Findings Of Fact 11. The factual allegations contained in the Stop- Work Order and Order of Penalty Assessment issued on May 19, 2011, the Amended Order of Penalty Assessment issued on June 7, 2011, and the 3rd Amended Order of Penalty Assessment issued on February 17, 2012, and fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Jeff Atwater, Chief Financial Officer of the State of Florida, or his designee, having considered the record in this case, including the request for administrative hearing received from WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC, the Stop- Work Order and Order of Penalty Assessment, the Amended Order of Penalty Assessment, the 3rd Amended Order of Penalty Assessment, and being otherwise fully advised in the premises, hereby finds that: 1. On May 19, 2011, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-164-1A to WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop- Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 2. On May 19, 2011, the Stop-Work Order and Order of Penalty Assessment was served by personal service on WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On June 2, 2011, the Department received an Election of Proceeding requesting administrative review (“Petition”) from WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC. A copy of the Petition is attached hereto as “Exhibit B” and incorporated herein by reference. 4. On June 7, 2011, the Department issued an Amended Order of Penalty Assessment to WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC. The Amended Order of Penalty Assessment amended the legal name of the employer to WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC. The Amended Order of Penalty Assessment assessed a total penalty of $43,256.29 against WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC. The Amended Order of Penalty Assessment includéd a Notice of Rights wherein WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28- 106.2015, Florida Administrative Code. 5. On June 23, 2011, the Amended Order of Penalty Assessment was served by certified mail on WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and incorporated herein by reference. 6. On July 13, 2011, the Department received an amended Election of Proceeding form (“Amended Petition”) from WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC, and the matter was referred to the Division of Administrative Hearings and assigned DOAH Case No. 11-6178. A copy of the Amended Petition is attached hereto as “Exhibit D” and incorporated herein by reference. 7. Following issuance of subsequent Amended Orders of Penalty Assessment, on February 17, 2012, the Department issued a 3rd Amended Order of Penalty Assessment to WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC. The 3rd Amended Order of Penalty Assessment assessed a total penalty of $4,708.85 against WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC. The 3rd Amended Order of Penalty Assessment included a Notice of Rights wherein WILLIAM KEELE, DBA, WILLIAM MILTON KEELE LLC, A DISSOLVED FLORIDA LIMITED LIABILITY COMPANY AND WILLIAM MILTON KEELE LLC was advised that any request for an administrative proceeding to challenge or contest the 3rd Amended Order of Penalty Assessment must conform to Rule 28-106.2015, Florida Administrative Code. 8. On April 5, 2012, the Department filed a Motion to Amend Order of Penalty Assessment with the Division of Administrative Hearings in DOAH Case No. 11-6178. A copy of the Department’s Motion to Amend Order of Penalty Assessment together with the 3rd Amended Order of Penalty Assessment is attached hereto as “Exhibit E” and incorporated herein by reference. 9. On April 18, 2012, the Administrative Law Judge issued an Order Granting Motion to Amend Penalty Assessment in DOAH Case No. 11-6178. The Order Granting Motion to Amend Penalty Assessment is attached hereto as “Exhibit F” and incorporated herein by reference. 10. On April 30, 2012, the Administrative Law Judge entered an Order Closing File and Relinquishing Jurisdiction due to Respondent’s failure to participate in discovery and appear at the scheduled formal hearing in DOAH Case No. 11-6178. A copy of the Order Closing File and Relinquishing Jurisdiction is attached hereto as “Exhibit G” and incorporated herein by reference.
The Issue The issues in this case are whether Respondent violated chapter 440, Florida Statutes, and Florida Administrative Code Chapter 69L-6, by failing to maintain workers' compensation coverage for its employees, and if so, the penalty that should be imposed.
Findings Of Fact The Parties 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 coverage for their employees. § 440.107(3), Fla. Stat. Respondent, Door Depot of Palm Beach, Inc., is a Florida for-profit corporation engaged in the sale and installation of doors, which is encompassed within the construction industry.2/ Ms. Morris is Respondent's owner and sole corporate officer. Failure to Secure Workers' Compensation Coverage As a result of a public referral, Petitioner initiated an investigation to determine whether Respondent had the required workers' compensation coverage for its employees. Michelle Jimerson, a Compliance Investigator employed by Petitioner, researched Petitioner's Coverage and Compliance Automated System ("CCAS") internal database regarding workers' compensation coverage and compliance, and determined that Respondent did not have current workers' compensation coverage and had not previously secured coverage. Ms. Jimerson's research further revealed that Ms. Morris, as Respondent's sole corporate officer, had a current workers' compensation exemption covering herself, and that she had maintained such exemptions since August 2002. On May 11, 2011, Ms. Jimerson conducted an on-site visit to Respondent's place of business. At that time, Petitioner issued a Request for Business Records to Respondent, seeking copies of payroll documents; bank statements; business tax receipts; check stubs and check ledgers; names of subcontractors; records of payments or disbursements to subcontractors; contracts; and proof of