The Issue The issues in the case are whether J. D. Tree Service, Inc. (Respondent), conducted business in violation of a previously- issued Stop-Work Order, and, if so, whether the Department of Financial Services, Division of Workers' Compensation (Petitioner), properly calculated the applicable penalty assessment.
Findings Of Fact The Petitioner is the state agency charged with the responsibility to enforce chapter 440, Florida Statutes (2010),1/ which essentially requires that Florida employers secure workers' compensation coverage for their employees. The Respondent is a Florida corporation providing various tree services, including trimming and related activities. On June 11, 2007, the Petitioner issued a Stop-Work Order (07-172-D7) and an Order of Penalty Assessment based on the Respondent's failure to obtain proper workers' compensation insurance coverage for employees. On June 14, 2007, the Petitioner issued an Amended Order of Penalty Assessment for $147,419.52 against the Respondent. The amended order was personally served on the Respondent on the date of issuance. The Respondent did not challenge either the Stop-Work Order or the Amended Order of Penalty Assessment. On June 15, 2007, the Respondent executed a "Payment Agreement Schedule for Periodic Payment of Penalty" (hereinafter "Agreement"). The Agreement permitted the Respondent to satisfy the penalty through a ten percent down payment and 60 subsequent monthly payments. Based on the execution of the Agreement, the Petitioner lifted the Stop-Work Order on the condition that the Respondent complied with the terms of the Agreement. The Agreement specifically stated that failure to meet the terms set forth therein would "result in the immediate reinstatement of the Stop-Work Order, and the remaining unpaid balance of the penalty to be paid by the employer shall become immediately due." The Respondent was provided a copy of the Agreement and acknowledged understanding the terms set forth therein. The Respondent made the down payment required at the time the Agreement was executed, but thereafter made none of the monthly payments due under the Agreement. On May 18, 2007, the Petitioner issued an Order Reinstating Stop-Work Order (the "Reinstatement Order") based on the Respondent's failure to comply with the payment terms of the Agreement. The Reinstatement Order identified the unpaid balance as $132,674.52 and directed the Respondent to "cease all business operations in the State of Florida" until certain conditions were met. Such conditions included satisfaction of the existing unpaid penalty balance as well as any additional penalty related to business operations conducted in violation of the Stop-Work Order and a determination by the Petitioner that the Respondent was in compliance with workers' compensation coverage requirements. The Respondent did not challenge the Reinstatement Order, and it became effective on June 6, 2008. On December 14, 2009, a workers' compensation compliance investigator employed by the Petitioner observed tree service operations being conducted at a recreational vehicle park in Naples, Florida. The investigator observed that there were persons wearing t-shirts bearing the Respondent's identification. Upon inquiry by the investigator, the workers stated that they were working for the Respondent. The investigator observed that the vehicles from which the workers were operating bore the Respondent's insignia. The investigator determined that there was an existing Stop-Work Order against the Respondent. On January 8, 2010, the Petitioner issued a Request for Production of Business Records, seeking to identify the number of days during which the Respondent had operated in violation of the Stop-Work Order, and provided the request to the Respondent. Also on January 8, 2010, the Petitioner issued an Order Assessing Penalty for Working in Violation of Reinstated Stop-Work Order, seeking to impose a penalty of $555,000.00. The penalty calculation was based on the 555 calendar days from June 7, 2008, to December 14, 2009. The Respondent challenged the penalty assessment and requested a formal administrative hearing. On May 21, 2010, the Respondent submitted payroll records for the period of March 21, 2009, through December 11, 2009. The records established that the Respondent had conducted business operations during the period that the Stop- Work Order was effective. The records also indicated that the Respondent routinely conducted business operations from Monday through Friday of each week, but did not operate on Saturdays, Sundays, or usual legal holidays. On January 21, 2011, the Department issued an Amended Order Assessing Penalty for Working in Violation of Reinstated Stop-Work Order in the amount of $381,000.00, based on the Respondent's routine work schedule with the deletion of the Saturdays, Sundays, and legal holidays that had been included in the January 8, 2010, Assessment. On January 25, 2011, the Petitioner filed a Motion to Amend Order of Penalty Assessment. The Motion was granted without objection at the commencement of the hearing. All orders relevant to this dispute were hand- delivered or were mailed to the Respondent's corporate address, which was also the residential address for the principals of the Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order assessing a penalty of $381,000.00 against the Respondent for conducting business operations in violation of the reinstated Stop-Work Order. DONE AND ENTERED this 29th day of March, 2011, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of March, 2011.
