The Issue Whether Respondents violated the provisions of chapter 440, Florida Statutes, by failing to secure the payment of workers' compensation coverage, as alleged in the Stop-Work Orders, and, if so, what penalty is appropriate.
Findings Of Fact The Department is the state agency charged with enforcing the requirement of chapter 440, Florida Statutes, that employers in Florida secure workers' compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondents are gas station/convenience stores located in South Florida. Northlake was created by Nazma Akter on May 6, 2014. MB was created by Ms. Akter on March 23, 2010. Congress Valero was created by Muhammad Saadat on July 21, 2011. Hena was created by Ms. Akter and Abu Ahsan on December 14, 2011. Hayma was created by Ms. Akter on December 14, 2011. Blue Heron was created by Ms. Akter on August 4, 2009. At all times relevant hereto, Respondents were duly-licensed to conduct business in the state of Florida. On February 2, 2015, the Department's Compliance Investigator Robert Feehrer, began a workers' compensation compliance investigation of Gardenia, LLC. Investigator Feehrer called the number listed for Gardenia, LLC, and was provided with a corporate office address. On February 10, 2015, upon arrival at Gardenia, LLC's, corporate office located at 165 US Highway 1, North Palm Beach, Florida, 33408, Investigator Feehrer spoke with Operations Manager Mohammad Hossain. Mr. Hossain stated that Gardenia, LLC, was a paper corporation and existed only for the purpose of paying unemployment taxes on the "six stores." Mr. Hossain went on to provide Investigator Feehrer with a list of Respondents and names of the employees that worked at each store. As an employee of Gardenia, LLC, and Respondents, Mr. Hossain's statements are party opponent admissions and bind Respondents. Lee v. Dep't of Health & Rehab. Servs., 698 So. 2d 1194, 1200 (Fla. 1997). With Mr. Hossain's statements and the list of Respondents' employees, Investigator Feehrer then consulted the Division of Corporations website, www.sunbiz.org, and confirmed that Respondents were current, active Florida companies. Investigator Feehrer then consulted the Department's Coverage and Compliance Automated System ("CCAS") for proof of workers' compensation coverage and exemptions associated with Respondents. Investigator Feehrer's CCAS search revealed that Respondents had no workers' compensation policies and no exemptions. On February 24, 2015, Investigator Feehrer conducted site visits at each of the six stores. Ms. Akter and Mr. Hossain accompanied Investigator Feehrer during these site visits. At all times material hereto, Ms. Akter was a corporate officer or managing member of each of the six Respondents. Muhammed Saadat and Abu Ahsan were corporate officers or managing members of Congress Valero, Hena, and Blue Heron. Kazi Ahamed was a corporate officer or managing member of Congress Valero and Hayma. Kazi Haider and Mohammed Haque were managing members of Hayma. All received compensation from the companies with which they were involved. Although Investigator Feehrer only personally observed one employee working at each location during his site visits, the payroll records revealed that at least four employees (including corporate officers or managing members without exemptions) received compensation for work at each location during the relevant period. Investigator Feehrer required additional information to determine compliance, and with Respondents' permission, contacted Respondents' accountant. Investigator Feehrer met with the accountant at least two times to obtain relevant information prior to March 30, 2015. Upon Ms. Akter's authorization, the accountant provided tax returns and payroll information for Respondents' employees. Information from Ms. Akter and Mr. Hossain also confirmed the specific employees at each of the six stores during the period of March 30, 2013, through March 30, 2015. On March 30, 2015, based on his findings, Investigator Feehrer served six Stop-Work Orders and Orders of Penalty Assessment. The Stop-Work Orders were personally served on Ms. Akter. Mr. Hossain was present as well and confirmed the lists of employees for each of the six stores were accurate. In April 2015, the Department assigned Penalty Auditor Christopher Richardson to calculate the six penalties assessed against Respondents. Respondent provided tax returns for the audit period and payroll transaction details were provided, as well as general ledgers/breakdowns, noting the employees for each Respondent company. Based on Investigator Feehrer's observations of the six stores on February 24, 2015, Auditor Richardson used the classification code 8061 listed in the Scopes® Manual, which has been adopted by the Department through Florida Administrative Code Rule 69L-6.021(1). Classification code 8061 applies to employees of gasoline stations with convenience stores. Classification codes are four-digit codes assigned to various occupations by the National Council on Compensation Insurance to assist in the calculation of workers' compensation insurance premiums. In the penalty assessment, Auditor Richardson applied the corresponding approved manual rate for classification code 8061 for the related periods of non-compliance. The corresponding approved manual rate was correctly utilized using the methodology specified in section 440.107(7)(d)1. and rule 69L-6.027 to determine the final penalties. The Department correctly determined Respondents' gross payroll pursuant to the procedures required by section 440.107(7)(d) and rule 69L-6.027. On January 14, 2016, the Department served the six Amended Orders of Penalty Assessment on Respondents, assessing penalties of $1,367.06 for Northlake, $9,687.00 for MB, $12,651.42 for Congress Valero, $18,508.88 for Hena, $7,257.48 for Hayma, and $4,031.60 for Blue Heron. The Department has demonstrated by clear and convincing evidence that Respondents were engaged in the gasoline station, self-service/convenience store industry in Florida during the periods of noncompliance; that Respondents failed to secure the payment of workers' compensation for their employees, as required by Florida's Workers' Compensation Law; and that the Department correctly utilized the methodology specified in section 440.107(7)(d)1. to determine the appropriate penalties.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a consolidated final order upholding the Stop-Work Orders and the Amended Orders of Penalty Assessment in the amounts of $1,367.06 for Northlake Mobile Enterprises, Inc.; $9,687.00 for MB Food and Beverage, Inc.; $12,651.42 for Congress Valero, Inc.; $18,508.88 for Hena Enterprises, Inc.; $7,257.48 for Hayma Enterprises, Inc.; and $4,031.60 for Blue Heron BP, Inc. DONE AND ENTERED this 16th day of June, 2016, in Tallahassee, Leon County, Florida. S MARY LI CREASY 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 16th day of June, 2016.
The Issue The issues in this case are whether Professional Staffing and Payroll Services, LLC, failed to secure the payment of workers' compensation coverage for its employees in violation of chapter 440, Florida Statutes (2014), and, if so, the penalty that should be imposed.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation insurance coverage for their employees, pursuant to chapter 440, Florida Statutes. Respondent, Professional Staffing and Payroll Services, LLC, is a registered Florida limited liability company. At all times relevant to this proceeding, its business address was 1400 Colonial Boulevard, Suite 260, Fort Myers, Florida. Respondent actively engaged in business during the period from February 1, 2015, to June 17, 2015. On June 2, 2015, Petitioner's compliance investigator, Jack Gumph, conducted a workers' compensation compliance investigation at a worksite located at 8530 Palacio Terrace North, Lot 67, Hacienda Lakes, Naples, Florida. At the worksite, Gumph observed five workers nailing down plywood on the trusses of the roof of a house under construction. One of the workers, Fernando Fernandez, identified himself as the job foreman. Mr. Fernandez and the other four workers were employed by J.S. Valdez, Inc. ("JSV"). These workers were engaged in carpentry work installing plywood. This type of carpentry work is classified as National Council on Compensation Insurance ("NCCI") class code 5403 and is considered a type of construction activity under Florida Administrative Code Rule 69L-6.021(2)(cc). The evidence established that JSV was a client company of Global Staffing Services, LLC ("GSS"), and that GSS supplied the workers to JSV. The evidence further established that all five workers Gumph observed at the Palacio Terrace jobsite were employees of GSS. Using the State of Florida's Coverage and Compliance Automated System ("CCAS") computer database, Gumph determined that JSV did not have workers' compensation insurance covering any of its employees, and that GSS had workers' compensation coverage only for two secretarial/clerical employees. Through research in the Florida Department of State, Division of Corporations Sunbiz database ("Sunbiz"), Gumph discovered that GSS was part of three related——as Gumph characterized it, "commingled"——business entities; these entities were GSS, Global Staffing Payroll, LLC ("GSP"), and Professional Staffing and Payroll Services, LLC, the named Respondent in this case. Ivan Hernandez was shown in Sunbiz as being the managing member of GSS and GSP. At that time, the managing member of Respondent was shown as being Martha Coloma. Gumph suspected that Respondent was leasing construction workers, who are engaged in hazardous work, through a staffing company that was characterized as a secretarial/clerical business (NCCI code 8810)——a substantially less hazardous occupation. The effect of classifying of these business as "secretarial/clerical" is that a much lower workers' compensation premium rate applies.2/ Gumph prepared requests for production of business records ("RPBR") for each of the related business entities and visited the business address listed in Sunbiz for GSS to personally serve them on Hernandez. The business was located in a strip mall that housed various types of businesses. As he was entering the business, he noted that the name shown at the entrance was "Professional Staffing." The business manager explained that GSS was opened in 2013, and that on February 1, 2015, the business name had been changed to Professional Staffing and Payroll Services——the named Respondent in this proceeding. Upon inquiry, Gumph was told that Hernandez was "out of state." Almost as soon as he left Respondent's business office, Gumph received a call from Hernandez, who confirmed that he was the owner and chief executive officer of both GSS and Respondent. Gumph scheduled an appointment with Hernandez for June 16, 2015. However, Hernandez did not keep that appointment or call Gumph back to reschedule the appointment. It was obvious to Gumph that Hernandez was avoiding him. In researching the Sunbiz records for Respondent, Gumph also noted that on June 16, 2015, the managing member's name had been changed from Martha