workers' compensation coverage for, or exemptions held by, the subcontractors. Respondent produced the requested records. From a review of the records, Ms. Jimerson determined that Respondent had contracted with three subcontractors, Breeze Image, Inc.,3/ Mike Jacobs, and Ross Whitehouse, to provide construction industry services (specifically, door repair and installation work), between April 22, 2011, and May 10, 2011. Ms. Jimerson's review of Petitioner's CCAS database revealed that none of these subcontractors was exempt from the workers' compensation coverage requirement during the period in which they contracted with Respondent to provide construction industry services, that none had secured workers' compensation coverage for themselves, and that Respondent had not secured workers' compensation coverage for them during this period. Because Respondent came into compliance with chapter 440 during Petitioner's investigation and before initiation of this enforcement action, Petitioner did not issue a Stop-Work Order.4/ Nancy Morris testified on Respondent's behalf. She admitted that Respondent had not secured workers' compensation coverage for these subcontractors. She credibly testified that she had asked if they were exempt from the workers' compensation coverage requirement, that they had told her they were, and that she had believed them. Penalty Assessment On May 24, 2011, Petitioner issued to Respondent a Request for Production of Business Records for Penalty Assessment Calculation, seeking copies of payroll documents; bank statements; business tax receipts; check stubs and check ledgers; names of subcontractors; records of payments or disbursements to subcontractors; contracts; and proof of workers' compensation coverage for, or exemptions held by, the subcontractors. Respondent produced the requested documents. Using these documents, Petitioner's Penalty Calculator, Teo Morel, calculated the penalty assessment for Respondent. Section 440.107(7)(d)1., establishes a formula for determining the penalty to be assessed against an employer who fails to secure workers' compensation as required by chapter 440. Specifically, the penalty is one and a half (1.5) times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during periods for which it failed to secure the payment of workers' compensation within the preceding three-year period, or $1000, whichever is greater. Petitioner has adopted a penalty worksheet for calculating the penalty prescribed by section 440.107(7)(d)1. See Fla. Admin. Code R. 69L-6.027. Ms. Morel used the worksheet in calculating the penalty to be assessed against Respondent. Specifically, Ms. Morel identified the subcontractors for which Respondent had not secured workers' compensation and identified the applicable construction industry classification NCCI Manual code for each (here, classification code 5102). For each subcontractor, she identified the periods of noncompliance for the preceding three-year period as required by section 440.107(7)(d)1., determined the subcontractor's gross payroll amount and divided that amount by 100, then multiplied this amount by the NCCI Manual rate applicable to the 5102 classification code. This calculation yielded the workers' compensation premium Respondent should have paid for each subcontractor, had Respondent complied with chapter 440. The premium amount was then multiplied by 1.5 to determine the total penalty amount to be assessed. Pursuant to the information Respondent provided, and performing the statutorily prescribed calculation, Petitioner initially calculated the total penalty to be assessed as $20,266.59. Respondent subsequently provided additional business records consisting of raw job worksite notes. These documents showed that the subcontractors were paid a total contract amount for each job. However, the notes did not indicate the cost of materials per contract, and Respondent was unable to provide records containing this information. Because the cost of materials for each contract was indeterminable, pursuant to Florida Administrative Code Rule 69L-6.035(1)(i), Petitioner assumed that the materials cost constituted 20 percent of each contract, deducted this amount from each subcontractor's gross payroll, and recalculated the premium amount. As a result, the total penalty assessment was reduced by 20 percent, to $16,213.30. Respondent disputes the amount of the amended penalty assessment on the basis that materials costs for each contract constituted more than 20 percent of each contract's amount. However, Ms. Morris was unable to provide any evidence substantiating the cost of materials for each contract. Ms. Morris credibly testified that if Respondent is required to pay the assessed penalty of $16,213.30, it likely will be forced to go out of business. Ms. Morris fully cooperated with Petitioner throughout its compliance investigation leading to this enforcement action against Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of law, it is hereby RECOMMENDED that Petitioner enter a Final Order determining that Respondent violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage; imposing a total penalty assessment of $16,213.30; and providing that Petitioner will execute with Respondent a Payment Agreement Schedule for Periodic Payment of Penalty, pursuant to Florida Administrative Code Rule 69L-6.025, under which Respondent shall make a down payment to Petitioner of ten percent of the total assessed penalty amount, which is $1,621.33, and shall repay the remaining penalty in 60 consecutive monthly installments. DONE AND ENTERED this 30th day of January, 2012, 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 26th day of January, 2012.
The Issue The issue for determination is whether Petitioner's claim is barred by Section 760.11(7), Florida Statutes (1999), because Petitioner filed a request for hearing more than 35 days after the time prescribed in Section 760.11(3) for a determination of reasonable cause by the Florida Commission on Human Relations (the "Commission"). (All statutory references are to Florida Statutes (1999) unless otherwise stated).
