11 days after the actual due date, the Division received Respondent’s hearing request. As a result of the late filing, the Division issued an Order to Show Cause (OTSC) on January 10, 2019. The OTSC required Respondent to show cause why the December 14, 2018, hearing request should not be dismissed as untimely. In the written response to the OTSC, Mr. Smith asserted that his brother, Edward Unger, “was only on the job site for the one day,” and Mr. Unger could “provide proof of employment elsewhere further (sic) showing he was not of our employment at the time.” Additionally, the response provided that “due to [an] emergency family situation where Byron Smith, owner, had to take a minor leave of absence to be with a close family member who had emergency open heart coronary bypass surgery. . ., the days and dates got scrambled with emotions clouding what needed to be done promptly.” The Division construed this conversation as possibly excusing the late filing and forwarded the matter to DOAH to resolve that narrow issue. During the hearing, Mr. Smith testified that his girlfriend, Ms. Nigh, prepared the OTSC response, but that his signature was on the document. Mr. Smith never clarified or corrected that Mr. Unger was his brother or step-son, and he merely reiterated the family problem and personal issues, without further detail or explanations, as his excuse. Lastly, Mr. Smith admitted that at the time Mr. Acaba observed the two working on June 6, 2018, he was breaking the rules, but “it was a huge penalty.” There is no credible evidence that Mr. Acaba gave Respondent’s owner, Mr. Smith any information that would cause him to miss the deadline for filing the petition.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that that the Department of Financial Services, Division of Workers’ Compensation, enter a final order dismissing Respondent’s request for a hearing as untimely. DONE AND ENTERED this 31st day of May, 2019, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of May, 2019. COPIES FURNISHED: Mattie Birster, Esquire Department of Financial Services Office of the General Counsel 200 East Gaines Street Tallahassee, Florida 32399 (eServed) Byron K. Smith, Jr. Smith's Interior Finishes, LLC 17829 Laura Lee Drive Shadyhills, Florida 34610 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
The Issue Whether the Petitioner was required to carry workers' compensation insurance coverage for its employees, and if so, the penalty that should be assessed. Whether the Petitioner violated the Stop Work Order entered May 18, 2005, and, if so, the penalty that should be assessed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department is the state agency charged with the responsibility of enforcing the requirement of Section 440.107, Florida Statutes, that employers in Florida secure workers' compensation insurance coverage for their employees. § 440.107(3), Fla. Stat. Tak-A-Way is a Florida corporation which engages in the business of performing small jobs such as removing trash and debris, digging up small driveways, and excavation. Tak-A-Way owns several dump trucks, and it maintains a permanent storage yard for materials and equipment. Tak-A-Way's payroll records for the period January 2003 through May 2005 establish that several persons were listed as "Help" and received regular checks from Tak-A-Way during this period. Donald Oppenheim is the owner and president of Tak-A-Way. He is exempted from workers' compensation coverage. On May 18, 2005, during a routine investigation, an investigator employed by the Department observed two men ripping up an asphalt driveway and loading the asphalt into a truck at a private residence in Pompano Beach, Florida. One man was operating a backhoe, and the other was operating a bobcat. The equipment and trucks being used at the site displayed the name “Tak-A-Way”, and the two men confirmed that they were employed by Tak-A-Way. The men were identified as Andy Oppenheim and Kevin McManus. The Department did not find any record of workers’ compensation insurance in its database for employees of Tak-A- Way, and Mr. Oppenheim confirmed during a conversation with the Department’s investigator that Tak-A-Way had no workers' compensation coverage for any of its employees. The Department's investigator issued a Stop Work Order against Tak-A-Way on May 18, 2005, because it did not have workers’ compensation coverage for its employees; the Stop Work Order was hand-delivered to Mr. Oppenheim on the date of issue. The Stop Work Order required that Tak-A-Way "cease all business operations in this state" and advised that a penalty of $1,000.00 per day would be imposed if Tak-A-Way were to conduct any business in violation of the Stop Work Order. Finally, the Stop Work Order included the following: "This Stop Work Order shall remain in effect until the Division issues an order releasing the Stop Work Order, or until the Division issues an order of conditional release from Stop Work Order pursuant to the employer entering into a payment agreement schedule for periodic payment of penalty." Penalty Assessment for Failure to Have Workers' Compensation Insurance Coverage At the same time that she delivered the Stop Work Order to Mr. Oppenheim, the Department's investigator delivered a Request for Production of Business Records for Penalty Assessment Calculation, in which Mr. Oppenheim was directed to produce business records for the period extending from November 3, 2003, through May 18, 2005.2 Mr. Oppenheim produced Tak-A-Way's business records as requested, and the Department's investigator used the payroll information in the records