Coloma to Ivan Hernandez. He also rechecked the CCAS and NCCI databases for Respondent and noted that only a few days before, a workers' compensation policy had been issued for Respondent. The policy listed the business as "secretarial/clerical" and had a total exposure of $143,000 to cover four secretarial/clerical employees. He also noted that GSS had a workers' compensation policy that was effective from August 15, 2014, to August 15, 2015, and that this policy did not cover any additional insured entities, so its coverage did not extend to Respondent or its employees. Gumph contacted Martha Coloma, who was employed by All Florida Financial Services, LLC, a payroll preparation and bookkeeping firm. Coloma told Gumph that in January 2015, Hernandez had asked her to amend the Sunbiz records for Respondent to be shown as Respondent's managing member. Coloma also told Gumph that Hernandez requested that she find a Professional Employer Organization ("PEO") leasing company that would secure workers' compensation coverage for approximately 40 to 50 of his employees who were engaged in construction work.3/ Coloma was unsuccessful, so Hernandez directed her to obtain another policy for secretarial/clerical employees. She obtained the policy covering the four secretarial/clerical employees. Thereafter, Gumph spoke directly with Hernandez, who confirmed that he employed 40 to 50 construction workers. He told Gumph that he had tried to obtain a policy but had been unable to do so. On June 17, 2015, Gumph issued a Stop-Work Order and Order of Penalty Assessment to Respondent, and also served a RPBR on Respondent. In response, Respondent provided business records consisting of bank statements from a Regions Bank account covering the period from February 1, 2015, to February 28, 2015. Respondent did not provide any copies of checks written during this period. Respondent also provided business records consisting of bank statements and copies of checks from a Fifth Third Bank payroll account for Respondent for the period of March 1, 2015, through June 17, 2015. The evidence establishes that between February 1, 2015, and June 12, 2015, Respondent employed 437 employees—— the great majority of whom worked in construction jobs——for whom Respondent failed to secure workers' compensation insurance coverage. For the period between June 13, 2015, and June 17, 2015, Respondent secured workers' compensation coverage for four secretarial/clerical employees. Based on the business records provided, Lynne Murcia, Petitioner's penalty auditor, calculated the penalty to be assessed against Respondent. Pursuant to section 440.107(7)(d)1., the penalty for failing to secure workers' compensation is equal to two times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during the period for which the employer failed to secure coverage during the two-year period preceding issuance of the Stop-Work Order. Here, because Respondent became a business entity on or about February 1, 2015, the penalty period applicable to this proceeding commenced on February 1, 2015, and ran through June 17, 2015, the date on which the Stop-Work Order and Penalty Assessment were served on Respondent.4/ Respondent did not obtain any exemptions from the workers' compensation coverage requirement for the period between February 1, 2015, and June 17, 2015. The business records Respondent provided in response to the RPBR were not sufficient to enable Petitioner to calculate Respondent's payroll for the period commencing on February 1, 2015, and ending on February 28, 2015. Accordingly, Petitioner imputed the gross payroll for Respondent's employees identified in the taxable wage report for the period covering February 1, 2015, through February 28, 2015, the statewide average weekly wage effective at the time of the Stop-Work Order, multiplied by two. The imputed wages for these employees over this period amounted to $2,544,907.68. For the period commencing on March 1, 2015, and ending on June 17, 2015, Respondent provided records sufficient to enable Petitioner to determine Respondent's actual gross payroll. For this period, Respondent's gross payroll amounted to $1,202,781.88. The evidence shows that for the period from February 1, 2015, through June 12, 2015, Respondent failed to secure workers' compensation coverage for any of its employees. On June 13, 2015, Respondent secured workers' compensation covering four secretarial/clerical employees. This coverage did not extend to Respondent's employees engaged in work other than secretarial/clerical work. For the period from June 13, 2015, to June 17, 2015, Respondent's gross payroll was calculated as $22,507.37. In calculating the applicable penalty, Respondent received a credit of $923.98 for the premium paid on the policy secured on June 12, 2015. This amount was deducted from the penalty owed. In calculating the penalty, Murcia determined the NCCI class code applicable to each employee according to his or her job, and applied the pertinent approved NCCI rates to determine the amount of the evaded premium for each employee. Pursuant to this method, Murcia calculated a total penalty of $645,019.36, which was reflected in the Amended Order of Penalty Assessment. In sum, Petitioner demonstrated, by clear and convincing evidence, that Respondent failed to secure workers' compensation coverage for its employees, in violation of chapter 440. The clear and convincing evidence further establishes that Petitioner correctly calculated a penalty of $645,019.36 to be assessed against Respondent pursuant to sections 440.107(7)(d)1. and 440.107(7)(e) and rule 69L-6.028.
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 determining that Respondent Professional Staffing and Payroll Services, LLC, violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage and imposing a penalty of $645,019.36. DONE AND ENTERED this 10th day of February, 2016, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS 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 10th day of February, 2016.
The Issue The issue is whether Petitioner properly issued a Stop Work Order (SWO) and Second Amended Penalty Assessment against Respondent for failing to obtain workers' compensation insurance that meets the requirements of Chapter 440, Florida Statutes.
Findings Of Fact The Division is a component of the Department of Financial Services. It is responsible for enforcing the workers' compensation coverage requirements pursuant to Section 440.107, Florida Statutes. Nobel is a corporation operating as a moving business in Florida. Nobel was incorporated in 2004 and has been operating with an active status since its inception. Yaniv Dalei is the sole owner and president of Nobel. On June 9, 2009, Petitioner's investigator, Cesar Tolentino, visited 18255 Northeast 4th Court, North Miami, Florida ("business site"), after being referred to the location to investigate Respondent for compliance with the Florida Workers' Compensation Law. At the business site, Petitioner's investigator spoke to the manager, and saw the bookkeeper and the receptionist during the visit. Respondent was not at the business site, but was out of the country in Panama when Tolentino visited. Respondent spoke to Tolentino by telephone. Respondent informed Tolentino that he had five employees and that he "was in the process of obtaining workers' compensation insurance." While at the business site, Tolentino, used the Department of Financial Services' Coverage and Compliance Automated System (CCAS), and confirmed Respondent lacked insurance for the payment of workers' compensation coverage. Additionally, Petitioner's investigator verified through the CCAS that Nobel had not secured an employee leasing company to secure workers' compensation insurance for its employees as well as found that no exemptions from workers' compensation had been issued in connection with Nobel. Petitioner's investigator also performed a National Council on Compensation Insurance search on Nobel while at the business site. The search revealed that Nobel's employees had not had workers' compensation insurance in the past. On June 9, 2009, Petitioner's investigator issued a SWO and posted it at the business site. The SWO required Respondent to cease all business operations. On June 10, 2009, Respondent obtained a certificate of insurance for workers' compensation coverage with the effective date being the same. The policy was issued by One-Stop Insurance Agency. Respondent provided the certificate to Tolentino upon receipt. On June 12, 2009, Petitioner's investigator issued to Respondent a Division of Workers' Compensation Request for Production of Business Records for Penalty Assessment Calculation ("Request"). Soon thereafter, Respondent responded to the Request and provided Petitioner's investigator with the requested records. Petitioner's investigator forwarded the documents to Jorge Pinera, Petitioner's penalty calculator, for review. On or about July 17, 2009, Petitioner issued an Amended Order of Penalty Assessment assessing a penalty of $74,794.38 against Respondent. On August 10, 2009, Respondent entered into a payment agreement with the Division. Respondent provided the Division a $7,480.00 cashier's check and agreed to pay the remainder of the assessed penalty in monthly installments. As a result, Petitioner issued an Order of Conditional Release for Nobel to operate. On March 3, 2010, Respondent supplied an employee list with position descriptions to Petitioner. After reviewing the document, Petitioner changed some employee class codes to indicate a lower rate for some occupations and recalculated the penalty amount owed with the new class codes. For the recalculation, Petitioner's penalty calculator, Russell Gray, used the following calculation from the penalty worksheet: (a) Respondent's total gross payroll from June 10, 2006, through June 9, 2009, was $1,010,001.32; (b) the total workers' compensation premium that Respondent should have paid for its employees during the relevant time period was $45,483.96; and (c) the premium was multiplied by the statutory factor of 1.5 resulting in a penalty assessment in the amount of $68,224.81. The new calculation superseded the Amended Order and a Second Amended Order of Penalty Assessment was issued March 3, 2010, reducing Respondent's penalty to $68,224.81.1 During the hearing, Respondent admitted not having workers' compensation coverage for his employees. He said, "Yes, you're right I needed to have workers' compensation but as I said . . . I never knew that I needed to have workers' compensation . . . I'm here to ask for forgiveness."
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, issue a final order affirming the Stop Work Order and Second Amended Order of Penalty Assessment in the amount of $68,224.81. DONE AND ENTERED this 20th day of April, 2010, in Tallahassee, Leon County, Florida. S JUNE C. McKINNEY 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 20th day of April, 2010.
The Issue The issue in this case is the amount of attorney’s fees and reasonable expenses to be awarded to Petitioner's counsel pursuant to section 766.31(1)(c), Florida Statutes.