Findings Of Fact Respondent employed Petitioner from May 25, 1995, until September 1, 1995. Petitioner filed a Charge of Discrimination with the Commission on October 3, 1995. The Charge of Discrimination alleges that Petitioner was forced to leave his position of employment because of Petitioner's sex, color, national origin, and age. The Charge of Discrimination contains no more specific factual allegation of an adverse employment action or other act of discrimination. Time Limits The Charge of Discrimination was timely filed pursuant to Section 760.11(1). The filing date of October 3, 1995, fell within 365 days of May 25, 1995, which is the first day on which the alleged discrimination could have occurred. Section 760.11(3) authorizes the Commission to issue a determination of reasonable cause within 180 days of October 3, 1995, the date Petitioner filed the Charge of Discrimination. Counting October 4, 1995, as the first day of the 180-day time limit, Section 760.11(3) authorized the Commission to determine reasonable cause no later than March 31, 1996. The Commission issued a Notice of Determination: No Cause on July 14, 1999. Section 760.11(7) required Petitioner to file a request for hearing within 35 days of March 31, 1996. Counting April 1, 1996, as the first day of the 35-day period, Section 760.11(7) required Petitioner to file a request for hearing no later than May 5, 1996. Petitioner did not timely file a request for hearing. Petitioner first requested a hearing in the Petition for Relief filed on August 13, 1999. Petitioner filed his request for hearing approximately 1,185 days late and 1,220 days after the expiration of the 180-day time limit prescribed in Section 760.11(3). Petitioner delayed the request for hearing because he did not have the form entitled Petition for Relief. Section 760.11(7) statutorily bars Petitioner's claim. Section 760.11(7) expressly provides, in relevant part: If the aggrieved person does not request an administrative hearing within the 35 days, the claim will be barred.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order dismissing this proceeding as barred by Section 760.11(7). DONE AND ENTERED this 6th day of June, 2000, in Tallahassee, Leon County, Florida. DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of June, 2000. COPIES FURNISHED: Sharon Moultry, Clerk Florida Commission on Human Relations 325 John Knox Road, Building F Tallahassee, Florida 32303-4149 Dana A. Baird, General Counsel Florida Commission on Human Relations 325 John Knox Road, Building F Tallahassee, Florida 32303-4149 Luis F. Hernandez 1116 Golden Gate Avenue Orlando, Florida 32808 Charles Williams, Jr., Esquire Scott A. Livingston, Esquire Williams and Davis, P.A. Suite 1220, Suntrust Center Post Office Box 1831 200 South Orange Avenue Olando, Florida 32802-1831
Findings Of Fact 12. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on October 17, 2011, the Amended Order of Penalty Assessment issued on November 4, 2011, and the 2"! Amended Order of Penalty Assessment issued on April 26, 2012, attached as exhibits and fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
The Issue Whether KP Roofing Masters, LLC ("Respondent"), failed to secure the payment of workers' compensation coverage for its employees, and if so, whether the Department of Financial Services, Division of Workers' Compensation ("Department"), correctly calculated the penalty imposed against Respondent.
Findings Of Fact The Department is the state agency charged with enforcing the requirement of chapter 440 that employers in Florida secure workers' compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondent was a business providing services in the construction industry. Its principal office is located at 7100 Northwest 12th Street, Suite 210, Miami, Florida 33126. The Investigation. On September 26, 2014, the Department's compliance investigator, Cabrera, observed two individuals performing roofing work on a house in Coral Gables, Florida. Investigator Cabrera interviewed the individuals, identified as Rodolfo Moscoso and Jairo Alvarado. Both men informed Cabrera that they worked for Respondent. Cabrera then checked the permit board located at the jobsite and confirmed that Respondent pulled the permit for the roofing work. After gathering the information at the jobsite, Cabrera consulted the Division of Corporations’ website to determine, inter alia, the identity of Respondent's corporate officers. Cabrera found that Jorge Cappelleti ("Cappelleti") was Respondent's sole corporate officer. Cabrera then consulted the Department's Coverage and Compliance Automated System ("CCAS") for proof of workers' compensation coverage and for exemptions associated with Respondent. An exemption is a method in which a corporate officer can exempt himself from the requirements of chapter 440. See § 440.05, Fla. Stat. (2014). CCAS is the Department's internal database that contains workers' compensation insurance policy information and exemption information. Insurance providers are required to report coverage and cancellation information, which is then input into CCAS. Cabrera's CCAS search revealed that Respondent did not have a workers' compensation policy or an employee leasing policy. Cabrera additionally discovered that Cappelleti had a valid exemption. Cabrera then called Cappelleti who confirmed that the two men at the jobsite were his employees and that the employees were not covered by workers' compensation insurance. Based on the information gathered, on September 26, 2014, Cabrera issued Respondent a Stop-Work Order and Order of Penalty Assessment. On September 29, 2014, Cabrera served Respondent with the Stop-Work Order and Order of Penalty Assessment. Cabrera simultaneously served Respondent with the Request for Production of Business Records for Penalty Assessment Calculation ("BRR"). The BRR requested documents that would enable the Department to determine Respondent's payroll for the time period of September 27, 2012, through September 26, 2014. In response to the BRR, Respondent ultimately provided the Department with bank statements, check details, a general ledger, and other records. Penalty Calculation. In October 2014, the Department assigned Penalty Auditor Ruzzo to calculate the penalty assessed against Respondent. Ruzzo reviewed the business records produced by Respondent and properly identified the amount of gross payroll paid to Respondent's employees on which workers' compensation premiums had not been paid. Ruzzo researched Respondent and Respondent's subcontractors to determine those periods when they were not compliant with chapter 440 during the audit period. Ruzzo determined that Respondent was not compliant for the period of September 27, 2012, through September 26, 2014. However, Respondent's corporate officer was not included in the penalty for the