for calculating the penalty to be assessed for Tak-A-Way's failure to have workers' compensation insurance coverage for its employees. The Department uses the National Council of Compensation Insurance, Inc. ("NCCI") Scopes Manual, which includes risk classifications and definitions used to determine rates for workers' compensation insurance coverage. The payroll records provided by Mr. Oppenheim did not indicate the workers' compensation classification codes assigned to Tak-A-Way's employees, so, in accordance with the NCCI Basic Manual for Workers Compensation and Employers Liability Insurance ("Basic Manual"), the Department's investigator assigned all of Tak-A-Way's operations to what she determined to be the highest- rated classifications of its business operations. As shown in the worksheets attached to both the Amended Order of Penalty Assessment and the Second Amended Order of Penalty Assessment, the Department's investigator classified all of Tak-A-Way's employees under the classification "Excavation," Code 6217, for the period extending from November 3, 2003, through December 31, 2004, which had an approved manual rate of $13.79 per $100.00 in payroll for that period; she classified all of Tak-A-Way's employees under the classification "Concrete," Code 5213, for the period extending from January 1, 2005, through May 18, 2005, with an approved manual rate of $24.66 per $100.00 in payroll for that period; and she classified all of Tak-A-Way's employees under the classification "Erection Permanent Yard," Code 8227, for the period extending from January 1, 2005, through May 18, 2005, with an approved manual rate of $9.38 per $100.00 in payroll for that period. The worksheets showed the premium calculation for each classification to be $19,248.91, $10,130.08, and $365.82, respectively, for a total premium of $29,744.81. The penalty, calculated as 1.5 times the premium for each classification, was shown on the worksheets as $28,873.37, $15,195.12, and $548.73, respectively, for a total penalty for the failure to have workers' compensation insurance coverage of $44,617.22. The operations included in the NCCI Scopes Manual classification "Excavation & Drivers," Code 6217, describe most closely the business operations of Tak-A-Way during the period of time covered by the penalty assessment for the failure to have workers' compensation insurance coverage. There is nothing in the record to indicate that the nature of Tak-A-Way's operations changed on or about January 1, 2005, nor did the Department's investigator provide any explanation for the change in classification from "Excavation" to "Concrete" effective January 1, 2005.3 In the absence of any evidence to support the change in classification, the Department has failed to sustain the $44,617.22 penalty assessment for the failure of Tak-A-Way to carry workers' compensation insurance coverage from November 3, 2003, through May 18, 2005. Rather, the premium calculation for the period from January 1, 2005, through May 18, 2005, should be based on the classification of "Excavation," Code 6217, which carried the approved manual rate of $12.77 for that period, and not on the classification of "Concrete," Code 5213.4 Tak-A-Way maintained a permanent storage yard in which its material and equipment was stored during the times material to this proceeding. The Department's investigator correctly included a premium calculation for "Erection Permanent Yard," Code 8227, as part of the calculation of the penalty against Tak-A-Way for failure to carry workers' compensation insurance coverage for its employees. Tak-A-Way obtained workers' compensation insurance coverage from Florida Citrus, Business & Industry, effective June 1, 2005. Penalty Assessment for Violating Stop Work Order On May 24, 2005, the Department’s investigator observed a Tak-A-Way truck traveling in front of her on the street and concluded that Tak-A-Way was conducting business in violation of the Stop Work Order issued May 18, 2005. The Amended Order of Penalty Assessment against Tak-A- Way issued on June 1, 2005, included a penalty of $1,000.00 for Tak-A-Way's violation of the Stop Work Order from May 24, 2005, to May 25, 2005, for a total penalty of $45.617.22. Tak-A-Way conducted business operations after the Stop Work Order was issued. Mr. Oppenheim rented dump trucks owned by Tak-A-Way to Preston Contractors. Mr. Oppenheim, who was the only Tak-A-Way employee involved in the business operations at the time, would drive a truck to one of Preston Contractors' construction sites, towing his pickup truck. He would park the truck and leave the site, and employees of Preston Contractors would fill the truck with construction debris. Mr. Oppenheim would return to the construction site and drive the truck to the landfill and dump the load of debris. At times, there were several Tak-A-Way dump trucks at the Preston Contractors' construction site. According to invoices maintained by Preston Contractors, it paid Tak-A-Way for truck rental and dump fees from February 2005 to September 2005. On November 22, 2005, the Department issued a Second Amended Order of Penalty Assessment, increasing the penalty for Tak-A-Way's violation of the Stop Work Order to $73,000.00, covering the period extending from May 19, 2005, through September 21, 2005, for a total penalty of $117,617.22. Based on the evidence presented, Tak-A-Way was conducting business operations in violation of the Stop Work Order during the period for which the penalty was assessed and had not obtained either an order releasing the Stop Work Order or an Order of Conditional Release from Stop Work Order.