The Issue The issue is whether the Department of Financial Services properly assessed a penalty on Petitioner for working in violation of a reinstated Stop-Work Order.
Findings Of Fact The Division is charged with the regulation of workers' compensation insurance in the State of Florida. Petitioner, Extraordinaire Home Improvements, Inc. (Extraordinaire Homes), is a corporation located in Jacksonville, Florida, and is engaged in the business of building construction, primarily roofing. Charlie Sakakini is the owner of Extraordinaire Homes. On October 20, 2004, the Division issued a Stop-Work Order and Order of Penalty Assessment. On October 29, 2004, the Department issued an Amended Order of Penalty Assessment to Petitioner in the amount of $8,079.29. Also on October 29, 2004, the parties entered into a Payment Agreement Schedule for Periodic Payment of Penalty wherein Mr. Sakakini agreed to remit monthly payments on behalf of Extraordinaire Homes to the Division in the amount of $589.95 for 11 months. The payment schedule informed Petitioner that failure to comply with the terms of the agreement would result in the immediate reinstatement of the Stop-Work Order. The Division issued an Order of Conditional Release from Stop-Work Order the same day the agreement was signed. Petitioner, through its owner, Mr. Sakakini, failed to make the payments required by the agreed payment schedule. Accordingly, the Division issued an Order Reinstating Stop-Work Order (Reinstatement Order) on July 27, 2006. The Reinstatement Order informed Petitioner that it must cease all business operations in the State of Florida until an order releasing the Reinstatement Order was issued. Mr. Sakakini acknowledges that Petitioner was actively conducting business operations, i.e., roofing work, on 100 days in the Fall of 2007, despite the Reinstatement Order having been issued. On September 28, 2007, the Division issued an Order Assessing Penalty for Working in Violation of Reinstated Stop-Work Order assessing a penalty of $406,000.00. The amount of the assessed penalty was reduced to $100,000.00 in a Second Amended Order of Penalty Assessment as a result of an Order Granting Motion to Amend Order of Penalty Assessment entered by the undersigned on April 28, 2008. Of the 100 days worked during the pendency of the Reinstatement Order, 25 of those days involved work on Mr. Sakikini's personal residence. During this time, business was slow, and he was trying to give his workers "something to do so that they can make some money." Mr. Sakikini continues to live in the home where this work took place. Mr. Sakikini paid the workers who worked on his personal residence with checks from the business account of Extraordinaire Homes. Mr. Sakikini considers the amount of the penalty, i.e., $1,000.00 per day of violation, to be excessively harsh when applied to a small businessman like himself.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that Respondent, Department of Financial Services, Division of Workers' Compensation, enter a final order amending the Second Amended Order of Penalty Assessment, assigning a penalty of $75,000.00. DONE AND ENTERED this 27th day of June, 2008, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of June, 2008.
The Issue Whether the Respondent was required to carry workers' compensation insurance coverage for its employees and, if it failed to do so, whether the Amended Notice and Penalty Assessment Order is correct.