periods in which he had an exemption. Additionally, Respondent's compliant subcontractors were not included in the penalty. The business records ultimately produced by Respondent were sufficient for Ruzzo to calculate a penalty for the entire audit period, except for September 26, 2014. For that day, Ruzzo imputed the payroll. On June 2, 2015, based on Ruzzo's calculations, the Department issued a 4th Amended Order of Penalty Assessment to Respondent. On September 1, 2015, the 4th Amended Order of Penalty Assessment was served on Respondent. The 4th Amended Order of Penalty Assessment assessed a penalty of $68,525.42. For the penalty assessment calculation, Ruzzo consulted the classification codes listed in the Scopes® Manual, which has been adopted by the Department of Financial Services through Florida Administrative Code Rules 69L-6.021 and 69L-6.031. Classification codes are assigned to various occupations to assist in the calculation of workers' compensation insurance premiums. Ruzzo assigned the class codes based on information provided to him by Cappelleti. Ruzzo then utilized the corresponding approved manual rates for those classification codes and the related periods of non-compliance. Ruzzo applied the correct approved manual rates and correctly utilized the methodology specified in section 440.107(7)(d)l. and rules 69L-6.027 and 69L-6.028 to determine the penalty. The Penalty Associated With Subcontractor Emerald. Respondent only disputes the portion of the penalty associated with its subcontractor, Emerald, in the amount of $8,434.86 for the period of non-compliance from January 1, 2014, through April 8, 2014. Section 440.10(1) provides in relevant part: In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment, and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment. A contractor shall require a subcontractor to provide evidence of workers’ compensation insurance. A subcontractor who is a corporation and has an officer who elects to be exempt as permitted under this chapter shall provide a copy of his or her certificate of exemption to the contractor. Noticeably absent from the statute is the time period within which this evidence of coverage must be provided to the contractor or the nature of the required evidence. Rule 69L-6.032(1) provides: In order for a contractor who is not securing the payment of compensation pursuant to Section 440.38(1)(a), F.S. to satisfy its obligation to obtain evidence of workers’ compensation insurance or a Certificate of Election to Be Exempt from a subcontractor pursuant to Section 440.10(1)(c), F.S., such contractor shall obtain and provide to the Department, when requested, the evidence specified in subsections (2), (3), (4) or (5) herein. (Emphasis added). Rule 69L-6.032 sets forth the contractor requirements for obtaining evidence that the subcontractor possesses workers' compensation insurance. If a subcontractor is a client company of a leasing company, such as Emerald, rule 69L-6.032(3) specifies that the evidence shall be a Certificate of Liability Insurance ("Certificate"). According to the deposition testimony of Cappelleti (Exhibit 11, offered into evidence by the Department), when Emerald began providing services to Respondent in January 2014, Emerald represented that its workers were covered by a policy through an employee leasing company. In fact, a Certificate, obtained by Respondent sometime before it was requested by the Department, indicates that Emerald had coverage for the period of January 1, 2014, through December 31, 2014. This period encompasses the period of time for which the Department now seeks to penalize Respondent. Although Respondent obtained proof of coverage from Emerald, this occurred after Emerald was paid by Respondent for work occurring between January 1, 2014, and April 8, 2014. Ruzzo checked the CCAS and found that the Certificate for Emerald was inaccurate. Emerald apparently did not join the leasing company insurance policy until April 9, 2014. Although a contractor does not have a duty to further investigate when presented with what appears to be a valid Certificate, Ruzzo's calculations penalized Respondent for the period of non-compliance of Emerald because Respondent did not seek the proof of coverage until after Emerald's workers were already on the job for Respondent. The Department has demonstrated by clear and convincing evidence that Respondent employed Mr. Moscoso and Mr. Alvarado on September 26, 2014; that Respondent was engaged in the construction industry in Florida during the period of September 27, 2012, to September 26, 2014; and that Respondent failed to carry workers' compensation insurance to cover its employees as required by Florida's Workers' Compensation Law from September 27, 2012, to September 26, 2014. The Department has demonstrated by clear and convincing evidence that Ruzzo correctly utilized the methodology specified in section 440.107(7)(d)l. However, the Department failed to show by clear and convincing evidence that a penalty for Emerald's period of non-compliance, in the amount of $8,434.86, should be included in the total penalty assessment of $68,525.42.
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, KP Roofing Masters, LLC, violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage, and imposing upon it a total penalty assessment of $60,090.56. DONE AND ENTERED this 2nd day of March, 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 2nd day of March, 2016.
The Issue Whether Royal Roofing and Restoration, Inc. (Respondent or Royal Roofing), failed to secure workers’ compensation insurance coverage for its employees; and, if so, whether the Department of Financial Services, Division of Workers’ Compensation (Petitioner or Department), correctly calculated the penalty to be assessed against Respondent.
Findings Of Fact Petitioner is the state agency charged with enforcing the requirement of chapter 440, that Florida employers secure workers’ compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondent is a Florida for-profit corporation organized on July 28, 2015, and engaged in the business of roofing and storm damage restoration. The company was formed, and initially conducted business, in Tallahassee, Florida, but expanded to the Panama City area in 2016. Traci Fisher is Respondent’s President and Registered Agent, with a mailing address of 1004 Kenilworth, Tallahassee, Florida 32312. DOAH Case No. 17-0879 On May 4, 2016, Department Compliance Investigator Jesse Holman, conducted a routine workers’ compensation compliance inspection at 374 Brown Place in Crestview, Florida. Mr. Holman observed four men removing shingles from the roof of a residential structure at that address. Mr. Holman first interviewed a worker who identified himself as Dustin Hansel and reported that he and the other three workers on site were a new crew