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 Tak-A-Way, Inc., failed to have workers' compensation insurance coverage for its employees, in violation of Sections 440.10(1)(a) and 440.38(1), Florida Statutes; Finding that Tak-A-Way, Inc., engaged in business operations during the pendency of a Stop Work Order, in violation of Section 440.107(7)(a), Florida Statutes; Assessing a penalty against Tak-A-Way, Inc., equal to 1.5 times premium based on the approved manual rate for the classification "Excavation," Code 6217, for the period extending from November 3, 2003, through May 18, 2005, and on the approved manual rate for the classification "Construction & Erection - Permanent Yard," Code 8227, for the period extending from January 1, 2005, through May 18, 2005 as provided in Section 440.107(7)(a) and (d), Florida Statutes; and Assessing a penalty of $73,000.00, against Tak-A-Way, Inc., for engaging in business operations in violation of the May 18, 2005, Stop Work Order, as provided in Section 440.107(7)(a) and (c), Florida Statutes. DONE AND ENTERED this 8th day of March, 2006, in Tallahassee, Leon County, Florida. S PATRICIA M. HART 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 March, 2006.
The Issue The issue for determination is whether Petitioner's claim is barred by Section 760.11(7), Florida Statutes (1999), because Petitioner filed a request for hearing more than 35 days after the time prescribed in Section 760.11(3) for a determination of reasonable cause by the Florida Commission on Human Relations (the "Commission"). (All statutory references are to Florida Statutes (1999) unless otherwise stated).
Findings Of Fact Respondent employed Petitioner from May 25, 1995, until September 1, 1995. Petitioner filed a Charge of Discrimination with the Commission on October 3, 1995. The Charge of Discrimination alleges that Petitioner was forced to leave his position of employment because of Petitioner's sex, color, national origin, and age. The Charge of Discrimination contains no more specific factual allegation of an adverse employment action or other act of discrimination. Time Limits The Charge of Discrimination was timely filed pursuant to Section 760.11(1). The filing date of October 3, 1995, fell within 365 days of May 25, 1995, which is the first day on which the alleged discrimination could have occurred. Section 760.11(3) authorizes the Commission to issue a determination of reasonable cause within 180 days of October 3, 1995, the date Petitioner filed the Charge of Discrimination. Counting October 4, 1995, as the first day of the 180-day time limit, Section 760.11(3) authorized the Commission to determine reasonable cause no later than March 31, 1996. The Commission issued a Notice of Determination: No Cause on July 14, 1999. Section 760.11(7) required Petitioner to file a request for hearing within 35 days of March 31, 1996. Counting April 1, 1996, as the first day of the 35-day period, Section 760.11(7) required Petitioner to file a request for hearing no later than May 5, 1996. Petitioner did not timely file a request for hearing. Petitioner first requested a hearing in the Petition for Relief filed on August 13, 1999. Petitioner filed his request for hearing approximately 1,185 days late and 1,220 days after the expiration of the 180-day time limit prescribed in Section 760.11(3). Petitioner delayed the request for hearing because he did not have the form entitled Petition for Relief. Section 760.11(7) statutorily bars Petitioner's claim. Section 760.11(7) expressly provides, in relevant part: If the aggrieved person does not request an administrative hearing within the 35 days, the claim will be barred.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order dismissing this proceeding as barred by Section 760.11(7). DONE AND ENTERED this 6th day of June, 2000, in Tallahassee, Leon County, Florida. DANIEL MANRY 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 6th day of June, 2000. COPIES FURNISHED: Sharon Moultry, Clerk Florida Commission on Human Relations 325 John Knox Road, Building F Tallahassee, Florida 32303-4149 Dana A. Baird, General Counsel Florida Commission on Human Relations 325 John Knox Road, Building F Tallahassee, Florida 32303-4149 Luis F. Hernandez 1116 Golden Gate Avenue Orlando, Florida 32808 Charles Williams, Jr., Esquire Scott A. Livingston, Esquire Williams and Davis, P.A. Suite 1220, Suntrust Center Post Office Box 1831 200 South Orange Avenue Olando, Florida 32802-1831