Findings Of Fact At all times material to this case, the Petitioner, the Department of Labor and Employment Security, Division of Workers’ Compensation was the state agency charged with the responsibility of administering compliance with state laws governing workers’ compensation (WC). The Respondent, A. J. Interiors, Inc., is a Florida corporation doing business at 1825 Mears Parkway, Margate, Florida. At all times material to this case, Robert Barnes was an investigator employed by the Department to perform compliance investigations for WC. On July 6, 2000, Investigator Barnes performed a random construction site inspection at a new construction project located at 16687 Jog Road, Delray Beach, Florida. While at that location, Investigator Barnes observed two men wearing T-shirts bearing the company name "A. J. Interiors, Inc." along with its telephone number. The men were installing metal framing in order to hang and finish drywall. The field interview with the two men, identified in this record as Sergio and Jaime Gonzalez, revealed that neither was covered by WC insurance. This information was later confirmed by Investigator Barnes. Additionally, neither man had obtained an exemption from coverage as the sole proprietor of a business. Based upon the field interview of the two men, a review of Department records, and contact with the Respondent's insurance agent, Investigator Barnes correctly determined that the men were the Respondent’s "employees” as that term is defined by the WC law. The men did not supply materials to the job site but agreed to perform work based upon a price described as a "per board" industry standard rate. In other words, the men would hang the drywall at a flat rate (established by and consistent with the local industry standard) for each job accepted through the Respondent. If the work were completed, the men expected to be paid by the Respondent. The men did not contract with or work for the general contractor of the job. The only requirement for payment was the performance of the work. The only risk incurred by the workers related to their relationship with the Respondent. Having concluded that the workers were not covered by WC and were not exempt, Investigator Barnes caused a stop work order to be issued against the Respondent. In conjunction with that order, the Department requested copies of the Respondent's business records. A review of the "vendor accounts” supplied by the Respondent established that its workers were paid amounts presumably based upon the number of boards hung per job identified. The payments were not always the same amount as the number of boards hung for a given job could vary. Additionally, the Respondent allowed workers to receive "draws" against the expected payments for uncompleted jobs. The Respondent’s claim that the workers were independent contractors has not been deemed credible. Based upon the testimony of the Respondent's witness all of the workers performed as outlined by the men interviewed by Investigator Barnes. The Respondent did not have a valid WC policy during the three years preceding the stop work order. The Amended Notice and Penalty Assessment Order prepared by Investigator Barnes accurately calculates the amounts owed by the Respondent for the three-year period.
The Issue Whether Gio & Sons, Inc. (Respondent) violated Sections and 440.38, Florida Statutes, and if so, what penalty should be imposed. References to sections are to the Florida Statutes (2004).
Findings Of Fact Petitioner is the state agency responsible for enforcing provisions of Florida law, specifically Chapter 440, Florida Statutes, which require that employers secure workers’ compensation coverage for their employees. Respondent, whose principal is Giovanny Martinez, Jr. (Mr. Martinez), is in the business of providing drywall installation services. At all times material to this case, Respondent is an employer within the meaning of Section 440.02(16)(a), Florida Statutes. At all times material to this case, Respondent was legally obligated to provide workers' compensation insurance in accordance with the provisions of Chapter 440, Florida Statutes, for all persons employed by Respondent to provide drywall installation services within Florida. In particular, Chapter 440 requires that the premium rates for such coverage be set pursuant to Florida law. At all times material to this case, Respondent failed to obtain workers' compensation coverage on behalf of over 150 employees. It is undisputed that Respondent had not furnished the required coverage, and that there was no valid exemption from this requirement. Accordingly, on February 26, 2004, the Stop Work Order was properly entered. Thereafter, Petitioner reviewed Respondent's payroll records, which revealed that Respondent employed the individuals referred to in paragraph 5, whose identities are not in dispute, under circumstances which obliged Respondent to provide workers' compensation coverage for their benefit. Based upon Respondent’s payroll records, Petitioner correctly calculated the penalty amount imposed by law under all the circumstances of the case, and issued the Amended Order imposing a penalty assessment in the amount of $107,885.71. Mr. Martinez does not dispute the factual or legal merits of Petitioner's case.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order that affirms the Amended Order in the amount of $107,885.71. DONE AND ENTERED this 15th day of December, 2004, in Tallahassee, Leon County, Florida. S FLORENCE SNYDER RIVAS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of December, 2004. COPIES FURNISHED: Joe Thompson, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 Giovanny Martinez, Jr. Gio & Sons, Inc. 6910 Southwest 18th Court Pompano Beach, Florida 33068 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florid a 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
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 is whether Respondent is subject to assessed penalties as set forth in the Amended Stop Work and Penalty Assessment Order dated March 11, 2003.