for Respondent, the permit for the job had not yet been pulled, and the workers were not aware of the rate of pay for the job. Mr. Hansel telephoned Respondent’s sales manager, Dillon Robinson, who then spoke directly with Mr. Holman via telephone. Mr. Robinson informed Mr. Holman that Respondent obtained workers’ compensation coverage through Payroll Management Inc. (PMI), an employee-leasing company. Mr. Holman identified the three remaining workers at the jobsite as Milton Trice, Winston Perrotta, and Kerrigan Ireland. Mr. Holman contacted PMI and secured a copy of Respondent’s then-active employee roster. None of the workers at the jobsite, including Mr. Hansel, were included on Respondent’s employee roster. Upon inquiry, Mr. Holman was informed that PMI had no pending employee applications for Respondent. Mr. Holman consulted the Department’s Coverage Compliance Automated System (CCAS) and found Respondent had no workers’ compensation insurance policy and no active exemptions. During Mr. Holman’s onsite investigation, the workers left the jobsite. Mr. Holman could not immediately reach Ms. Fisher, but did speak with her husband, Tim Fisher. Mr. Fisher informed Mr. Holman that the crew was on their way to the PMI Fort Walton office to be enrolled on Respondent’s employee roster. On May 5, 2016, based on his investigation, and after consultation with his supervisor, Mr. Holman issued Respondent Stop-Work Order (SWO) 16-148-1A, along with a Business Records Request (BRR) for records covering the audit period of July 27, 2015 through May 4, 2016. Later that day, Mr. Holman spoke to Ms. Fisher, who informed him the crew did not have permission to begin the work on that date, as she had not yet pulled the permit for the reroof. Ms. Fisher further explained that the crewmembers had been instructed to complete applications with PMI prior to departing Tallahassee for Crestview. Ms. Fisher confirmed the crewmembers were completing applications at PMI Fort Walton that same day. Mr. Holman met with Ms. Fisher the following day and personally served SWO 16-148-1A. Ms. Fisher delivered to Mr. Holman an updated employee roster from PMI which included Mr. Hansel, Mr. Perrotta, and Mr. Ireland; a letter documenting Mr. Trice was not employed by Respondent; and a $1000 check as downpayment on the penalty. Respondent initially submitted business records in response to the BRR on May 23 and 25, 2017. DOAH Case No. 17-1558 On June 8, 2016, Mr. Holman conducted a random workers’ compensation compliance inspection at 532 Rising Star Drive in Crestview. The single-family home at that address was undergoing renovations and Mr. Holman observed three men on the roof removing shingles. None of the men on the roof spoke English, but a fourth man, who identified himself as Jose Manuel Mejia, appeared and stated he worked for Respondent, and that all the workers onsite were paid through PMI at a rate of $10.00 per hour. Mr. Mejia admitted that one of the worker’s onsite, Emelio Lopez, was not enrolled with PMI and explained that Mr. Mejia brought him to the worksite that day because he knew Mr. Lopez to be a good worker. The remaining workers onsite were identified as Juan Mencho and Ramon Gonzalez, both from Atlanta, Georgia. Mr. Mejia produced some PMI paystubs for himself and Mr. Mencho. Mr. Mejia stated that he and his crews also received reimbursement checks directly from Respondent for gas, rentals, materials, and the like. Mr. Holman contacted PMI, who produced Respondent’s then-active employee roster. Mr. Mejia and Mr. Mencho were on the roster, but neither Mr. Gonzalez nor Mr. Lopez was included. Mr. Holman next contacted Ms. Fisher, who identified Mr. Mejia as a subcontractor, but was not familiar with any of the other men Mr. Holman encountered at the worksite. Mr. Holman consulted via telephone with his supervisor, who instructed him to issue an SWO to Respondent for failing to secure workers’ compensation coverage for its employees. Mr. Holman issued SWO 16-198-1A by posting the worksite on June 8, 2016. Department Facilitator Don Hurst, personally served Ms. Fisher with SWO 16-198-1A in Tallahassee that same day. SWO 16-148-1A Penalty Calculation1/ Department Penalty Auditor Eunika Jackson, was assigned to calculate the penalties associated with the SWOs issued to Respondent. On June 8, 2016, Ms. Jackson began calculating the penalty associated with SWO 16-148-1A. Ms. Jackson reviewed the documents submitted by Respondent in response to the BRR. The documents included Respondent’s Wells Fargo bank statements, check images, and PMI payroll register for the audit period.2/ Based on a review of the records, Ms. Jackson identified the following individuals as Respondent’s employees because they received direct payment from Respondent at times during the audit period: David Rosinsky, Dylan Robinson, Jarod Bell, Tommy Miller, and David Shields. Ms. Jackson determined periods of non-compliance for these employees based on the dates they received payments from Respondent and were not covered for workers’ compensation via PMI employment roster, separate policy, or corporate officer exemption. Ms. Jackson deemed payments to each of the individuals as gross payroll for purposes of calculating the penalty. Based upon Ms. Fisher’s deposition testimony, Ms. Jackson assigned National Council on Compensation Insurance (NCCI) class code 5551, Roofing, to Mr. Miller; NCCI class code 5474, Painting, to Mr. Rosinsky; NCCI class code 8742, Sales, to Mr. Bell and Mr. Robinson; and NCCI class code 8810, clerical office employee, to Mr. Shields. Utilizing the statutory formula for penalty calculation, Ms. Jackson calculated a total penalty of $191.28 associated with these five “employees.” Ms. Jackson next calculated the penalty for Dustin Hansel, Kerrigan Ireland, Milton Trice, and Winston Perrotta, the workers identified at the jobsite as employees on May 4, 2016. The Department maintains that the business records submitted by Respondent were insufficient to determine Respondent’s payroll to these “employees,” thus, Ms. Jackson used the statutory formula to impute payroll to these workers. Ms. Jackson calculated a penalty of $14,970.12 against Respondent for failure to secure payment of workers’ compensation insurance for each of these four “employees” during the audit period. The total penalty associated with these four “employees” is $59,880.48. Ms. Jackson calculated a total penalty of $60,072.96 to be imposed against Respondent in connection with SWO 16-148- 1A. Business Records In compliance with the Department’s BRR, Respondent submitted additional business records on several occasions-- March 21, May 3 and 31, June 7, and August 15 and 24, 2017--in order to establish its complete payroll for the audit period. While the Department admits that the final documents submitted do establish Respondent’s