Findings Of Fact As noted in the Preliminary Statement, the parties filed an Amended Joint Stipulation on May 20, 2015. The parties stipulated to the amount and manner of payment of an award to Petitioners. Specifically, the parties agreed to an award of: Actual expenses for ambulance in the amount of $320; lump sum award to the parents or legal guardians of the infant found to have sustained a birth-related neurological injury in the amount of $100,000; and a death benefit in the amount of $10,000. The parties further stipulated to Petitioners’ entitlement to $631.05 in costs which includes the $15.00 DOAH filing fee and $616.05 for medical records. The parties also stipulated that the only remaining costs which are at issue are costs for a nursing consultant in the amount of $1,200 for Karla Olson & Associates, LLC, and expert witness costs for Donald Hinkle, Esquire. Petitioners also seek reasonable attorney’s fees. In the Amended Joint Stipulation, Petitioners’ counsel agreed to withdraw their request for time expended in seeking attorney’s fees from NICA and preparing for the fee hearing. Despite this, the parties were still unable to agree on the amount of reasonable attorney’s fees. Petitioners’ attorneys assert an entitlement to attorney’s fees in the amount of $34,728.27; $1,870 for the services of a paralegal; costs for a nurse’s review of the medical records in the amount of $1,200; and an expert witness fee for Donald Hinkle, Esquire, in the amount of $2,400. The total amount of attorney’s fees sought by Petitioners is broken down as follows: 82.2 hours for Ellen Burno at a rate of $275.19 per hour; 20.2 hours for Peter Van den Boom at a rate of $350 per hour; 12.9 hours for David Anderson at a rate of $225 per hour; and 11.2 hours for Saray Noda at a rate of $190.64 per hour. In addition to seeking $2,400 for their expert witness, Donald Hinkle, and $1,200 for a nurse consultant’s review of medical records, Petitioners seek costs for paralegal Ruthie Romero, at $110 per hour for 17 hours. Ellen Burno is the sole attorney in the Gainesville office of Frost Van den Boom, P.A. She has been licensed as an attorney in Florida since 2013 and has been licensed to practice law in the state of Kentucky since 2004. She has represented clients in medical malpractice cases and has extensive experience in litigation and health care law. She first met with Petitioners in October 2014 after the case was transferred from the firm’s Bartow office by senior attorney, David Anderson. Ms. Burno’s initial meeting with Petitioners took place not long after the death of their infant son, Ryan Michael Jolley. According to the Petition filed in this case, the Petitioners resided in Lake City. It is noted that Gainesville is considerably closer to Lake City than Bartow. Despite having represented multiple personal injury and malpractice clients, NICA was a first impression issue for her and for the other attorneys with the firm. Ms. Burno collaborated with Mr. Anderson on the case until he left the firm on March 7, 2014, when Peter Van den Boom became the senior attorney and partner on the case. Mr. Van den Boom has been licensed as an attorney in Florida since 1998. He has considerable experience handling medical malpractice and personal injury cases, including catastrophic injury due to medical malpractice. Ms. Burno took a 12-week maternity leave in October 2014 at which time Saray Noda began working on the case. Ms. Noda has been a licensed attorney in Florida since 2013. NICA objects to portions of Petitioners’ request for fees on numerous grounds including: that much of the time billed by Petitioners’ attorneys was unreasonable and unnecessary; that reasonableness of the task and time billed by counsel cannot be ascertained because of vagueness or block-billing; that much of the time billed involves intercommunication among Petitioners’ four lawyers; that much of the time billed represented duplication of efforts; that Petitioners’ need for a particular structure of the settlement agreement in order to amicably split the award of NICA benefits should not be awarded; and that time billed by a paralegal was clerical in nature and should not be awarded. As stated previously, David Anderson initially received the case. Mr. Anderson has been licensed as an attorney in Florida since 2007. Mr. Anderson, who is no longer with the firm, seeks compensation for 12.9 hours of work from October 28, 2013, through February 13, 2014. Included in the 12.9 total is an entry for 2.0 hours for “review and analyze case law re: NICA statute” and 2.7 hours for “research regarding filing claim under NICA statute.” Mr. Anderson’s time entries begin October 28, 2013, and conclude on February 13, 2014. Mr. Anderson’s affidavit noted that the case was taken on a contingent fee basis. Ellen Burno initially met with Petitioners in the Gainesville office. She handled the bulk of the case after it was assigned to her by Mr. Anderson. Ms. Burno seeks compensation for 82.2 hours for time spent on the case from October 23, 2013, through October 7, 2014. Ms. Burno’s time entries include entries on October 23, 24, and 25 which all reference research of NICA statute and/or NICA case law. Time entries on December 20, 2013, and January 15, 2014, reference numerous tasks including review of NICA case law. These and many other time entries of Ms. Burno’s include multiple tasks. These entries do not set forth with particularity the nature of the service provided, making it impossible for the undersigned to determine reasonableness of the entries. A time entry on February 6, 2014, for 6.4 hours references “research NICA issues re nurse liability,” which is not related to a NICA claim for compensation. Mr. Van den Boom began working on the case about two months after Mr. Anderson left the firm. The first two time entries on Mr. Van den Boom’s time report reflect dates that are in error in that they reference time in 2012. Those first two entries totaling 0.5 hours must be excluded. The third time entry dated October 25, 2013, indicates that he expended two hours of time reviewing the NICA statute and case law. There are no time entries from the October 25, 2013, entry until an entry on March 25, 2014, described as “review file, NICA” reflecting 4.9 hours, until March 25, 2014, which contains an entry described as “review summary; legal research NICA; review file in its entirety. Telephone conference with EB” reflecting 8.6 hours expended. Following those entries, there are many entries from July 2014 through October 7, 2014, reflecting receipt and review of e-mails or telephone conferences with Ms. Burno, many of which match entries on Ms. Burno’s time sheet for times they were exchanging e-mails or having a telephone status conference. Thus these entries are duplicative. Moreover, while each attorney working on the case understandably wanted to be familiar with NICA law, the number of total hours for research was excessive. Ms. Noda seeks attorney’s fees for 11.2 hours. Her time entries begin November 4, 2014, through December 23, 2014. It is noted that all of the entries on Ms. Noda’s time report were made subsequent to the entry of the Summary Final Order on compensability entered on October 16, 2014. Some of her time entries concerned the settlement agreement which involved the uneven distribution of funds between the parents, who are not married.1/ In any event, since compensability had already been determined, Ms. Noda’s hours have been excluded in calculating the fee award. Petitioners seek paralegal fees for 17 hours of paralegal work by Ruthie Romero. Her time entries begin on October 28, 2013. Other than a final time entry for one hour on July 16, 2014, Ms. Romero’s time entries end on April 29, 2014, just prior to the filing of the Petition for Benefits. Virtually all of the time entries for Ms. Romero deal with requesting medical records, bates numbering of the medical records, and scaning, copying and redacting the medical records. These tasks are clerical in nature. Donald Hinkle, Esquire, testified as Petitioners’ expert witness on attorney’s rates and hours. Mr. Hinkle is a board-certified civil trial lawyer who practices law in Tallahassee. He has been practicing law since 1980. He is familiar with the NICA statutes and NICA cases and has testified in a previous NICA case as an expert witness. He specializes in civil trial practice, primarily in medical malpractice. Mr. Hinkle reviewed the file materials from the claimants’ file, but did not review the medical records. He also reviewed the time records of the four attorneys who represented Petitioners in this case, as well as the NICA statutes and case law. Mr. Hinkle opined that the time billed by all four of Petitioners’ attorneys was reasonable and that the respective rate for each attorney was reasonable, and actually low in comparison to fee awards given in the community to attorneys of comparable experience. Mr. Hinkle is claiming a rate of $600 per hour for four hours as his expert witness fee, despite the fact that he had already expended 4.2 hours on this case prior to the hearing, and was present throughout most of the hearing which lasted three hours. Petitioners seek $2,400 for his time which, taking into consideration the time he actually spent, comes to less than $350 per hour. Based on Mr. Hinkle's experience and expertise, a total fee of $2,400 is quite reasonable. Additionally, Mr. Hinkle is of the opinion that the hiring of a nurse consultant to review the medical records was reasonable to determine whether a birth-related neurological injury occurred. Regarding the paralegal fees, it was Mr. Hinkle’s opinion that the tasks performed were those typically done by a paralegal, but acknowledged that the tasks were not tasks that an attorney typically performs. John Kelner, Esquire, testified on behalf of the Respondent as an expert in attorney's fees. Mr. Kelner has been practicing law since 1980. He practices in the area of civil litigation, primarily medical negligence, and he has experience with NICA claims and also testified in a previous NICA hearing. Mr. Kelner approached the case from the aspect of what would be reasonable time to expend in light of the facts of the case. Mr. Kelner opined that it would be reasonable to allocate between 5 to 8 hours over the course of the case to communicate with Petitioners; it would be reasonable to allocate between 1 to 3 hours to researching the law pertaining to NICA; and it would be reasonable to allocate between 3 to 5 hours to reviewing pleadings filed. In total, Mr. Kelner opined that a reasonable amount of time to attribute to this case is 16 hours, and that a reasonable fee for an experienced attorney to handle this matter is $300 per hour. In reaching this opinion, Mr. Kelner took into consideration that there was no discovery conducted in this case, no depositions taken, and no hearings held. The Motion for Summary Final order was unopposed. Given the closeness of the hourly rates claimed by Petitioners’ attorneys, NICA urges that the average of $260 per hour should be assigned to Petitioners’ counsel’s work in this case. In consideration of Mr. Hinkle and Mr. Kelner’s testimony in this regard, that suggestion is accepted. However, since the fees attributable to Ms. Noda have been excluded, her rate has also been excluded in calculating the average fee rate. Petitioners’ counsel request $34,728.27 in attorney’s fees. NICA suggests an award of $3,536 in attorney’s fees. In consideration of the evidence presented by the parties, including the testimony of the respective fee experts and in light of the prevailing case law which will be more fully explained in the Conclusions of Law, and having removed excessive, vague, block- billed, intercommunication, and duplicative time, the undersigned finds that Petitioners’ counsel is entitled to 58.5 hours of time at $283 per hour for a total of $16,555.50 as attorney’s fees from NICA. Respondent does not object to the following expenses incurred by Petitioners: $15 for the DOAH filing fee and $616.05 for medical records, for a total of $631.05. Petitioners seek payment of $2,400 to Donald Hinkle, Esquire. The undersigned agrees that Petitioners are entitled to these expert witness fees. Petitioners seek payment of $1,200 for a nurse consultant. Mr. Kelner noted that the nurse’s review of the medical records was conducted after the claim was filed, indicating that she may have been hired for reasons other than compensability. Mr. Hinkle acknowledged that he would have had the nursing expert review done before filing the Petition. The undersigned notes that within Ms. Burno’s time records are found entries regarding research on issues regarding “nurse liability.” This indicates that the nurse consultant was, at least in part, advising on matters not related to a NICA claim for compensation. The undersigned concludes that Petitioners are not entitled to the $1,200 sought for the nurse consultant.
The Issue Whether Respondent was required and failed to obtain workers' compensation insurance coverage for his employees during the period from March 7, 1997 through March 7, 2000, and, if so, what penalty should be assessed, pursuant to Section 440.107, Florida Statutes.