Findings Of Fact Petitioner is the agency charged with enforcing statutory requirements that employers secure the payment of workers' compensation for their employees. Respondent is a Florida corporation, Federal Employer Identification No. 592489849, located in Ocala, Florida, that provides livestock transportation services. Henry Hayes Hudson, III, is Respondent's president. Martha Hudson is Respondent's vice president. Henry and Martha Hudson are Respondent's only officers and shareholders. On or about March 3, 2003, Petitioner received a complaint alleging that Respondent did not carry workers' compensation coverage. That same day, Petitioner's investigator, William Pangrass, conducted a compliance inspection at Respondent's principal place of business, 5879 West County Road 326, Ocala, Florida. During the investigation, Mr. Pangrass interviewed Martha Hudson and Respondent's bookkeeper, Kelly Hadsock. The investigation revealed that Respondent had no proof of workers' compensation for the prior three years. Petitioner personally served Respondent with a Stop Work and Penalty Assessment Order, No. 03-191-D1, on March 3, 2003. The Order required Respondent to cease all business activities. The Order also assessed the minimum statutory penalty in the amount of $100.00 under Section 440.107(5) and $1,000.00 under Section 440.107(7)(b). Martha Hudson refused to sign the Order. Next, Petitioner personally served a Request for Business Owner Affidavit and Production of Business Records on March 3, 2003. Martha Hudson also refused to sign this document. Respondent subsequently provided Petitioner with copies of its payroll records. The records included Respondent's payroll from March 3, 2000, through March 3, 2003. For all or part of that period, Respondent employed 52 individuals. Petitioner used the payroll records to calculate the penalty assessment for the three-year period of time that Respondent did not provide its employees with workers' compensation. On March 11, 2003, Petitioner issued the Amended Stop Work and Penalty Assessment Order, No. 03-191-D1-2. The Amended Order required Respondent to cease all business operations and to pay a penalty in the amount of $109,500.00, pursuant to Section 440.107(5), and a penalty in the amount of $325,045.57, pursuant to Section 440.107(7)(a). The total assessed penalty was $434,545.57. In a telephone conference on July 11, 2003, the parties stipulated that Respondent had no workers' compensation coverage for the period of time at issue here. They also stipulated that the only remaining issue involved the accuracy of the assessed penalty. During the hearing, Petitioner presented competent evidence to support the accuracy of the assessed penalty. More importantly, Respondent stipulated to the accuracy of the assessed penalty.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Petitioner enter a final order affirming the Amended Stop Work Penalty Assessment Order and directing Respondent to pay a penalty in the amount of $434,545.57. DONE AND ENTERED this 10th day of November, 2003, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of November, 2003. COPIES FURNISHED: Larry Collins, Esquire 202 South Magnolia, Suite 3 Ocala, Florida 34474 Eric Lloyd, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue in this case is whether Respondent had sufficient or complete workers' compensation coverage for his employees pursuant to Chapter 440, Florida Statutes (2006).1
Findings Of Fact Respondent owns and operates a business engaged in the practice of installing flooring, including carpets, tile, hardwood, etc. He is a sole proprietor with no one else on his payroll. His work is performed by subcontractors whom he hires for each individual job. Respondent has been involved in the construction industry for many years and is generally aware of the concept of workers' compensation coverage. He has always operated under the assumption that an employer is only responsible for providing workers' compensation coverage for persons who are directly employed, i.e., that contracted employees (subcontractors) were exempt or had to pay their own coverage. Respondent did not make workers' compensation contributions for the subcontractors who did work for him. He acted on a good faith belief that such coverage was not his responsibility. On April 7, 2006, an investigator for Petitioner conducted a compliance investigation at Pegasus Point apartments in Orlando, Florida, pursuant to a public request. In Apartment J of the complex, the investigator observed a man (later identified as Jeff Menendez), who stated he was installing carpet. When asked about workers' compensation coverage, he replied that he was a subcontractor and did not believe he needed coverage. He said he got this job from "Allied" (the Petitioner in this case). As a result of this encounter, Petitioner contacted Respondent and asked for certain records in order to determine whether appropriate coverage was in place for its employees. When the requested records were not forthcoming, Petitioner entered a Stop Work Order. This prompted another request for business records so that Petitioner could calculate the appropriate penalty. Once it received the necessary records from Respondent, Petitioner determined there were several employees (as that term is defined in statute) working for Respondent for whom workers' compensation coverage had not been paid for the period of May 3, 2003, through May 3, 2006. When those workers were checked against Petitioner's data base--called the Coverage & Compliance Automated System, or CCAS--no coverage was found for Respondent or the identified employees for that period of time. One or more of the named employees had exemptions in place for a portion of the time they did work for Respondent. After taking that into consideration, Petitioner calculated a penalty of $28,619.97 against Respondent. The penalty was calculated using the Scopes Manual, a tool promulgated by rule. Respondent's business was identified in the Scopes Manual as Code 5478: carpet or flooring installation. The assigned rate for this code was then compared to the designated insurance rate. Once the amount was determined, it was multiplied by 1.5 to ascertain the penalty amount. The Stop Work Order was lifted by Petitioner after Respondent signed a "Payment Agreement Schedule for Periodic Payment of Penalty" on June 1, 2006. At that time, Respondent made a down payment of $2,867.19 and agreed to pay the sum of $403.08 per month for 60 months. Upon reaching agreement with Petitioner to pay the fine, Respondent also terminated all "employees" doing subcontract work for him at that time.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services upholding the Penalty assessed against Respondent for failure to provide workers' compensation coverage for employees. Inasmuch as the parties have already agreed to a payment plan, it is RECOMMENDED that the plan remain in effect until the penalty has been paid. DONE AND ENTERED this 22nd day of March, 2007, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of March, 2007.