complete payroll, the Department did not issue amended penalty assessment based on those records in either case. The Department maintains Respondent did not timely submit records, pursuant to Florida Administrative Code Rule 69L-6.028(4), which allows an employer 20 business days after service of the first amended order of penalty assessment to submit sufficient records to establish payroll. All business records submitted by Respondent were admitted in evidence and included as part of the record. The undersigned is not limited to the record before the Department at the time the amended penalty assessments were imposed, but must determine a recommendation in a de novo proceeding. The undersigned has relied upon the complete record in arriving at the decision in this case. Penalty Calculation for Ireland, Trice, and Perrotta For purposes of workers’ compensation insurance coverage, an “employee” is “any person who receives remuneration from an employer” for work or services performed under a contract. § 440.02(15)(a), Fla. Stat. Respondent did not issue a single check to Mr. Ireland, Mr. Trice, or Mr. Perrotta during the audit period. Mr. Ireland, Mr. Trice, and Mr. Perrotta are not included on any PMI leasing roster included in the record for the audit period. The uncontroverted evidence, including the credible and unrefuted testimony of each person with knowledge, established that Mr. Ireland, Mr. Trice, and Mr. Perrotta were newly hired for the job in Crestview on May 4, 2016, and began working that day prior to submitting applications at PMI, despite Ms. Fisher’s directions otherwise. Petitioner did not prove that either Mr. Ireland, Mr. Trice, or Mr. Perrotta was Respondent’s employee at any time during the audit period. Petitioner did not correctly calculate the penalty of $44,911.26 against Respondent for failure to secure workers’ compensation insurance for Mr. Ireland, Mr. Trice, and Mr. Perrotta during the audit period. Penalty Calculation for Hansel Ms. Fisher testified that Mr. Hansel has owned several businesses with which Respondent has conducted business over the years. Originally, Mr. Hansel owned a dumpster rental business, now owned by his father. Mr. Hansel also owned an independent landscaping company with which Respondent occasionally transacted business. When Respondent expanded business into the Panama City area, Ms. Fisher hired Mr. Hansel as a crew chief to supervise new crews in the area. The job on May 4, 2016, was his first roofing job. A review of Respondent’s records reveals Respondent issued the following checks to Mr. Hansel during the audit period: December 4, 2015, in the amount of $360, $300 of which was for “dumpster rental” and the remaining $60 for “sod”; May 4, 2016, in the amount of $200 for “sod repair”; May 6, 2016, in the amount of $925 as reimbursement for travel expenses; May 9, 2016, in the amount of $1,011.50 (with no memo); and May 21, 2016, in the amount of $100 for “7845 Preservation.” Mr. Hansel was included on Respondent’s PMI leasing roster beginning on May 13, 2016. Petitioner proved that Mr. Hansel was Respondent’s employee at times during the audit period. Petitioner did not prove that Respondent’s records were insufficient to determine payroll to Mr. Hansel during the audit period, which would have required an imputed penalty. Petitioner did not correctly calculate the penalty of $14,970.42 against Respondent for failure to secure workers’ compensation insurance coverage for Mr. Hansel during the audit period. Sod repair by Mr. Hansel is a service performed for Respondent during the audit period. Reimbursement of travel expenses is specifically included in the definition of payroll for purposes of calculating the penalty. See Fla. Admin. Code R. 69L- 6.035(1)(f) (“Expense reimbursements, including reimbursements for travel” are included as remuneration to employees “to the extent that the employer’s business records and receipts do not confirm that the expense incurred as a valid business expense.”). Dumpster rental is neither work performed on behalf of, nor service provided to, Respondent during the audit period. The correct uninsured payroll amount attributable to Mr. Hansel is $2,296.50. Petitioner correctly applied NCCI class code 5551, Roofing, to work performed by Mr. Hansel based on the observation of Mr. Holman at the worksite on May 4, 2016. With respect to Mr. Hansel’s services for sod and sod repair, Petitioner did not correctly apply NCCI class code 5551. Petitioner did not introduce competent substantial evidence of the applicable NCCI class code and premium amount for landscaping services performed during the audit period.3/ Uninsured payroll attributable to Mr. Hansel for roofing services during the audit period is $2,036.50. The approved manual rate for workers’ compensation insurance for NCCI class code 5551 during the period of non- compliance--May 9 and 21, 2016--is $18.60. The premium amount Respondent would have paid to provide workers’ compensation insurance for Mr. Hansel is $378.79 (One percent of Mr. Hansel’s gross payroll during the non-compliance period--$20.36--multiplied by $18.60). The penalty for Respondent’s failure to secure worker’s compensation coverage insurance for Mr. Hansel during the period of non-compliance is calculated as two times the amount Respondent would have paid in premium for the non- compliance period. The correct penalty for Respondent’s failure to maintain workers’ compensation coverage for Mr. Hansel during the period of non-compliance is $757.58. Penalty Calculation for Salesmen Independent contractors not engaged in the construction industry are not employees for purposes of enforcing workers’ compensation insurance requirements. See § 440.02(15)(d)1., Fla. Stat. Sales is a non-construction industry occupation. The Department calculated a penalty associated with payroll attributable to the following persons identified by Ms. Fisher as independent salesmen: Dylan Robinson, Kevin Miller, Marc Medley, Mike Rucker, Colby Fisher, David Jones, Jarod Bell, Matt Flynn, and Todd Zulauf. Section 440.02(15)(d)1. provides that an individual may be an independent contractor, rather than an employee, as follows: In order to meet the definition of independent contractor, at least four of the following criteria must be met: The independent contractor maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations; The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal regulations; The independent contractor receives compensation for services rendered or work performed and such compensation is paid to a business rather than to an individual; The independent contractor holds one or more bank accounts in the name of the business entity for purposes of paying business expenses or other expenses related to services rendered or work performed for compensation; The independent