Findings Of Fact Petitioner is the state agency charged with enforcing the requirement that employers secure workers' compensation insurance for the benefit of their employees. On March 7, 2001, one of Petitioner's investigators observed two individuals, Worker 1 and Worker 2,3 painting a sidewalk, curb stops, and lines in the parking lot of a 7-Eleven store in Lake Worth, Florida. At that time, the investigator performed an on-site inspection. The investigator interviewed the two workers and completed a worksheet to determine if they were independent contractors. Worker 1 and Worker 2, among other things, worked for and were paid weekly by Respondent as painters, did not maintain a separate business from Respondent, did not control the means of performing their work, did not incur the expenses of their work, and did not incur the principal expenses related to their work. The investigator determined that the two workers were not independent contractors but were employees of Respondent. Neither Worker 1 nor Worker 2 was granted a workers' compensation exemption. Both workers were unprotected by workers' compensation insurance. Respondent provided to Petitioner's investigator federal tax Form 1099s for the years 1998 and 1999, pertaining to Worker 1 and Worker 2 and a handwritten note indicating the compensation paid to them during the year 2000. The documents indicated that Respondent paid the workers for the years 1998 through 2000 the following: Worker 1--$9,685 for 1998, $19,180 for 1999, and $3,330 for 2000; and Worker 2--$2,790 for 1999, and $240 for 2000. A compilation of approved classifications that groups employers according to their operations is published by the National Council of Compensation Insurance (NCCI). The publication is Scopes Manual, Scopes of Basic Manual Classifications (Scopes Manual). NCCI is a rating organization in Florida, which represents workers' compensation carriers. NCCI seeks approval from Florida's Department of Insurance of rates charged by workers' compensation carriers. NCCI and Professional Insurance Associates, as well as other sources, publish tables of approved rates for each classification code. It is undisputed that NCCI's publication of class codes and rates is relied upon and used by Petitioner to determine an employer's class code and the workers' compensation insurance rate. On March 7, 2000, Petitioner's investigator issued a SWO to Respondent. On March 8, 2000, Petitioner issued a NPAO to Respondent, indicating an assessment and penalty of $18,824. The investigator determined that, based upon what he had observed and the information that he had obtained, the work being performed by Worker 1 and Worker 2 was painting and was classified under Scopes Manual Code 5474. The investigator determined the evaded premium, or the premium that Respondent would have paid had he secured workers’ compensation insurance, by multiplying the gross compensation to employees each year by the premium rate for that Code for that year. The statutory penalty on the evaded premium is twice the evaded premium. The calculated penalty was $18,724. Added to the $18,724 was $100, which represented the penalty for the one day, March 7, 2000, that Respondent was not in compliance with the workers’ compensation requirement. On October 20, 2000, Petitioner issued a Second Amended Notice and Penalty Assessment Order, which was the final assessment, against Respondent assessing a penalty of $69,569, which included the $100 penalty. Pursuant to an agreement, Respondent performs general maintenance and preventative maintenance (GMPM) for Southland Corporation at 100 or more 7-Eleven stores in Dade, Broward, and Palm Beach counties. Petitioner was able to interview 13 of Respondent's employees, Worker 1 through Worker 13.4 As not a part of the GMPM agreement, Respondent's employees paint curbs, bumpers, and lines in the parking lot of each 7-Eleven store once each year. Respondent’s employees also engaged in the following: painting of buildings’ exterior and interior, parking lots, and loading docks; hanging drywall; setting of tile; paving of parking lots; repairing stucco and concrete; minor plumbing; carpentry, including trim, installation of doors and locks; filling potholes; and installing walls and cabinets. For example, Worker 10, who was employed with Respondent between June 1996 and January 1998, initially performed a daily activity of painting lines and curbs in parking lots at 7-Eleven stores. He could be assigned three stores in one day performing this activity. Later, Worker 10 performed under the GMPM agreement doing the following: painting the exterior and interior of stores, which could be the entire outside or a storeroom; tiling floors and ceilings; patching blacktop and repairing asphalt; and engaging in carpentry work, including putting up wooden shelves in storage rooms, cutting, nailing and screwing boards, and operating saws. Worker 10 also assisted Worker 6, who was a carpenter, repairing enclosures for dumpsters. The repairs consisted of sinking four-by-four posts into the ground, replacing slats, and occasionally replacing the entire enclosure due to damage caused by a truck backing into the enclosure. As another example, Worker 11 was employed with Respondent during 1998 and 1999 for 14 months and worked under the GMPM agreement. Worker 11 performed all activities under the agreement in maintaining the 7-Eleven stores, except for electrical and internal plumbing. The work to which he was assigned generally lasted four days a week, but for one day a week, he was assigned to handling service calls or performing line striping. Worker 11 performed the following: resurfacing asphalt; painting the entire parking lot, including lines for parking spaces and curbs; replacing or repairing ceiling and floor tile; laying tar on the roof; performing carpentry, including building shelves in storing rooms, reinforcing shelving, hanging new doors, replacing door hardware, and performing carpentry alongside Worker 6; and repairing enclosures for dumpsters by re-hanging doors, replacing slats, and replacing four-by-four posts. Even though Respondent stated that he subcontracted the repair of roofs and dumpsters, the installation of doors and electrical and plumbing work, he failed to present evidence showing to whom and when the work was subcontracted.5 Petitioner presented evidence demonstrating that Respondent’s employees performed all of the work described, except for electrical work. The work performed by Respondent’s employees included multiple class codes. NCCI requires the assignment of the highest rated classification under such circumstances. Carpentry is the highest-rated classification for all the work performed by Respondent’s employees, and the Scopes Manual Code for carpentry is 5403. Scopes Manual Code 5403 is also the code for the enclosure of a dumpster and the installation of a pre-hung door. The corresponding rate per $100 of payroll assigned to Scopes Manual Code 5403 is different for the applicable years 1997 through 2000. The rate for 1997 was 29.77; for 1998 was 29.09; for 1999 was 26.66; and 2000 was 27.96. Worker 1 through Worker 13 did not maintain a separate business from Respondent, did not control the means of performing their work, did not incur the expenses of their work, and did not incur the principal expenses related to their work. None of Respondent’s 13 employees had a valid workers’ compensation exemption. None of them were protected by workers’ compensation insurance. Respondent’s usual and customary practice was to pay his employees on a weekly basis. His usual and customary practice was to employ four or more employees during a weekly pay period. Respondent’s usual and customary practice was to employ four or more employees during any payroll period. Respondent asserts that he relied upon subcontractors for some of the work. The identity of the subcontractors, the service performed, and the frequency of their work are unknown. Whether the subcontractors had workers’ compensation insurance is also unknown. As a result, a determination cannot be made as to what Respondent’s responsibility, if any, was to the subcontractors as to workers’ compensation insurance, which in turn would affect an assessed penalty under worker’s compensation. To establish what his payroll was for the three years preceding the issuance of the SWO on March 7, 2000, Respondent used federal tax Form 1099s and cancelled business checks. For the years 1997 through 2000, Respondent’s payroll was as follows: Worker 1--1998 was $9,685, 1999 was $19,180, and 2000 was $3,330; Worker 2--1999 was $2,790, and 2000 was $240; Worker 3--1997 was $2,100, 1999 was $2,035, and 2000 was $3,045; Worker 4--1999 was $2,100; Worker 5--1997 was $1,900; Worker 6--1997 was $4,620, 1998 was $15,965, 1999 was $5,100, and 2000 was $3,303; Worker 7- -1999 was $610; Worker 8--1997 was $1,380, 1998 was $5,640, 1999 was $7,640, and 2000 was $350; Worker 9--1997 was $3,120; Worker 10--1997 was $8,450, and 1998 was $960; Worker 11--1998 was $7,095, and 1999 was $7,225; Worker 12--1998 was $2,883; and Worker 13--1999 was $2,675. Consequently, Respondent’s total payroll for 1997 was $21,570, for 1998 was $42,228, for 1999 was $49,355, and for 2000 was $10,268. Respondent’s payroll of $21,570 for 1997, was for the entire year. Petitioner made no reduction for the time period in the year 1997 prior to March 8, 1997, which would have been three years prior to the SWO on March 7, 2000. The statutory penalty assessed by Petitioner in its Second Amended Notice and Assessment Order against Respondent was $69,569, which included the penalty of $100. Petitioner’s assessment should be reduced to compensate for the Respondent’s payroll during the period of January 1, 1997 through March 7, 1997.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Labor and Employment Security, Division of Workers' Compensation, Bureau of Compliance enter a final order against Gregory Dennis Nelly: Sustaining the Stop Work Order. Sustaining the penalty assessed in the Second Amended Notice and Penalty Assessment Order minus the calculation for the payroll during the period of January 1, 1997 through March 7, 1997. DONE AND ENTERED this 5th day of June, 2001, in Tallahassee, Leon County, Florida. ERROL H. POWELL 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 5th day of June, 2001.
The Issue The issue is whether Respondent properly dismissed Petitioner's Petition for Resolution of Workers' Compensation Reimbursement Dispute, pursuant to section 440.13(7), Florida Statutes.