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 Did Respondent fail to comply with Sections 440.10 and 440.38, Florida Statutes, and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the agency of the State of Florida government responsible for enforcing the statutory requirement, pursuant to Chapter 440, Florida Statutes, that employers secure the payment of workers' compensation for the benefit of their employees. Respondent works in the construction industry, specifically as it relates to drywall services. On February 25, 2004, Petitioner's investigator, David Kunz, visited Respondent's worksite at 400 West Bay Street in Jacksonville, Florida (also known as the Bennett Federal Building). Petitioner's investigator observed 12 workers engaged in drywall construction. Mr. Kunz spoke with Respondent's project foreman at the worksite, and with the assistance of a Spanish-speaking colleague, he interviewed all of Respondent's workers at the site. A representative of the general contractor, Skanska, U.S.A., furnished Petitioner's investigator with a certificate of workers' compensation insurance which had been provided to the general contractor by Respondent as a subcontractor on the Bennett Federal Building job. The address listed for Respondent was in North Carolina, and the producer of the policy also had a North Carolina address. The next day, Petitioner's investigator obtained a copy of Respondent's workers' compensation insurance policy. After reviewing the policy, the investigator concluded that Respondent had violated Florida's Workers' Compensation Law, because an endorsement applying Florida premium rates was not a part of the policy. Mr. Kunz then issued a Stop Work Order to Respondent on February 26, 2004. The Stop Work Order required Respondent to cease its business operations immediately, due to its lack of compliance with Chapter 440, Florida Statutes. By the Stop Work Order, Respondent was charged with failure to secure the payment of workers' compensation that met the requirements of Chapter 440, Florida Statutes, and the Florida Insurance Code, because North Carolina premium rates, rather than Florida premium rates, had been applied. The Stop Work Order indicated that the penalty amount assessed against Respondent would be subject to amendment based on further information provided by Respondent, including the provision of business records. St. Paul's Insurance Companies maintain a presence in Orlando, Florida, but the documents subsequently provided by Respondent to the investigator as purported proof of Respondent's compliance with Chapter 440, Florida Statutes, did not meet all necessary Florida requirements. The carrier on Respondent's policy is St. Paul Fire and Marine Insurance Company. The "producer" was "Insur A Car Commercial" in North Carolina. The "producer" is the agent responsible for processing the policy for the insurance carrier. Respondent's workers' compensation insurance policy lists U & M Contractors, Inc., 9036 Arborgate Dr., Apt. A, Charlotte, NC 28273 in the "Insured" column. The policy number is 6S16UB-0130B52-8-03. Respondent's insurance policy was "produced" outside Florida. Respondent had procured workers' compensation insurance from an insurance carrier which was appropriately licensed to do business in Florida, but Respondent did not maintain at all times a Florida endorsement to its policy indicating that the applicable premium rates were Florida premium rates. Respondent's workers' compensation insurance policy includes no Florida endorsement showing the application of Florida premium rates. Only North Carolina is listed in Item 3A of Respondent's workers' compensation policy. The endorsement (WC 00 03 26 (A)) for "Other States Insurance" in Respondent's policy specifically states that it "does not satisfy the requirements of that state's workers' compensation law" for any state not listed in Item 3A. Florida is not listed in Item 3A. The "Extension of Information" page of Respondent's workers' compensation insurance policy indicates the type of work that Respondent intends to perform, pursuant to the policy. The type of work is indicated by a class code, or number, assigned to the type or category of work. The Extension of Information page assigns class code 5445 (drywall installation) as to the work Respondent would be performing under the policy. The source for the class codes is the SCOPES Manual, published by the National Council on Compensation Insurance (NCCI). Petitioner's Agency's adoption of the SCOPES Manual was accomplished by Florida Administrative Code Rule 69L-6.021. Respondent's policy's Extension of Information page further indicates that a premium rate (rate per $100.00 of remuneration provided to Respondent's