contractor performs work or is able to perform work for any entity in addition to or besides the employer at his or her own election without the necessity of completing an employment application or process; or The independent contractor receives compensation for work or services rendered on a competitive-bid basis or completion of a task or a set of tasks as defined by a contractual agreement, unless such contractual agreement expressly states that an employment relationship exists. If four of the criteria listed in sub- subparagraph a. do not exist, an individual may still be presumed to be an independent contractor and not an employee based on full consideration of the nature of the individual situation with regard to satisfying any of the following conditions: The independent contractor performs or agrees to perform specific services or work for a specific amount of money and controls the means of performing the services or work. The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform. The independent contractor is responsible for the satisfactory completion of the work or services that he or she performs or agrees to perform. The independent contractor receives compensation for work or services performed for a commission or on a per-job basis and not on any other basis. The independent contractor may realize a profit or suffer a loss in connection with performing work or services. The independent contractor has continuing or recurring business liabilities or obligations. The success or failure of the independent contractor’s business depends on the relationship of business receipts to expenditures. Ms. Fisher testified that each of the above-named salesmen sold roofing jobs for her at various times during the audit period on a commission-only basis. The contractors inspect homeowner roofs, draft schematics, use their own equipment (e.g., drones), incur all of their own expenses, and handle the insurance filing for the homeowner’s insurance to pay on the claim. Ms. Fisher further testified that each of the salesmen also sells for other roofing contractors in the Tallahassee area. She pays the salesmen on a per-job basis. Ms. Fisher does not compensate the salesmen for the time involved in inspecting a roof, preparing schematics, or making the sale. Nor does Ms. Fisher reimburse the salesmen for travel to sales jobsites. Ms. Fisher’s testimony was credible, persuasive, and uncontroverted. Respondent introduced in evidence four “Independent Contractor Checklists” allegedly completed by Mr. Robinson, Mr. Medley, Mr. Fisher, and Mr. Flynn. Each form checklist follows the format of section 440.02(15)(d)1., listing the criteria set forth in subparagraphs a. and b. The forms indicate that they each meet all the criteria listed in subparagraph b.: they perform, or agree to perform services for a specific amount of money and control the means of performing the service; they incur the principal expenses related to the service performed; they are responsible for satisfactory completion of the services performed; they receive compensation for the services performed on a per-job or commission basis; they may realize a profit or suffer a loss in connection with performing the services; they have continuing and recurring business liabilities or obligations; and the success or failure of their business depends on the relationship of business receipts to expenditures.4/ In its Proposed Recommended Order, Petitioner conceded the nine men identified by Respondent as independent sales contractors “would not be considered employees of Respondent” because the “salesmen would seem to meet the majority of [the] requirements [of section 440.02(15)(d)1.b.].” Respondent issued Dylan Robinson, Mark Medley, Colby Fisher, Matt Flynn, Kevin Miller, Mike Rucker, Jarod Bell, David Jones, and Todd Zulauf an IRS FORM 1099-MISC for income paid during the 2016 tax year. Respondent did not prove by clear and convincing evidence that the above-named salesmen were Respondent’s employees during the audit period. For SWO 16-148-1A, Respondent did not correctly calculate the penalty because Respondent included a penalty associated with Petitioner’s failure to provide workers’ compensation insurance coverage for Dylan Robinson and Jarod Bell. Penalty in the amount of $20.70 associated with Dylan Robinson and Jarod Bell should not be included in the total penalty. The correct penalty amount for SWO 16-148-1A, based on records submitted by Respondent on or before March 20, 2016, is $929.16. Draft Revised Second Amended Order of Penalty Assessment The additional records submitted by Respondent revealed payments made to persons during the audit period who were not included in the Department’s Second Amended Order of Penalty Assessment. The Department and Respondent disagreed at hearing whether the payments qualified as payroll. At hearing, Petitioner submitted a draft revised second amended penalty calculation for SWO 16-148-1A based on all records received from Respondent. The revised penalty is in the amount of $61,453.50. Ms. Jackson populated the spreadsheet with the name of every individual to whom a check was written on Respondent’s business bank account during the audit period, removing only those payments to individuals and entities which, to Petitioner’s knowledge, were not Respondent’s employees. Respondent’s calculations in the revised penalty suffer from some of the same errors as in the second amended penalty calculation--they include individuals Petitioner did not prove were Respondent’s employees, as well as payments which were not uninsured payroll. For the reasons explained herein, Petitioner did not prove that salesmen David Jones, Dylan Robinson, Jarod Bell, Kevin Miller, Mark Medley, Matt Flynn, Mike Rucker, Tim Fischer, and Colby Fisher were Respondent’s employees during the audit period. Respondent did not accurately calculate the penalty associated with those persons. Respondent made payments to David Shields during the audit period, which the Department argues should be included as payroll. The Department included payments to Mr. Shields in its draft revised second amended order of penalty assessment and assigned NCCI class code “8810” for clerical work. Mr. Shields is a licensed professional roofing contractor who acts as “qualifier” for Respondent’s business. A qualifier is a licensed professional who certifies plans for permit applications submitted by another business. Respondent pays Mr. Shields a flat fee per permit application qualified by him. The record evidence does not support a finding that Mr. Shields provides clerical services to Respondent. Mr. Shields provides some sort of professional services to Respondent, and is likely an independent contractor providing his own materials and supplies, maintaining his own business accounts, and liable for his own business success. Assuming