Findings Of Fact At all material times, C. G. was employed by Solo Printing, Inc., which had workers' compensation coverage through Intervenor. On March 2, 2012, C. G. was injured at work as a result of falling onto his knee during a fight with a coworker. C. G. was transported from the worksite by ambulance to Petitioner's hospital, where he was admitted. Later the same day, C. G. underwent emergency surgery to his knee. He was discharged from the hospital on March 8, 2012. On April 2, 2012, Petitioner billed Intervenor for services rendered to C. G. during his hospitalization. On May 11, 2012, Intervenor issued a Notice of Denial. On June 8, 2012, Petitioner filed with Respondent the Petition. On June 14, 2012, Respondent issued the Dismissal. Intervenor's Notice of Denial cites three grounds for denying payment for the bill: section 440.09(3), which prohibits compensation for injuries to an employee "occasioned primarily" by his willfully trying to injure another person; lack of authorization for services; and any other defense that may become available. The Dismissal cites one ground for dismissing the Petition: Petitioner's failure to submit an EOBR with its Petition. The only ground cited in the preceding paragraph that is relevant is the first cited by Intervenor. This ground raises the issue of compensability by disclosing that Intervenor has not conceded that C. G.'s injuries are compensable. Nor has a Judge of Compensation Claims (JCC) ever entered an order determining that C. G.'s injuries are compensable. In fact, G. has never filed a claim for benefits. At the time in question, C. G. had health insurance, but his insurer reportedly denied coverage on the ground that it insured's injuries were covered by workers' compensation. It does not appear that Petitioner has commenced a legal action against C. G. for payment for the services that it rendered to him in March 2012.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a Final Order dismissing the Petition. DONE AND ENTERED this 25th day of February, 2013, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 25th day of February, 2013. COPIES FURNISHED: Lorne S. Cabinsky, Esquire Law Offices of Lorne S. Cabinsky, P.A. Suite 1500 101 Northeast 3rd Avenue Fort Lauderdale, Florida 33301 Mari H. McCully, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 James T. Armstrong, Esquire Walton Lantaff Schroeder and Carson, LLP Suite 1575 200 South Orange Avenue Orlando, Florida 32801 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Division of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390
The Issue Whether Millenium Homes, Inc. (Petitioner) conducted operations in the State of Florida without obtaining workers’ compensation coverage which meets the requirements of Chapter 440, Florida Statutes (2008), in violation of Subsection 440.107(2), Florida Statutes (2008)1, as alleged in the Stop-Work Order and Order and Penalty Assessment and the Fifth Amended Order of Penalty Assessment. If so, what penalty should be assessed by the Department of Financial Services, Division of Workers’ Compensation (Respondent), pursuant to Section 440.107, Florida Statutes.
Findings Of Fact Respondent is the state agency charged with the responsibility of enforcing the requirements of Chapter 440, Florida Statutes, that employers in Florida secure the payment of workers’ compensation coverage for their employees. § 440.107(3), Fla. Stat. Workers’ compensation coverage is required if a business entity has one or more employees and is engaged in the construction industry in Florida. The payment of workers’ compensation coverage may be secured via three non-mutually exclusive methods: 1) the purchase of a workers’ compensation insurance policy; 2) arranging for the payment of wages and workers’ compensation coverage through an employee leasing company; and 3) applying for and receiving a certificate of exemption from workers’ compensation coverage if certain statutorily mandated criteria are met. On September 4, 2008, Maria Seidler, a compliance investigator employed by Respondent, was making random site visits at the Bella Vida development in North Fort Myers. Seidler observed eight workers unloading a truck, taking measurements, and performing various tasks on new homes under construction. All eight of the men were engaged in some type of activity on the job site. None were merely standing around, sitting in a truck, or otherwise idle. Seidler had all eight men stand in front of her, spoke to them in Spanish, and recorded their names on her field interview worksheet. All eight men advised Seidler, in Spanish, that they worked for Millenium Homes. None of the men advised Seidler that they did not work for Petitioner, nor that they were present in hopes of applying for a job. The individual apparently in charge at the job site, did not advise Seidler that not all of the men present were working for Petitioner. The evidence demonstrated that D.R. Horton was the general contractor for the project, and that D.R. Horton had contracted with Petitioner to frame out the housing units at the project. The eight men, who were present on the job site and who identified themselves as employees of Petitioner, confirmed that they were present on September 4, 2008, to perform framing. Framing is a construction activity as contemplated by Subsection 440.02(8), Florida Statutes, and Florida Administrative Code Rule 69L-6.021. James Loubert, president and sole shareholder of Petitioner, was not on the job site at the time of Seidler’s arrival, and she initially spoke with him by telephone. Loubert arrived at the job site a short time later. Loubert advised Seidler that Petitioner had secured workers’ compensation coverage for its employees through an employee leasing arrangement with Employee Leasing Solutions (ELS). This coverage was later confirmed by Seidler. However, of the eight workers found on the job site, three workers, Alejandro Osorio, Josue Sanchez Bautista, and Luis Aguilar, were not named on the ELS list of Petitioner’s active, covered employees. Seidler was very definite and precise in her testimony that she observed Alejandro Osorio, Josue Sanchez Bautista, and Luis Aguilar wearing hard hats and engaging in work activities upon her arrival at the job site. Her testimony is found to be credible. When Loubert arrived at the job site, he informed Seidler that two of the workers, not listed on Petitioner’s active employee roster, were to have been sent home to pick up their Social Security cards, and that he had called in the third worker, Josue Sanchez Bautista, to ELS. Loubert did not inform Seidler that Osorio, Bautista, and Aguilar were not employees of Petitioner and were merely present at the job site in hopes of applying for a job. The Pre-hearing Stipulation signed by counsel for the parties and filed with the DOAH clerk on December 8, 2009, contained the following statements of admitted facts in section E: Respondent’s [sic] employees Josue Sanchez Bautista, Luis Aguilar, and Juan Perez had not been called into and accepted as employees by ELS as of September 4, 2008. Respondent [sic] was not in compliance with the coverage requirements of Chapter 440, Florida Statutes, as of September 4, 2008.2 At the hearing, both Javier Perez and Loubert testified that Osorio, Bautista, and Aguilar were not employees of Petitioner, but rather were waiting on site for Loubert to arrive, so that they could ask for jobs. However, they were all wearing hard hats. The testimony of Perez and Loubert is inconsistent with the observations of Seidler, as well as the statements made to Seidler by Loubert at the job site on September 8, 2008, and is, therefore, not credible. Petitioner had no workers’ compensation coverage other than that provided though ELS, and no active exemptions. James Loubert is the only officer of Petitioner, and did not have an exemption from coverage as of September 4, 2008. At the work-site, a Stop-Work Order 08-234-D7 was issued and personally served upon James Loubert based upon Petitioner’s failure to secure the payment of workers’ compensation for its employees Josue Sanchez Bautista, Luis Aguilar, and Alejandro Osorio. A business records request was also served on Loubert in order to obtain the records necessary to calculate and assess a penalty on Petitioner based upon its failure to comply with the coverage requirements of Chapter 440, Florida Statutes. Pursuant to Section 440.107(5), Florida Statutes, Petitioner’s business records were requested back to September 5, 2005, or three years prior to the issuance of the Stop-Work Order. Petitioner produced the register for its primary checking account to Respondent on September 4, 2008, in response to Respondent’s request for business records. Lynne Murcia is a compliance specialist for Respondent. She reviews business records produced by employers to determine the amount of payroll on which workers’ compensation premium was not paid, in order to calculate an appropriate penalty for violations of the coverage requirements of Chapter 440, Florida Statutes. Upon review of the business records initially produced by Petitioner, it was determined that the register from one of Petitioner’s two business checking accounts was missing. The records initially produced by Petitioner were, therefore, insufficient for the calculation of an appropriate penalty. It was requested that Petitioner produce the register for the second checking account, and those records were quickly produced. Thereafter, a 45-page summary of all transactions potentially meeting the definitions of payroll set forth in Florida Administrative Code Rule 69L-6.035 (the Rule), was prepared and an Order of Penalty Assessment issued. In determining which payments should potentially be considered payroll, pursuant to the Rule, all payments made by Petitioner directly to its employees that did not pass through ELS were included. To the extent that those direct payments meet the definition of payroll, they were subject to workers’ compensation premium and would be properly included in an assessed penalty. Petitioner also made direct “per diem” payments to reimburse its employees for the cost of meals and lodging which they incurred during the times that they were required to travel away from home to perform their jobs. The per diem rates were calculated pursuant to Internal Revenue Service guidelines, and were deducted as a business expense on Petitioner’s income tax returns for the years 2005-2007. The Rule requires that expense reimbursements by an employer to employees be included as payroll subject to workers’ compensation premium to the extent that the business records of the employer do not confirm that the expenses were incurred as valid business expenses. All per diem payments made by Petitioner to its employees were included in the calculations, because Petitioner did not produce the receipts reflecting that its employees had actually incurred meal and lodging expenses in those amounts. However, following the December 15, 2009, hearing, Respondent examined the issue further and concluded that Petitioner’s per diem payments to its employees were properly documented as business expenses on Petitioner’s income tax returns. Respondent thereafter sought leave to file its Fifth Amended Order of Penalty Assessment deleting all per diem payments from the assessed penalty. Petitioner made numerous payments to third parties who provided construction, maintenance, or janitorial services at the homes of James Loubert, his father, Adrian Loubert, and his wife, April White, or who provided child care services for the Loubert family. For example, Petitioner paid $1,500.00 for tile work performed at James Loubert’s residence; $478.00 to Alex Ortiz, Antonio Elias, and Candy Ortiz for pressure-washing the homes of James Loubert and April White; $2,548.14 to Pedro Delgano for building cabinets for the homes of James Loubert and his father; $11,326.40 to Rick Wilson for painting the houses of James and Adrian Loubert; and beginning August 23, 2007, through December 20, 2007, $1,433.66 to Diane Berger for cleaning James Loubert’s home. Petitioner also paid $3,402.00 to Cinta Smollis for babysitting services provided to Loubert. These individuals do not appear on the penalty work sheet of the Fifth Amended Order of Penalty Assessment, since they do not meet the statutory definition of employees. Petitioner also paid large sums of money to Adrian Loubert for the purchase of a farm in Canada. In addition, James Loubert testified that some of the payments to his father represented expense reimbursements, suggesting that, at some point, Adrian Loubert had been an employee of Petitioner. Petitioner did not introduce any exhibits into evidence reflecting the nature or amount of the reimbursements allegedly being made to Adrian Loubert. James Loubert was actively involved in the carpentry work performed by Petitioner, on the project on which the stop- work order was issued as well as on prior projects. Nevertheless, he received only a minimal salary through Petitioner’s employee leasing company, ELS. In 2007, Loubert received a total salary of $11,000.00 through ELS. In 2008, he received a total salary through ELS of only $7,200.00. Any payments that James Loubert received directly from Petitioner, that meet the definition of payroll set forth in the Rule, were subject to workers’ compensation premium, and are therefore subject to penalty. During the three-year penalty period specified by the statute, Petitioner made many cash payments to, or for