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 Whether the Respondent committed the violations alleged in the Second Amended Order of Penalty Assessment filed October 17, 2008, and, if so, the penalty that should be imposed.
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 responsible for 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. Valou Enterprises is a Florida corporation located in Miami, Florida, which does business under the fictitious name of "Mr. Rooter Plumbing" ("Mr. Rooter"). Leslie McMillan is part- owner and the President of Valou Enterprises. Pedro Rolle is part-owner and the Treasurer of Valou Enterprises, and he is responsible for the business's day-to-day management. Welthial McMillan is part-owner and the Secretary of Valou Enterprises. Mr. Rooter is a franchise that engages in the business of providing plumbing services and repairs. According to franchise documents, among the services offered by Mr. Rooter are HydroScrubbing™ sewer lines to remove blockages; water heater installation; kitchen and bath installation and repairs, including faucets, sinks, tubs and toilets; and leak detection and water line repair and installation.2 On its website, Valou Enterprises advertises that Mr. Rooter provides full-service plumbing, including bath sinks, bathtubs and showers, drain pipes, faucets, floor drains, gas meters, gas vents, kitchen sinks, pipe repair, sewer lines, and water softeners.3 Mr. McMillan is a Florida-certified plumbing contractor, and he is the qualifier for Mr. Rooter. Mr. and Mrs. McMillan and Mr. Rolle, have elected, as officers of a corporation engaged in the construction industry, to be exempt from Florida's workers' compensation law, in accordance with the provisions of Sections 440.02(15)(b)2. and 440.05(3), Florida Statutes. Valou Enterprises hires plumbing technicians to provide plumbing services to Mr. Rooter's customers. These plumbing technicians are not licensed; rather, they work under Mr. McMillan's plumbing contractor's license. They do not receive a salary and do not have regular hours during which they must be at the Mr. Rooter office or at a jobsite. The plumbing technicians are paid commissions based on the work they perform, and they are required to supply their own tools. The plumbing technicians are on-call with Mr. Rooter at all times, but they only perform services for Mr. Rooter when actually dispatched to a job. When a plumbing technician is called and notified of a job, he is free either to accept or to reject the job. Mr. Rooter also dispatches plumbing helpers when a plumbing technician needs assistance. Valou Enterprises employs Catia Duque, who takes calls and dispatches plumbing technicians to Mr. Rooter jobs. Kenneth Mecure runs errands for Valou Enterprises part-time when needed, on a part-time basis. Late in the afternoon on Friday, June 27, 2008, a compliance investigator working for the Division of Workers' Compensation stopped at the Mr. Rooter office, which was located in a warehouse district. The visit was random, initiated when the investigator saw white vans parked in front of the office, with the name "Mr. Rooter Plumbing" and logo on the sides of the vans. When the investigator entered the office, she observed four men wearing shirts with the "Mr. Rooter Plumbing" logo. When the investigator requested information about Valou Enterprises's workers' compensation insurance coverage, Mr. Rolle referred her to Ms. Duque. Ms. Duque told the investigator that she would send whatever information she had regarding workers' compensation insurance coverage by facsimile transmittal, but the investigator did not receive any information from Ms. Duque. After her visit on June 27, 2008, the compliance investigator conducted research through the Coverage and Compliance Automated System database, which provides information on workers' compensation insurance coverage and exemptions. The investigator's research revealed that Mr. McMillan, Mrs. McMillan, and Mr. Rolle had exemptions from the workers' compensation law as officers of a corporation engaged in the construction industry and that none of the persons she observed in the Mr. Rooter office on June 27, 2008, were covered by a workers' compensation insurance policy. The investigator confirmed the lack of workers' compensation insurance coverage by consulting the website for the National Council on Compensation Insurance, Inc. ("NCCI"). The compliance investigator returned to the Mr. Rooter office on Monday, July 1, 2008, and spoke with Mr. McMillan. Mr. McMillan was unable to provide her with proof