employees) of $10.20 had been applied by the insurer for class code 5445, and that the premium rate was for North Carolina, not Florida. By contrast, the approved Florida premium rate for class code 5445 is $20.88 per $100.00 of remuneration. The source for Florida premium rates is the NCCI Basic Manual. Mr. Kunz testified that the Basic Manual is used regularly by workers' compensation investigators. Mr. Kunz issued an Agency Request for Business Records on February 26, 2004, the same date as the Stop Work Order. He specifically sought Respondent's payroll records, because Chapter 440 requires Petitioner "to calculate the penalty of an employer who is in noncompliance based on the employer's payroll." Some payroll records were forwarded to Mr. Kunz by Respondent. Some payroll records were provided to one of Petitioner's fellow investigators by a general contractor for whom Respondent had subcontracted drywall installation at the Bennett Federal Building worksite. The latter records were part of a separate investigation, but were shared between the two investigators. However, several weeks of Respondent's payroll records were not initially provided from any source. Respondent's payroll records include, among other entries, the names of its workers and the dates and amounts of remuneration provided to those workers. The records indicate that Respondent provided remuneration to its workers in the years 2003 and 2004. The penalty period assigned by Petitioner against Respondent is from November 17, 2003, through February 25, 2004, because November 17, 2003, was the day that work on the Bennett Federal Building began, and February 25, 2004, was the date listed in the Stop Work Order. Mr. Kunz used the payroll records he had to calculate an initial penalty amount of $74,479.90. Payroll for weeks not accounted for in Respondent's first production of payroll records was imputed by Mr. Kunz in the initial penalty amount, pursuant to Chapter 440, by calculations based on the first records he had. He issued the First Amended Penalty Assessment Order (Amended Order) to Respondent on March 3, 2004, in the amount of $74,479.90. A subsequent production of records by Respondent caused Petitioner to recalculate the penalty for some weeks for which payroll previously had only been imputed. The recalculation caused the assessed penalty amount to decrease to $51,779.50, and on March 9, 2004, a second Amended Order in the amount of $51,779.50 was issued to Respondent. The second Amended Order included the imputation of payroll for Respondent's two owners, Juan Mitchell (Mitchell) and Hector Urbina (Urbina). Mr. Kunz had received no payroll records at any time for the two owners, though he had twice specifically requested those records. He determined that the owners were named on Respondent's insurance policy and had actually been present on the Florida worksite. Mitchell and Urbina are classified under code 5445 (drywall installation). Their respective average weekly wages for the entire penalty period was imputed according to Chapter 440, and the penalty amount for Mitchell and Urbina was calculated by first multiplying the evaded premium amount by the premium rate for class code 5445. The evaded premium amount was determined by taking the amount of wages for a penalty period, dividing it by one hundred (100), and multiplying it by the premium rate for the pertinent class code. The evaded premium amount was then multiplied by 1.5 to arrive at the penalty amount assessed for Mitchell ($4,434.72) and for Urbina ($4,434.72). The 1.5 multiplier is specifically required by Section 440.107(7)(d)1., Florida Statutes. Wages were similarly imputed for the following employees for February 23, 24, and 25, in 2004, because records did not exist for that partial work week: Alex Rosales; Jose Jimenez: Julio Betata; Orlin Betata; Erick Estrada; Melvin Landaverde; Neptale Lopez; and Jose Valentin. In calculating the penalty for the remainder of Respondent's workers for whom payroll records were provided, Petitioner's investigator similarly applied the foregoing methodology.
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 that affirms the Stop Work Order and assesses the $51,779.50 penalty cited in the Second Amended Order. DONE AND ENTERED this 7th day of April, 2005, in Tallahassee, Leon County, Florida. S ELLA JANE P. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 7th day of April, 2005. COPIES FURNISHED: Joe Thompson Assistant General Counsel Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399 Juan Carlos Mitchell U & M Contractors 1912 Southwest 67th Avenue Fort Lauderdale, Florida 33068 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
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.