the benefit of, James Loubert. The business records produced by Petitioner indicate that these cash payments were made to payees such as Blockbuster Video, Toys-R-Us, and PetsMart, as well as for vacation expenses. In addition, James Loubert took large amounts of cash from Petitioner to facilitate his hobby of racing cars. Throughout the penalty period, Petitioner also made numerous payments to Loubert’s wife, April White, and to his daughter, Alexa Seagate. Petitioner also made numerous payments to Gary White, his father-in-law and one of Petitioner’s employees. James Loubert testified that the payments made to, or on behalf of, family members, the payments made to third- party payees, and the cash payments which he took from Petitioner reflected shareholder distributions. However, the memo lines on those payment entries do not indicate that those payments were intended to be shareholder distributions. Petitioner’s business records reflect that the memo line on a check would indicate that it was a shareholder distribution, if that was what it was intended to be. This was the practice on other transactions. In addition, James Loubert testified that the memos for his Quick Books entries reflect “exactly what” each payment was for. Presumably those memo entries are the same as the memo entries on the corresponding checks. The payments made by Petitioner to third parties from which it appears that Petitioner did not receive services or a benefit, including but not limited to the payments made to family members of James Loubert, and the cash payments made by Petitioner to finance James Loubert’s auto racing hobby, do not constitute legitimate business expenses. Petitioner frequently made loans or wage advances to its employees. Although Loubert testified that those loans were repaid to him, he later acknowledged that a $2,000.00 loan to employee Rachel Broulet was never paid back, and that a $975.00 loan to Nicholas Susa was never repaid. Petitioner did not produce business records or documentary evidence at the hearing that indicates that any of the loans which it made to employees were repaid. The State of Florida has adopted a classification code developed by the National Council of Compensation Insurance (NCCI), which assigns individual four digit codes to various classes of labor. This classification code is utilized to segregate different categories of labor by risk and to determine appropriate workers’ compensation premiums for those classes of labor in Florida. Fla. Admin. Code R. 69L-6.021. As noted above, Petitioner was performing framing work at the time of the September 4, 2008, inspection. Because Petitioner’s employees were observed at work constructing residential homes, classification code 5645, detached one or two family dwellings, was correctly applied to Petitioner’s employees directly engaged in construction activities. This includes Javier Perez, as he was working along with and directly supervising the other seven carpenters who were working on site when the inspection took place. Classification code 8742, outside sales, has been applied to James Loubert, as he was not observed working on September 4, 2008. However, Loubert did testify at his deposition that he usually performed construction work along side Petitioner’s other employees, but Respondent did not apply the construction code to him in the Fifth Amended Order of Penalty Assessment. Classification code 8810 was correctly applied to those employees of Petitioner who performed clerical work in the office. The appropriate manual rates for each year of the penalty period of September 5, 2005, through September 4, 2008, was applied for each classification code assigned to Petitioner’s employees. In preparing the Fifth Amended Order of Penalty Assessment, the amount of unsecured payroll attributable to each employee of Petitioner listed on the penalty worksheet was correctly calculated. From the evidence, Luis Aguilar and Alejandro Osorio were to be paid $10.00 per hour. There was no evidence that Aguilar and Osorio had worked prior to the issuance of the Stop-Work Order, and therefore, earnings of $80.00 assigned, reflecting eight hours at $10.00 per hour for September 4, 2008, was correct. Petitioner failed to provide any business records or other information concerning the rate of pay for Josue Sanchez Bautista, the third non-compliant worker. Bautista’s wages for September 4, 2008, can be imputed utilizing the statewide average wage pursuant to Subsection 440.107(7)(e), Florida Statutes.
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 Millenium Homes, Inc., failed to secure the payment of workers’ compensation insurance coverage for its employees, in violation of Section 440.38(1), Florida Statutes, and that a penalty in the amount of $66,099.37 should be imposed for the failure to provide the required workers’ compensation insurance coverage. DONE AND ORDERED this 28th day of May, 2010, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of May, 2010.
The Issue At issue in this proceeding is the amount of reasonable expenses, including reasonable attorney’s fees, that should be awarded as a consequence of the filing of a claim for benefits under the Florida Birth-Related Neurological Injury Compensation Plan.
Findings Of Fact Background 1. Heather Nicole Hosken (Heather) is the natural daughter of Cynthia and Brian Hosken, and was born September 4, 1993, at Cape Canaveral Hospital, Cocoa Beach, Brevard County, Florida. 2. Within a few days of Heather’s birth, NICA was advised by the office of the "participating physician", who provided obstetrical services during Heather’s delivery, that she might qualify for coverage under the Plan. Consequently, NICA, through its executive director Lynn Dickinson, spoke with the Hoskens by telephone and, by letter of September 27, 1993, advised them as follows: Per our telephone conversation of this date, enclosed please find two medical information release forms. One of these forms is for the mother’s medical records, the other form is for your daughter’s medical records. Please complete these forms and return them to us, so that we may obtain medical records to assist you in filing a NICA claim. For your review, I am enclosing a copy of Section 766.301-766.316, Florida Statutes, which is the law that governs the Florida Birth-Related Neurological Injury Compensa- tion Association. zit you have any questions, please contact me. 3. Thereafter, Ms. Dickinson spoke with the parents by telephone and made arrangements to meet with them in the area of their residence; however, Mr. Hosken subsequently cancelled the appointment stating that he would contact Ms. Dickinson again in the future. Notwithstanding such advice, neither Ms. Dickinson nor NICA received any further contact regarding this potential claim until in or about April 12, 1994, when Mr. Frederick Feins’ office, now counsel for the Hoskens, contacted NICA to inquire about, inter alia, the procedure for filing claims. Finally, on June 8, 1994, Mr. Feins’ office again contacted NICA by telephone regarding the information needed for the claim (petition) for benefits, and NICA provided, by letter of June 8, 1994, a draft petition for counsel’s benefit. To further assist counsel, the letter provided: Dear Mr. Fein: 4 Enclosed is a draft petition which may be used for your convenience. Please complete and forward to Ann Cole, Division of Administrative Hearings, 1230 Apalachee Park- way, Tallahassee, Florida 32399-1550 along with $15.00 (payable to Division of Administrative Hearings) for the filing fee. Please send us a courtesy copy along with completed medical authorization release forms for the mother and the infant. We have enclosed blank authorization forms for your convenience. Please send us a complete copy of the mother’s prenatal records, labor and delivery records and a copy of the baby’s nursery notes/records. Please do not delay filing your claim while waiting for records or bills. We can obtain them for you. We will also request all outstanding bills. If you have any questions or if I may assist you in any way to expedite this or any other claim, please contact me. 4. On June 27, 1994, Mr. Fein, on behalf of the claimants, filed a petition with the Division of Administrative Hearings ("DOAH") for compensation under the Florida Birth-Related Neurological Injury Compensation Plan (the "Plan"), and on or about July 12, 1994, DOAH served the Florida Birth-Related Neurological Injury Compensation Association ("NICA") with a copy of the claim. The petition that was filed substantially mirrored the draft petition NICA had provided petitioner’s counsel. 5. Respondent, NICA, following service of a copy of the petition, evaluated the claim and arranged for a _ medical examination to assess whether Heather was currently "permanently and substantially mentally and physically impaired" so as to qualify for benefits under the Plan. That examination was conducted by Michael Duchowny, M.D., a pediatric neurologist associated with Miami Children’s Hospital, on September 20, 1994, and he rendered his report to NICA on or about September 26, 1994, concluding that Heather’s "neurologic examination reveals evidence of a profound developmental delay affecting both motor and cognitive functioning. [Heather] has not progressed past the newborn and the prognosis for neurologic function is extremely guarded. I believe that her deficits are relatively fixed and that the long term prognosis is extremely poor." 6. Following its receipt of Dr. Duchowny’s report, NICA determined the claim to be compensable, and by letter of October 7, 1994, advised claimants’ counsel as follows: Dear Mr. Fein: As per Section 766.305(3), Florida Statutes, the Association agrees that Heather Hosken suffered a birth-related neurological injury as defined in Section 766.302(2), Florida Statutes. A copy of Dr. Duchowny’s medical evaluation is attached. We are prepared to provide medical benefits as provided by Section 766.31(1) (a) and are willing to offer the full $100,000.00 as provided in Section 766.31(1) (b). Please forward to this office, your detail of time and expense records for the above stated claim so that we may reach agreement on reasonable attorney’s fee and costs as per Section 766.31(1)(c), Florida Statutes. Also, please contact me so that we may discuss how the funds will be disbursed. Moreover, on November 4, 1994, NICA telefaxed a draft stipulation to claimants’ counsel so NICA’s agreement to accept the claim for compensation could, consistent with the provisions of Section 766.305(6), Florida Statutes, be approved by the Hearing Officer. 7. A stipulation, which substantially comported with the draft stipulation forwarded by NICA, was ultimately executed by the parties on December 29, 1994, and filed with DOAH on January 6, 1995. By final order of January 17, 1995, the stipulation was approved by the Hearing Officer, and all disputes between the parties were resolved with the exception of the amount of reasonable expenses, including attorney’s fees, that should be awarded. The claim for attorney’s fees and_expenses 8. Pertinent to the claim for attorney’s fees, the time records of the law firm of Thornton, Davis & Murray, P.A., counsel for petitioners, reflect that from March 18, 1994, to January 30, 1995, the following time had been logged, by the individual indicated, on petitioner’s file: NAME HOURS LOGGED Calvin F. David (attorney) 12.00 Frederick J. Fein (attorney) 127.75 Holly S. Harvey (attorney) 43.50 Jeffrey B. Shalek (attorney) 6.00 Jinny E. Anderson (paralegal) -50 Naomi G. Berjah (paralegal) 29.00 [Petitioner’s exhibit 1).? 9. At hearing, Mr. Fein acknowledged that some of the hours contained in the firm’s time records should not be considered as an expense of pursuing the claim, including the hours spent negotiating a fee agreement with the federal government to pursue a claim against NICA to recover benefits paid by the government, researching the entitlement to fees under the Federal Medical Recovery Act, conversations with referral counsel regarding the status of the claim, and any time expended in seeking recovery of attorney’s fees in this proceeding. 10. The actual entries or hours that Mr. Fein conceded were not germane to the claim were not identified at hearing but, post-hearing, Mr. Fein submitted a proposed "order awarding attorney’s fees and costs" which reflected a claim for 122.00 hours on behalf of Mr. Fein as opposed to the 127.75 hours reflected on the time records for the period of March 18, 1994, to January 30, 1995. No time was deducted for any other attorney or paralegal. The "order" did not, however, identify the entries to which the 5.75 hour reduction related, and the reduction made falls far short of the time identified by Mr. Fein’s expert as excludable or, on examination of the time records, is suspect and remains unexplained. li. Here, substantial time has been dedicated to reviewing the time records entry by entry, and line by line. Based on that review, it must be concluded that the time logged is grossly excessive for this NICA claim and includes a substantial amount of time that is inadequately explained or unrelated to the NICA claim. 12. In concluding that the time logged is excessive for this NICA claim, it is observed that the claim was straight- forward, lacked any novel aspects, and the earliest medical reports disclosed that Heather was profoundly impaired, mentally and physically. Moreover, NICA assisted the claimants in filing the claim, expeditiously processed the claim, promptly accepted the claim for compensation, and, but for the claim for attorney's fees, did not contest any matter regarding compensability or benefits. 