that Valou Enterprises had workers' compensation insurance coverage. The investigator then prepared a Stop-Work Order and an Order of Penalty Assessment, which she hand-delivered to Mr. McMillan on July 2, 2008, and posted at the Mr. Rooter office. At the same time, the investigator served Mr. McMillan with a Request for Production of Business Records for Penalty Assessment Calculations. The Stop-Work Order required Valou Enterprises to "cease all business operations for all worksites in the state." An Order of Penalty Assessment was included in the Stop-Work Order, in which Valou Enterprises was advised that a penalty would be assessed in an amount [e]qual to 1.5 times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during periods for which it failed to secure the payment of workers' compensation required by this chapter within the preceding 3-year period, or $1,000, whichever is greater. Section 440.107(7)(d), F.S. In addition, the Order of Penalty Assessment also advised Valou Enterprises that a penalty of "[u]p to $5,000 for each employee who the Employer misclassified as an independent contractor" would be imposed pursuant to Sections 440.10(1)(f) and 440.107(7)(f), Florida Statutes. On July 3, 2008, the compliance investigator returned to the Mr. Rooter office. The office was closed, but she observed a white van turning out of the office parking lot. The van had the "Mr. Rooter Plumbing" name and logo on the side, and it was driven by Michael Dassell, a plumbing technician the investigator had met during her visit to the Mr. Rooter office on July 27, 2008. The investigator questioned Mr. Dassell, who told her that he was on-call that day. Mr. Dassell had not been dispatched on a job or called into the office but had gone to the office to pick up a commission check. Mr. Dassell had not been told that the Mr. Rooter office was closed on July 3, 2008. Mr. McMillan provided the compliance investigator the payroll and other records requested in the business records request. Based on these records, the compliance investigator calculated the penalty to be imposed on Valou Enterprises for its failure to have workers' compensation insurance coverage in the amount of $59,652.93. The investigator also imposed a penalty of $1,000.00 for a one-day violation of the Stop-Work Order and a penalty of $35,000.00 for "misrepresenting the status of the employee(s) as an independent contractor(s)." The total penalty of $95,652.93 was set forth in an Amended Order of Penalty Assessment that the investigator hand-delivered the order to Mr. McMillan on July 9, 2008. Valou Enterprises obtained workers' compensation insurance coverage effective July 4, 2008, and, on July 9, 2008, Mr. McMillan entered into a Payment Agreement Schedule for Periodic Payment of Penalty, remitting at the time a down payment of 10 percent of the penalty, or $9,566.00. As a result, an Order of Conditional Release from Stop-Work Order was entered on July 9, 2008. The compliance investigator subsequently recalculated the penalty assessment and prepared a 2nd Amended Order of Penalty Assessment dated October 17, 2008. The $35,000.00 penalty assessed for misclassifying employees as independent contractors was deleted for lack of evidence, and the final penalty assessment was in the amount of $60,652.93, which consisted of a $59,652.93 penalty for failure to secure workers' compensation insurance coverage for Valou Enterprises employees and a $1,000.00 penalty for violating the Stop-Work Order.4 The compliance investigator looked to the NCCI SCOPES Basic Manual of Classifications ("SCOPES Manual") for classification codes attributable to the various workplace operations of the persons working for Valou Enterprises. The classification code assigned by the compliance investigator to the plumbing technicians and plumbing helpers performing work for Valou Enterprises was Code 5183.5 According to the SCOPES Manual and to Florida Administrative Code Rule 69L-6.021(1)(r), Code 5183 is a code applicable to the construction industry and covers "Plumbing NOC and Drivers." The description of the scope of Code 5183 is stated in the SCOPES Manual in pertinent part as follows: Applicable to gas, steam, hot water or other types of pipe fitting. Includes house connections and shop operations. * * * Code 5183 is applicable to plumbing operations provided that the work performed is "not otherwise classified" (NOC). Insureds contemplated by Code 5183 may install, remove, or repair equipment that is used to direct gas or water supplies to a destination. This equipment includes but is not limited