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 Respondent, Gulf Coast Site Prep, Inc., failed to comply with the coverage requirements of the Workers’ Compensation Law, chapter 440, Florida Statutes, by not obtaining workers’ compensation insurance for its employees, and, if so, what penalty should be assessed against Respondent pursuant to section 440.107, Florida Statutes (2014).1/
Findings Of Fact 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. Respondent, Gulf Coast Site Prep., Inc., is a Florida for-profit corporation organized on March 3, 2008. Respondent’s registered business address is 952 TR Miller Road, Defuniak Springs, Florida. Ashley Adams is Respondent’s President and Registered Agent. On March 27, 2015, the Department’s investigator-in- training, Jill Scogland, and lead investigator, Sharon Kelson, conducted a random workers’ compensation compliance check at Lot 34 in the Driftwood Estates residential subdivision in Santa Rosa Beach, Florida. Ms. Scogland observed two men on site. David Wayne Gibson was operating a front-end loader spreading dirt on site. Colby Smith was shoveling dirt on site. While Ms. Scogland was inspecting the site, a third man, Ashley Adams, arrived driving a dump truck with a load of dirt. Mr. Adams identified himself as the owner of Gulf Coast, and stated that he had an exemption from the requirement for workers’ compensation insurance and that he thought Mr. Gibson did as well. Mr. Adams advised Ms. Scogland that he hired both Mr. Gibson and Mr. Smith to work at the site.2/ At hearing, Respondent challenged the evidence supporting a finding that Respondent hired Mr. Gibson.3/ Specifically, Respondent argues that Ms. Scogland’s testimony that Mr. Adams told her he hired Mr. Gibson is unreliable because Ms. Scogland did not include that information in her field notes. Respondent claims that Ms. Scogland’s status as investigator-in-training on the date of the inspection is indicative of her unreliability. To the contrary, Ms. Scogland’s testimony regarding both the persons and events on the date of the inspection was clear and unequivocal. While Ms. Scogland admitted her field notes were not as detailed on the date in question as they are for more recent inspections, she was confident that her investigation of the facts was thorough. The fact that Ms. Scogland did not write down what Mr. Adams said does not render her testimony unreliable. The undersigned finds Ms. Scogland’s testimony to be clear and convincing. Ms. Scogland reviewed the Department of State, Division of Corporations’ online information and identified Mr. Gibson as President and Registered Agent of David Wayne Gibson Tractor Service, Inc. According to Ms. Scogland, the online records indicated the corporation had been administratively dissolved in September 2013. Ms. Scogland next accessed the Department’s Coverage and Compliance Automated System (CCAS) and determined that Mr. Gibson had obtained a workers’ compensation coverage exemption for himself, but the exemption had expired on February 15, 2015. The information contained in CCAS is information on new policies, cancellations, etc., reported to the Department by insurance agencies as required by administrative rule. Next, Ms. Scogland accessed the Division of Corporations’ website, verified Gulf Coast as an active corporation, and identified Mr. Adams as the sole officer of Gulf Coast. Ms. Scogland then accessed CCAS and determined that, although Gulf Coast did not have workers’ compensation coverage, Mr. Adams had an active exemption effective from February 12, 2014 through February 12, 2016. Mr. Adams had a prior exemption that expired on April 14, 2013, but had no valid exemption in place between April 14, 2013 and February 12, 2014. After contacting her supervisor, Michelle Lloyd, Ms. Scogland served Mr. Adams, on behalf of Gulf Coast, with a site-specific Stop-Work Order for failure to ensure workers’ compensation coverage for its employees. Ms. Scogland also served Mr. Adams with a Request for Production of Business Records for Penalty Assessment Calculation. The request was for Gulf Coast’s payroll, account, and disbursement records, as well as records identifying its subcontractors, payments thereto, and workers’ compensation coverage thereof, from March 28, 2013 through March 27, 2015 (the penalty period).4/ Mr. Adams did not provide any records to the Department in response to the records request. The Department’s penalty auditor, Eunika Jackson, was assigned to calculate the penalty to be assessed against Gulf Coast for failure to secure workers’ compensation insurance