13. The reliability of the time logged or, stated differently, the reliability of the records as an accurate indication of the time reasonably dedicated to the claim, is further rendered suspect based on the firm's practice of recording all time in quarter (.25) hour segments. This practice, particularly when coupled with the firm’s practice of lumping every task performed on a given day by a lawyer or paralegal into a single entry, leads to inflated hours and unreliable records.° 14. Among the time that is facially unrelated to the NICA claim is that time logged between August 4, 1994, and December 13, 1994, wherein the time records reflect numerous entries by Mr. Fein, Jeffrey P. Shalek, Holly S. Harvey, and J.E. Anderson, for work related to representing the federal government in pursuit of a claim against NICA and research related to the Federal Medical Recovery Act which, based on the context of those entries, each with the other, is clearly related to the federal representation and not to the NICA claim.* 45. First, with regard to the time recorded by Jeffrey P. Shalek on August 4, September 20, and September 28, 1994, totaling 6.00 hours, such time is patently related to the federal claim. Second, with regard to the time recorded for Holly Ss. Harvey between November 10 and November 22, 1994, in the amount of 43.50 hours, such time is all related to researching the Federal Medical Recovery Act and when read, particularly in conjunction with Mr. Fein’s time, is patently related to the federal claim.°? Third, with regard to the time recorded for g.E. Anderson of November 30 and December 13, 1994, totalling .50 hours, it is observed that the entry of December 13, 1994, for .25 hours again patently relates to the federal claim. The other entry for J.E. Anderson of November 30, 1994, of one-quarter (.25) hour for “update of pleading index" is rejected as de minimus, not shown to be related to the NICA claim, and not shown to have been necessary. 16. Next, with regard to the time recorded by Calvin F. David, totaling 12.00 hours, it is observed that the time recorded for April 6, August 4, August 9, August 30, and October 14, 1994, totaling 4 hours, did not reasonably relate to the NICA claim but, rather, related to the federal representation, revising the contingency contract with the client, and a review of the "charges printout." 17. Finally, as to the time recorded by Mr. Fein that did not reasonably relate to the NICA claim, are the time charges of March 23 (11.00 hours), August 4 (3.00 hours), August 10 (1.00 hour), August 30 (2.00 hours), September 19 (.50 hours), September 30 (.50 hours), October 5 (.50 hours), October 14 (2.00 hours), October 19 (2.50 hours), October 21 (1.00 hour), October 24 (1.00 hour), October 31 (1.50 hours), November 1 (2.00 hours), November 3 (.50 hours), November 7 (.50 hours), November 18 (1.00 hour), November 22, 1994 (1.00 hour), and January 24, 1995 (1.00 hour). As to the March 23, 1994, charge of 11.00 hours, it relates to "Travel to Melbourne. Attendance at meeting with Wolfman and plaintiffs. Travel back to office." Notably, the infant was born in Brevard County, petitioners reside in Brevard County, and there was no showing that competent or able counsel was not available in that area. Given that proper venue was Brevard County, Section 766.307(1), Florida Statutes, and there was no showing that counsel was unavailable in that area to 10 represent petitioners, travel time cannot be recovered. See, In re Florear, Inc., 16 B.R. 726 (S.D. Fla. 1982). Moreover, since there is no proof of record as to how long the conference took with the clients, that item cannot be separately addressed. As for the time recorded for January 24, 1995, that was a status conference with referring counsel and, considering it occurred after resolution of the claim, there was no proof that it was relevant to the filing of the claim. As to the remaining hours, they were facially incurred with respect to anticipated representation of the federal government on claims against NICA, or were so intertwined with those claims as not to be divisible. Accordingly, petitioners have failed to demonstrate that these 32.50 hours were reasonably expended in pursuit of the claim for compensation. ° 18. Reducing the hours claimed, as set forth in paragraph 8, by the foregoing hours that are clearly objectionable, leaves the following hours, by individual, that must still be addressed. NAME HOURS Calvin F. David (attorney) "8.00 Frederick J. Fein (attorney) 97.25 Naomi G. Berjah (paralegal) 29.00 19. With regard to the entries made for Ms. Berjah, as well as those for Mr. David and Mr. Fein that have not heretofore been rejected, the firm’s practice of lumping every task performed on a given day by the lawyer or paralegal into a single entry with only the gross hours noted for the day, renders it impossible to discern, absent further explanation, the time dedicated to any particular task. Moreover, such practice, when Mr. Fein’s 11 entries include tasks which are not related to the NICA claim, such as representing the federal government, conferring with the referring attorney regarding the status of the case, preparing contingency contracts, or exploring the possibility of opting out of NICA through the "bad faith" exception or otherwise, ’ renders it impossible, absent speculation, to derive an accurate picture of the hours dedicated to the NICA claim. 20. The unreliability of the firm’s time records, as a gauge of the number of hours reasonably expended in pursuit of the NICA claim, is, as heretofore noted, intensified by the firm’s practice of recording all time in quarter (.25) hour segments. This practice, by its very nature, leads to inflated hours and unreliable records. 21. In reaching the foregoing conclusions, the expert opinion of Michael Eidson, Esquire, has not been overlooked. His conclusion as to the relationship of the time claimed to the subject claim, as well as the necessity and reasonableness of the time expended, is not, however, persuasive. Indeed, Mr. Eidson assumed the number of hours recorded related to the claim for compensation and, essentially, accepted the integrity of the number of hours claimed; however, when made aware, he readily conceded that time recorded incident to, inter alia, representing the federal government was not relevant to the NICA claim. Accordingly, since the record demonstrates that much of the time expended was not relevant to the NICA claim and that the firm’s time records are otherwise not reliable, Mr. Eidson’s opinion that the hours claimed were reasonably and necessarily expended is rejected. 12 22. Given the proof, the testimony of John Kelner, Esquire, is credited, and his opinion that the reasonable number of hours necessarily required to pursue this simple claim for compensation benefits was between 20 and 40 hours is accepted. Giving petitioner’s counsel the full benefit of doubt, and considering his relative inexperience, 40 hours are found to be reasonable in this case. 23. The next consideration in establishing a reasonable fee is the determination of the market rate" or prevailing hourly rate, or range of hourly rates, charged in the community by lawyers of reasonably comparable skill, experience and reputation, for similar services. 24. In deriving the market rate, careful consideration has been accorded the hourly rates referenced in the affidavit of Mr. Fein for the lawyers and paralegals employed by his firm. {Petitioners’ exhibit 1] Those rates are, however, excessive, and bear no reasonable relationship to the prevailing rate in the community, when the fee basis is hourly billing for time worked. 25. With regard to Mr. Fein, the $210.00 hourly rate he seeks to ascribe to his services is patently not a real world rate but, rather, an in-house rate used in contingency fee cases where his contract with the client accords him the option of a contingency percentage or a court awarded reasonable fee, which even is higher, at his option. That rate is clearly illusory since it bears no reasonable relationship to the market rate in the community or to those cases Mr. Fein has handled on which the fee basis is hourly billing for time worked. In such cases, 13 which Mr. Fein describes as insurance defense, he has billed "as high as 185 an hour and ... as low as 155 an hour." Given that Mr. Fein was not admitted to the Florida Bar until 1989, has yet to be lead counsel on any case that has been tried, and bills in quarter hour segments, it is doubtful that he could even command that rate. 26. As for the rates ascribed to the other attorneys, with the exception of Calvin David, and paralegals who worked on this case, as set forth in Mr. Fein’s affidavit, they suffer the same disparities and bear no reasonable relationship to the market when the fee basis is hourly billing for time worked. 27. Given the record, the proof offered on behalf of petitioners is rejected as unpersuasive, and the opinion of John Kelner that the range of rates in the community for similar services, considering the experience of the personnel who worked on this claim, would be a blended or mixed fee of $100.00 to $150.00 per hour. Here, a mixed rate of $150.00 per hour is accepted as a reasonable rate in the community for the services rendered, 28. Finally, petitioners’ attorneys incurred certain expenses for which they seek recovery as reasonably incurred in connection with pursuing the claim for compensation. Such costs total $5,354.42. ([Petitioners’ exhibit 1] NICA does not object to the filing fee of $15.00, medical expert fee of $1,050.00, cost for obtaining the medical records of Dr. Pettit of $10.00, and copy service charge of $2,256.40 incurred between May 4, 1994, and September 27, 1994, for Heather’s medical records. 14 Accordingly, such expenses totaling $3,331.40 are awarded, without further discussion. 29. The expenses opposed by NICA are (1) courier service fees of $40.95, (2) mileage expense of $7.43, (3) copy service expense of February 14, 1995, of $266.50, (4) travel expenses of $281.64 for Mr. Fein’s trip to Orlando, (5) the cost of photocopies at the firm of $687.90, (6) phone charges of $395.06, (7) postage of $53.54, and (8) the cost of Westlaw research of $290.00. As to items (1), (2), (Ss), (6), (7), and (8), there was no independent proof as to what services these expenses were incurred for and, therefore, the reasonableness of the amount or the need to incur those expenses has not been established. Moreover, it is as likely that they were incurred incident to the firm’s efforts to represent the federal government as its representation of petitioners and, if mixed, which is likely, cannot be allocated. As to item (3), the copy services of February 14, 1995, it is observed that such expense was incurred subsequent to the resolution of petitioner’s claim. Accordingly, there being no other showing concerning that cost, its relevance to the claim or reasonableness has not been shown. As to item (4), the travel expenses of Mr. Fein’s trip to Orlando, such is presumed to refer to his meeting with his clients in Melbourne on March 23, 1994. Consistent with the conclusion that time spent traveling to meet with his clients is not recoverable, so also is the conclusion that the travel expense is not recoverable. In re Florcar, Inc., 16 B.R.- 726 (S§.D. Fla. 1982). Accordingly, none of the expenses to which NICA has objected are recoverable. 15 The "cap" or maximum award of attorney’s fees and expenses recoverable in this case 30. Pursuant to the provisions of Section 766.31(1) (c), Florida Statutes, petitioners are entitled to recover and NICA is obligated to pay reasonable expenses incurred in connection with the filing of the claim, including reasonable attorney’s fees. In establishing the award of attorney’s fees, the Hearing Officer is constrained to base such award on the six factors contained in subsection 766.31(1)(c), discussed infra. 31. Here, notwithstanding petitioners’ entitlement to an award of reasonable attorney’s fees and expenses as prescribed by statute, the proof demonstrates they entered into a contingency fee contract with Mr. Fein’s firm. Pursuant to that agreement, following resolution of their claim, they resolved their obligation for fees and expenses to the firm by payment of 33 1/3 percent of the $100,000 they received in compensation of the claim. According to Mr. Fein, his firm has recovered all attorney’s fees and expenses from petitioners to which the firm is entitled or petitioners are obligated to pay, and that whatever is awarded here is to be paid to petitioners as reimbursement. 32. Given such circumstances, the maximum award that could be made in this case is an award for expenses, including reasonable attorney’s fees, not to exceed a total award of $33,333.00, and not the fee award of $46,345.00 and expense award of $5,591.25 sought at hearing. (Petitioner's proposed order, page 3]. See, Lane v_ Head, 566 So.2d 508 (Fla 1990), Florida Patient’s Compensation Fund v. Rowe, 472 So.2d 1145, 1151 (Fla. 16 1985), Government Employees Insurance Co. v. Robinson, 581 So.2da 230 (Fla. 3d DCA 1991), Erickson Enterprises, Inc. v- Louis Wahl & Sons, 422 So.2d 1085 (Pla. 3d DCA 1982), and Trustees of Cameron -. Brown Investment Group v. Tavormina, 385 So.2d 728 (Fla. 3d DCA 1980). Given the award made, such restraint is not, however, significant to these proceedings.