to piping and related fixtures, appliances, and accessories. No limits have been established as to the size of the pipe being repaired or installed. The operations contemplated by Code 5183 also include "the cleaning of building sewer connections using portable equipment" and "the installation or service of domestic water softener systems." The approved NCCI Manual rate in Florida effective January 1, 2006, for Code 5183 was $10.04 per $100.00 of payroll; the approved NCCI Manual rate in Florida effective January 1, 2007, for Code 5183 was $8.13 per $100.00 of payroll; and the approved NCCI Manual rate in Florida effective January 1, 2008, for Code 5183 was $6.75 per $100.00 of payroll.6 The classification code found in the SCOPES Manual assigned to Ms. Duque and to Paul Anderson, who was a clerical worker in the Valou Enterprises office in 2006, was Code 8810. According to the SCOPES Manual, Code 8810 covers "Clerical Office Employees."7 The description of the scope of Code 8810 is stated in the SCOPES Manual in pertinent part as follows: "The duties of a clerical office employee include . . . telephone duties." The approved NCCI Manual rate in Florida effective January 1, 2006, for Code 8810 was $.58 per $100.00 of payroll; the approved NCCI Manual rate in Florida effective January 1, 2007, for Code 8810 was $.48 per $100.00 of payroll; and the approved NCCI Manual rate in Florida effective January 1, 2008, for Code 8810 was $.37 per $100.00 of payroll.8 The classification code assigned by the compliance investigator to Kevin Mecure, a part-time employee who ran errands for Valou Enterprises, was Code 7380.9 According to the SCOPES Manual, Code 7380 covers "Drivers, Chauffeurs & Their Helpers NOC - Commercial." The description of the scope of Code 7380 is stated in the SCOPES Manual in pertinent part as follows: "The term "drivers" refers to employees who engage in duties on or in connection with vehicles " The approved NCCI Manual rate in Florida effective January 1, 2006, for Code 7380 was $12.20 per $100.00 of payroll; the approved NCCI Manual rate in Florida effective January 1, 2007, for Code 7380 was $10.18 per $100.00 of payroll; and the approved NCCI Manual rate in Florida effective January 1, 2008, for Code 7380 was $8.74 per $100.00 of payroll.10 The compliance investigator calculated the total penalty attributable to Valou Enterprises's failure to provide workers' compensation insurance coverage for the plumbing technicians, clerical workers, and drivers using the Department's Penalty Worksheet. She obtained the names of each of the individuals included in her calculations and the amount of the gross payroll for each individual from the payroll information provided by Mr. McMillan in response to the business records request. The compliance investigator calculated the penalty as follows: She listed Valou Enterprises's employees on the Penalty Worksheet; assigned each employee a classification code based on the definitions of workplace operations that most closely described the work they performed for Valou Enterprises; set out the dates during which Valou Enterprises did not provide workers' compensation insurance coverage11; entered the annual or pro-rated gross payroll for each employee during the period of non-compliance; divided the gross payroll for each employee by 100; set out the approved manual rate for each employee during the period of non-compliance in accordance with his or her classification code; determined the premium that Valou Enterprises would have paid for workers' compensation insurance coverage for each employee during the period of non-compliance by multiplying the approved manual rate and one one-hundredth of the gross payroll for each employee; calculated the penalty attributable to each employee during the period of non- compliance by multiplying the premium for each employee by 1.5; and, finally, calculated the total penalty owed by Valou Enterprises attributable to its failure to secure workers' compensation insurance coverage for its employees.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order finding that Valou Enterprises, Inc., d/b/a/ Mr. Rooter Plumbing, failed to secure workers' compensation insurance coverage for its employees in violation of Section 440.38(1), Florida Statutes, and imposing a penalty in the amount of $59,652.93 for the failure to provide the required workers' compensation insurance coverage. DONE AND ENTERED this 28th day of April, 2009, in Tallahassee, Leon County, Florida. 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 28th day of April, 2009.