during the penalty period. The penalty to be assessed against an employer for failure to secure workers’ compensation coverage is two times the amount the employer would have paid in workers’ compensation insurance premiums when applying approved manual rates to the employer’s payroll during the penalty period. § 440.107(7)(d), Fla. Stat. Ms. Jackson consulted the Scopes Manual, which is published by the National Council on Compensation Insurance (NCCI), and identified class code 6217--Excavation and Drivers-- as the appropriate construction class code for the work being performed at the worksite. Respondent contests the assignment of class code 6217 to Mr. Adams, who was driving a dump truck and delivering a load of dirt to the site. Respondent admits that Mr. Gibson’s operation of the front-end loader was properly classified as Excavation and Drivers. NCCI Scopes Manual provides the following with regard to classification code 6217: Includes burrowing, filling or backfilling. * * * Code 6217 is applied to specialist contractors engaged in general excavation including ditch digging, burrowing, filling or backfilling provided such operations are not otherwise classified in the manual. The operations involve the removal of earth, small boulders and rocks by power shovels, trench diggers or bulldozers and piling it at the jobsite for backfill. The material may also be removed by dump trucks for fill in some other area. Code 6217 includes excavation in connection with building foundations, swimming pools, landscape gardening and waterproofing operations. * * * This classification also is applied to specialist contractors engaged in grading land and landfilling, provided these operations are not otherwise classified in this manual. This classification includes ditch digging, burrowing, filling or backfilling, and operations such as scraping, cutting, piling or pushing the earth to rearrange the terrain. These operations utilize equipment such as bulldozers, motor graders and carryalls. [emphasis supplied]. Mr. Adams’ operation of the dump truck falls squarely within the definition of Excavation and Drivers. The material in the dump truck was fill for the site under excavation, a purpose which is directly addressed in the manual under code 6217. Under Respondent’s interpretation, fill removed from the site by a dump truck would be an excavation activity, but would no longer be excavation when the dump truck arrived at another site (or at another location on the same site) with the fill. That interpretation is illogical. No evidence was introduced to support a finding that typical operation of a dump truck in preconstruction was classified by a different code in the Scopes Manual. It is found that Ms. Jackson properly applied the Scopes Manual in assigning code 6217 to the work being performed by Mr. Adams on the site. Having no payroll records from Gulf Coast, Ms. Jackson had to impute the statewide average weekly wage as Respondent’s payroll for Mr. Adams and his subcontractor, Mr. Gibson. The average weekly wages were calculated based on the Workers’ Compensation and Employers Liability approved rate manual also published by NCCI and adopted by the Department by administrative rule. Ms. Jackson calculated a penalty of two times the workers’ compensation insurance premiums that would have applied to the purchase of insurance for Mr. Adams and Mr. Gibson during periods of non-compliance during the penalty. The period of non-compliance for Mr. Adams was April 15, 2013 to February 11, 2014, during which time his exemption had lapsed. The period of non-compliance for Mr. Gibson was February 16, 2015 to March 27, 2015, during which his exemption had expired. § 440.107(7)(e), Fla. Stat. Utilizing the penalty calculation worksheet adopted by Florida Administrative Code Rule 69L-6.027, Ms. Scogland calculated a penalty of $12,181.42. On May 20, 2015, the Department issued an Amended Order of Penalty Assessment against Gulf Coast in the amount of $12,181.42. The Department correctly calculated the penalty based on the statutory formulas and adopted rules governing workers’ compensation insurance.
Recommendation Having considered 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 upholding the Stop-Work Order and Amended Penalty Assessment against Respondent, Gulf Coast Site Prep., Inc., for its failure to secure and maintain required workers’ compensation insurance for its employees. DONE AND ENTERED this 14th day of January, 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 14th day of January, 2016.