Conclusions For Petitioners: Frederick J. Fein, Esquire Thornton, Davis & Murray, P.A. World Trade Center, Suite 2900 80 Southwest Eighth Street Miami, Florida 33130 For Respondent: David W. Black, Esquire Atkinson, Diner, Stone, Black & Mankuta, P.A. Post Office Drawer 2088 1946 Tyler Street Hollywood, Florida 33022-2088
Other Judicial Opinions A party who is adversely affected by this final order is entitled to judicial review pursuant to Sections 120.68 and 766.311, Florida Statutes. Review proceedings are governed by the Florida Rules Of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Agency Clerk Of The Division Of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the appropriate District Court of Appeal. See, Section 120.68(2), Florida Statutes, and Florida Birth-Related Neurological Injury Compensation Association v. Carreras, 598 So.2d 299 (Fla. ist DCA 1992). The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. 23
The Issue The issues are whether, pursuant to section 409.910(17)(b), Florida Statutes (17b),1 Petitioner has proved that Respondent's recovery of $535,312 in medical assistance expenditures2 from $5 million in proceeds from the settlement of a personal injury action must be reduced to avoid conflict with 42 U.S.C. § 1396p(a)(1) (Anti-Lien Statute)3; and, if so, the maximum allowable amount of Respondent's recovery.
Findings Of Fact On September 28, 2005, Petitioner was born by an unremarkable delivery at 42 weeks' gestation at a hospital in West Palm Beach. On October 1, 2005, from all appearances a healthy infant, Petitioner was discharged to home. However, Petitioner was born with an extremely rare metabolic disorder known as B-ketothiolase deficiency (BKT), which prevents the body from processing a protein building block called isoleucine and impedes the body's processing of ketones. A few weeks after Petitioner's birth, the birth hospital began screening that would have detected this condition and permitted timely management and treatment of this serious condition. Petitioner progressed normally until, at the age of five years, she acquired an infection that caused her to suffer a decompensation attack and guardian," and DOAH Case 20-2124MTR identifies by name a parent, "individually and as parent and natural guardian of A. F., a minor." As to the latter case, the same attorneys represent the petitioner and respondent as represent Petitioner and Respondent. 9 Resp.'s proposed final order, footnote 2. metabolic crisis. Over the span of a few hours, Petitioner suffered irreversible and progressive atrophic changes to her basal ganglia. This brain damage produced, among other permanent conditions, intermittent painful spasms, multiple times during the day and night, that cause Petitioner to thrash her head about wildly, to arch her back into an extreme "U-like position," and uncontrollably to scratch her eyes or mouth until the spasm ends or her arms are secured or become entrapped in the wheelchair. Otherwise, Petitioner's arms and legs are in a permanent state of contracture, so as to be of little use to her, and her head is typically deviated to the left. Unable to walk, Petitioner requires the use of a wheelchair for mobility, but chronic pain, especially in her back, prevents her from remaining in the chair for more than 30 minutes at a time. Unable to maintain any position for very long, Petitioner is unable even to watch television or a movie. Petitioner attends school, where she is assisted by a one-to-one paraprofessional, but, due to pain, she typically finds it necessary to leave, often in tears, prior to the end of the school day. Petitioner is completely dependent on others for all of the activities of daily living. She is fed through a gastrostomy tube. Without respite care, Petitioner's mother is unable to leave her daughter unattended and provides nearly all of the required care. Among many other things, the mother secures Petitioner to her bed, changes her position, stretches her, brushes her teeth, and takes her to appointments, including brain stimulation therapy in Gainesville twice weekly to help with the spasms. The impact of Petitioner's condition upon the family is nearly inestimable. For instance, nearly the entire family must accommodate Petitioner's desire to go to an amusement park, as the mother, Petitioner's father, and the older of their other two children must help to get Petitioner into one ride. Petitioner's ability to speak is limited, and she lacks the means of expressive communication by writing or a keyboard. The frustration of these communication barriers is heightened by the fact that Petitioner is likely to be cognitively intact, meaning that she is substantially "locked in," so as to understand what is going on about her, but is unable to express herself, even by body movement or gesture. No single measure adequately conveys the extensive care required just to maintain, to the maximum extent possible, Petitioner's present, limited functionality. When assessed for a life care plan, Petitioner was being seen by nine different physicians, three therapists, and the school nurse; was taking nine different medications; and was served by or consumed nearly two dozen items of equipment or supplies. In 2013, Petitioner filed a personal injury action in circuit court in West Palm Beach against the birth hospital and its corporate parent. The case presented three major problems in establishing liability. At the time of Petitioner's birth, only two hospitals in the state of Florida provided BKT screening at birth, and the birth hospital was not one of them. However, the corporate parent owns numerous hospitals in other states, and at least some of these hospitals were providing BKT screening at the time. Petitioner's ability to establish a favorable standard of care was thus dependent on keeping the corporate parent in the case, even though its liability was attenuated. Petitioner's task was complicated by a Florida statute that explicitly provides that the failure of a healthcare provider to provide supplemental diagnostic tests is not actionable if the provider acted in good faith with due regard to the prevailing standard of care.10 Lastly, Petitioner was confronted by a causation issue because, when informed of Petitioner's rare metabolic condition, the parents did not immediately obtain a screening for her older brother. In September 2017, the circuit judge ordered the parties to submit to two summary jury trials, in which each side had a little over one hour to present the case to actual jurors for a nonbinding verdict. Each party devoted 10 § 766.102(4). nearly all of its allotted time to a presentation on liability, not damages. One jury returned a verdict for the defendants, and the other returned a verdict for the plaintiffs, awarding $23.5 million as follows: the loss of earning capacity and future medical expenses after the age of 18 years--$10.5 million; past and future pain and suffering--$5 million; past and future medical expenses until the age of 18 years--$5 million; and the parents' loss of consortium--$3 million. In the ensuing settlement negotiations, the defendants' counsel did not contest the damages. Significantly, in calculating future medical expenses and loss of earning capacity, both sides chose conservative reduced actuarial values with only four years separating their choices. Additionally, the defendants' counsel did not contend that a timely screening might not have prevented the injuries. Instead, the defendants' counsel argued the above-described liability and causation issues. The plaintiffs' counsel opposed these arguments and, secondarily, argued that the $23.5 million summary jury verdict was too low due to the necessity of counsel's preoccupation with liability during their presentations. Nearly one year after the summary jury verdicts and after extensive discovery and the expenditure of about $200,000 in costs by the plaintiffs, the parties reached the settlement described above. By any standard of proof, Petitioner has proved that the true value of her case was at least $23.5 million, including $535,000 for past medical expenses, and that the $5 million settlement was driven by concerns as to liability and causation, not damages. The only noteworthy damages component in the true value is Petitioner's past and future pain and suffering, which could have supported a larger value based on the Florida Supreme Court's jury instructions on the matter.11 11 Florida Standard Jury Instructions in Civil Cases, Appendix B, Form 2, states in part: What is the total amount of (claimant’s) damages for pain and suffering, disability, physical impairment, disfigurement, mental anguish, inconvenience, aggravation of a disease or physical defect (list any other noneconomic damages) and loss The $5 million settlement represents a discount of $18.5 million or 78.7% when compared to the true value of the case. Applying the same discount to $535,312 results in Respondent's recovery of $114,021.