Findings Of Fact 1. Pursuant to Section 440.107, Florida Statutes, the Florida Department of Financial Services 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 has the authority to “issue stop-work orders, penalty assessment orders, and any other orders necessary for the administration of this section.” Section 440.107(3)(g), Florida Statutes (2004). On March 29, 2006, the Department’s Investigator, John Wheeler, conducted a compliance investigation of Terry’s Paint & Body Shop, Inc. in Pensacola, Florida, and found that contrary to Florida law, the Business did not maintain a policy of worker’s compensation insurance for its’ employees. A Stop-Work Order and an Order of Penalty Assessment was issued to Terry’s Paint & Body Shop, Inc., on March 29, 2006, for “failing to obtain coverage that meets the requirements of Ch. 440, Fla. Stat.” (Respondent’s Exhibit 1.) The Stop-Work Order provided that Terry’s Paint & Body, Inc., cease all business operations in this State until such time as the Business secures workers’ compensation insurance for its’ employees. (id.) On March 29, 2006, a Division of Workers’ Compensation Request for Production of Business Records for Penalty Assessment Calculation was served on Terry’s Paint & Body, Inc. (Respondent’s Exhibit 2.) The Petitioner cooperated with the Division of Workers’ Compensation and timely produced business records in response to the March 29, 2006 request. On March 30, 2006, an Amended Order of Penalty Assessment was issued and personally served on Terry’s Paint & Body Shop, Inc., by John Wheeler, the Respondent’s workers’ compensation compliance investigator, and provided for a total penalty assessment of $29,223.48. (Respondent’s Exhibit 3). On April 3, 2006, Terry’s Paint & Body Shop, Inc. entered into a Payment Agreement for Periodic Payment of Penalty that provided for the periodic payment of the assessed penalty of $29,223.48 over a period of sixty (60) months. (Respondent’s Exhibit 6.) Pursuant to that Agreement, the Petitioner paid a required initial payment down-payment of ten percent (10%) of the assessed penalty ($3,000), and agreed to make sixty (60) payments of $437.08 per month, payable on the first day of the month. (Id.) The first scheduled monthly payment was due on June 1, 2006. (Id.) On April 3, 2006, and based on the executed Payment Agreement Schedule for Periodic Payment of Penalty, the ten percent (10%) down payment by Terry’s Paint & Body, Inc., and pursuant to Florida law, the Department of Financial Services, Division of Workers’ Compensation entered their Order of Conditional Release from Stop-Work Order to Petitioner. (Respondent’ Exhibit 5.) Pursuant to the Order of Conditional Release from Stop-Work Order, the Petitioner was permitted to resume business operations in Pensacola, Florida. (Id.) Pursuant to the Payment Agreement Schedule for Periodic Payment of Penalty and the Order of Conditional Release from Stop-Work Order, the Petitioner was obligated to make sixty (60) monthly payments of $437.08 that were payable on the first day of every month. (Respondent’s Exhibit 5 and 6.) The Petitioner failed to timely submit the schedule monthly payments that were due on October 1, 2008 and November 1, 2008, and defaulted on the April 3, 2006, Payment Agreement Schedule for Periodic Payment of Penalty. (Respondent’s Exhibit 8.) Because of the missed payments and the default of the Payment Agreement Schedule for Periodic Payment of Penalty, the Respondent entered an Order Reinstating Stop-Work Order on December 24, 2008. (Jd.) 10. 11. On or about January 14, 2009, the Petitioner submitted a payment for the months of October and November 2008 to the Workers’ Compensation Administration Trust Fund. (Respondent’s Exhibits 7 and 7A.) Because the Petitioner became current on his monthly payments and pursuant to Florida Law, the Respondent entered a January 28, 2009 Order Rescinding Order Reinstating Stop-Work Order wherein the Petitioner was allowed to resume normal business operations in Pensacola, Florida provided the future monthly payments were timely paid. (Respondent’s Exhibit 9.) Pursuant to the Payment Agreement Schedule for Periodic Payment of Penalty and the Order of Conditional Release from Stop-Work Order, the Petitioner was obligated to make sixty (60) monthly payments of $437.08 that were payable on the first day of every month. (Respondent’s Exhibit 5 and 6) The Petitioner failed to timely submit the schedule monthly payment that was due on January 1, 2009, and again defaulted on the April 3, 2006, Payment Agreement Schedule for Periodic Payment of Penalty. (Respondent’s Exhibit 10.) Because of the missed payment and the default of the Payment Agreement Schedule for Periodic Payment of Penalty, the Respondent entered an Order Reinstating Stop-Work Order on March 21, 2009. (Id.) On or about April 7, 2009, the Petitioner submitted a payment for the months of January and February 2009 to the Workers’ Compensation Administration Trust Fund. (Respondent’s Exhibits 7 and 7A.) Because the Petitioner became current on his monthly payments and pursuant to Florida Law, the Respondent entered an April 13, 2009 Order Rescinding Order Reinstating Stop-Work Order wherein the Petitioner was allowed to resume normal business operations in Pensacola, Florida, provided the future monthly payments were timely paid. (Respondent’s Exhibit 9.) 12. 13. 14. Pursuant to the Payment Agreement Schedule for Periodic Payment of Penalty and the Order of Conditional Release from Stop-Work Order, the Petitioner was obligated to make sixty (60) monthly payments of $437.08 that were payable on the first day of every month. (Respondent’s Exhibit 5 and 6.) The Petitioner failed to timely submit the schedule monthly payment that was due on March 1, 2009, and defaulted on the April 3, 2006, Payment Agreement Schedule for Periodic Payment of Penalty for a third time. (Respondent’s Exhibit 12.) Because of the missed payment and the default of the Payment Agreement Schedule for Periodic Payment of Penalty, the Respondent entered an Order Reinstating Stop-Work Order on June 16, 2009. (Id.) In addition, the June 16, 2009 Order Reinstating Stop-Work Order requires the current unpaid balance of the total assessed penalty to become immediately due in order to withdraw the current stop-work order, which totals $11,800.50. (Id.) In addition to the above penalty and stop-work orders, on October 19, 2009, an Order Assessing Penalty for Working in Violation of Reinstated Stop-Work Order was issued and personally served on Terry’s Paint & Body Shop, Inc., in the amount of $125,000.00. This penalty is being contested by Petitioner before the Division of Administrative Hearings, is not being considered by this Hearing Officer, and is not part of the instant Matter. (Respondent’s Exhibit 4.) In his Petition for Hearing and throughout this proceeding, the Petitioner is seeking a third order rescinding the Terry’s Paint & Body, Inc., Stop-Work Order conditioned on his paying all past due amounts and making future payments under the April 3, 2006 Payment Agreement Schedule for Periodic Payment of Penalty. uo
Conclusions Terry’s Paint & Body, Inc. by and through Mr. Terry Hedges 8129 Pensacola Boulevard Pensacola, Florida 32534 Petitioner Pro Se Paige Shoemaker, Esq. Department of Financial Services Division of Legal Services Tallahassee, Florida 32399-4229 Attorney for the Florida Department of Financial Services, Division of Workers’ Compensation
Recommendation Based on the Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department issue a final order upholding the June 16, 2009 Order Reinstating Stop-Work Order issued to Terry’s Paint & Body Shop, Inc. until such time that the Petitioner pays the balance of its’ monetary penalties that were assessed beginning on March 29, 2009, as a result of the Business failing to secure mandated workers’ compensation insurance for its’ employees. In addition, it is RECOMMENDED the final order in this matter hold that Florida law does not provide the Department or this Hearing Officer any discretion whatsoever to enter an order rescinding the Department’s Stop-Work Order after the Petitioner has defaulted three (3) times on his April 3, 2006 Payment Agreement Schedule for Periodic Payment of Penalty. Respectfully submitted this 26" day of July 2010. Alan J. ma bf Department of Financial Services 3700 Lifford Circle Tallahassee, Florida 32309 Phone: (850)668-9820 Fax: (850)668-9825 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the above and foregoing Recommended Order has been provided by US Mail to: Mr. Terry Hedges, Terry’s Paint & Body, Inc,, 8129 Pensacola Boulevard, Pensacola, Florida 32534 and via hand delivery to Paige Shoemaker, Esq., Department of Financial Services, Division of Legal Services, 200 East Gaines Street, Tallahassee, FL 32399-4429 in the interests of judicial economy, this 26" day of July, 2010. Alan J. on aff -13-
Findings Of Fact 10. The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on July 17, 2007, and the Third Amended Order of Penalty Assessment issued on September 8, 2009, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions This cause came on before Tom Gallagher, as Chief Financial Officer of the State of Florida, for consideration of and final agency action on the Recommended Order issued herein on October 4, 2003, by Administrative Law Judge J.D. Parrish. No exceptions to that Recommended Order were filed. , Having reviewed the Recommended Order and the record of this proceeding, and being otherwise apprised in all material premises, IT IS HEREBY ORDERED that the Findings of Fact and Conclusions of Law made and announced by the Administrative Law Judge in the Recommended Order are adopted without exception as the Findings of Fact and Conclusions of law of the agency. IT IS HEREBY FURTHER ORDERED that Janusz Kraj shall pay to the Division of Worker's Compensation a civil penalty in the amount of $1,100, within thirty days from the date hereof, said sum to thereafter bear interest at the rate of 9% per anum until paid. IT {S$ HEREBY FURTHER ORDERED that the Stop Work And Penalty Assessment Order entered by the Division of Worker's Compensation is affirmed, and that Janusz Kraj shall cease all business operations unless and until he provides evidence satisfactory to the Division of Worker's Compensation of having now complied with the workers compensation law by securing the necessary worker's compensation for covered employees and, pursuant to Section 440.107(7)(a), Florida Statutes, paid the civil penalty imposed herein. Lh DONE AND ORDERED this 3° — day of November, 2003. ST ) Sie \eouw Tom Gallag Chief Financial Officer Tomy “ay a PEF LAO
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.
Findings Of Fact 8. The factual allegations contained in the Stop- Work Order and Order of Penalty Assessment issued on January 4, 2010, and the Amended Order of Penalty Assessment issued on February 24, 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 Amended Order of Penalty Assessment, served in Division of Workers’ Compensation Case No. 10-001-1A, and being otherwise fully advised in the premises, hereby finds that: 1. On January 4, 2010, the Department issued a Stop-Work Order and Order of Penalty Assessment to POWELL & SONS ROOFING, INC. 2. On January 15, 2010, the Stop-Work Order and Order of Penalty Assessment were served on POWELL & SONS ROOFING, INC by certified mail. A copy of the Stop-Work Order and Order of Penalty Assessment are attached hereto as “Exhibit A” and incorporated herein by reference. 3. On February 24, 2010, the Department issued an Amended Order of Penalty Assessment in Division of Workers’ Compensation Case No. 10-001-1A to POWELL & SONS ROOFING, INC. The Amended Order of Penalty Assessment assessed a total penalty of $1,000.00 against POWELL & SONS ROOFING, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein POWELL & SONS ROOFING, INC. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the ‘Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, 4. On March 4, 2010, the Amended Order of Penalty Assessment was served by personal service on POWELL & SONS ROOFING, INC. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On March 18, 2010, POWELL & SONS ROOFING, INC. filed a request for Administrative Review (“Petition”), requesting review of the Amended Order of Penalty Assessment. The petition for administrative review was forwarded to the Division of Administrative Hearings on May 20, 2010, and the matter was assigned DOAH Case No. 10- 2789. A copy of the Petition is attached hereto as “Exhibit C” and incorporated herein by : reference. 6. On June 22, 2010, POWELL & SONS ROOFING, INC. filed a Motion to Withdraw Petition with the Division of Administrative Hearings. A copy of the Motion to Withdraw Petition is attached hereto as “Exhibit D” and incorporated herein by reference. 7. On July 1, 2010, the Administrative Law Judge issued an Order Closing File which relinquished jurisdiction to the Department. A copy of the Order Closing File is attached hereto as “Exhibit E” and incorporated herein by reference.
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.
Findings Of Fact 12. The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on December 30 2008, and the Seventh Amended Order of Penalty Assessment issued on August 31, 2009, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