Mr. Shields were Respondent’s employee, the Department introduced no evidence of an appropriate NCCI class code for Mr. Shields’ services. The Department did not prove that payments to Mr. Shields should be included as Respondent’s uninsured payroll during the audit period. Respondent paid Susan Swain a total of $258 during the audit period for clerical work. Ms. Fisher maintained Ms. Swain’s work was casual at first, and the payments reflect a time when she worked on-again, off-again, handling the paperwork for restoration insurance claims. Later, Ms. Swain came to work for Respondent full-time and was added to the PMI leasing roster. Section 440.02(15)(d)5. provides that a person “whose employment is both casual and not in the course of the trade, business, profession or occupation of the employer” is not an employee. The statute defines “casual” employment as work that is anticipated to be completed in 10 working days or less and at a total labor cost of less than $500. See § 440.02(5), Fla. Stat. In its Proposed Recommended Order, the Department argues Ms. Swain’s wages should be included as payroll because the “testimony regarding Ms. Swain does not suggest that she was employed for less than 10 days[.]” However, it was the Department’s burden to prove that Ms. Swain was a statutory employee. The Department did not prove that Ms. Swain’s wages should be included within Respondent’s uninsured payroll. The largest portion of the penalty assessed by the Department, as well as in the draft revised second amended penalty assessment, against Respondent is in connection with various roofers who were employed by Respondent at times during the audit period. Each of the roofers was included on Respondent’s PMI leasing roster, but received checks directly from Respondent in addition to PMI payroll checks. The Department included all the direct payments to those roofers as payroll for purposes of calculating a penalty in this case. As Ms. Fisher explained, the company bids a reroof on a per job basis--usually a per square foot price. Ms. Fisher adds each roofing contractor’s name to the PMI leasing roster to ensure that each roofer is covered by workers’ compensation insurance for the duration of the job. When the job is completed (which is a matter of just a few days), the contractor reports to Ms. Fisher what amount of the contract price was spent on materials, supplies, or other non-labor costs. Ms. Fisher cuts a check to the contractor for that amount and authorizes PMI to issue payroll checks for the “labor cost” (the difference between the contract price and the non-labor costs). Ms. Fisher refers to this process as “back-charging” the contractors for their materials, maintenance, tools, and other non-labor costs. The Department is correct that the direct payments are payroll to the roofing contractors. See Fla. Admin. Code R. 69L-6.035(1)(b) and (h) (remuneration includes “payments, including cash payments, made to employees by or on behalf of the employer” and “payments or allowances made by or on behalf of the employer for tools or equipment used by employees in their work or operations for the employer.”). The Department would be correct to include these payments in the penalty calculation if they represented uninsured payroll. However, the evidence supports a finding that the direct payments to the roofing contractors were made for the same jobs on which Respondent secured workers’ compensation coverage through PMI. The roofing contractors were covered for workers’ compensation throughout the job, even though they may have received partial payment for the job outside of the PMI payroll checks.5/ The direct payments were not for separate reroofs on which the roofers were not otherwise insured. The Department did not correctly calculate penalties associated with the following roofing contractors: Donald Tontigh, Joseph Howard, Keith Mills, Aaron Kilpatrick, Gustavo Tobias, Jose Mejia, and Tommy Miller. Ms. Fisher also received cash payments from Respondent during the audit period. These payments were made in addition to her payroll through PMI. Ms. Fisher described these payments as “cash tickets,” which were paid outside of her PMI payroll to reimburse her for investments made in the company. For purposes of calculating the penalty in this case, these “cash tickets” are clearly payroll, as that term is to be calculated pursuant to rule 69L-6.035. Similar to the issue with the roofing contractors, the question is whether the payments represent uninsured payroll. Ms. Fisher did not hold a corporate officer exemption at any time relevant hereto. Ms. Fisher testified that she was covered through PMI payroll leasing. In contrast to the roofing contractors, Ms. Fisher’s direct payments do not directly coincide with any particular job or specific time frame during which Ms. Fisher was covered for workers’ compensation insurance through PMI. The evidence was insufficient to determine that the amounts were insured payroll. The Department properly calculated a penalty associated with payroll attributable to Ms. Fisher. Respondent made one payment of $75 to Donald Martin during the audit period. The Department calculated a penalty of $27.90 associated with this payment to Mr. Martin. Ms. Fisher explained that Mr. Martin was a down-on-his-luck guy who came by the office one day complaining that Mr. Hansel owed him some money. Ms. Fisher offered to put him on a roofing crew and wrote him the $75 check to help him out. Ms. Fisher’s testimony was both credible and unrefuted. Mr. Martin was never hired by Respondent, put on any roofing crew, or added to the PMI leasing roster. Mr. Martin was not Respondent’s employee because he did not receive remuneration for the “performance of any work or service while engaged in any employment under any appointment or contract for hire” with Respondent. § 440.02(15)(a), Fla. Stat. Cale Dierking works for Respondent full-time in a clerical position. During the audit period, Respondent paid Mr. Dierking directly by check for $1,306.14. This payment was made outside of Mr. Dierking’s PMI payroll checks. Ms. Fisher testified that she paid Mr. Dierking directly on one occasion when “PMI’s payroll got stuck in Memphis, I believe it was a snow-in situation where payroll checks didn’t come.” Rather than ask her employee to go without a timely paycheck, she advanced his payroll. Ms. Fisher’s testimony was both credible and unrefuted. The payment to Mr. Dierking is clearly payroll. However, Mr. Dierking was covered for workers’ compensation through PMI for the period during which the check was issued. Thus, there is no evidence that it was uninsured payroll. The Department did not correctly calculate a penalty associated with payments to Mr. Dierking. The correct penalty to be assessed against Respondent for failure to secure workers’ compensation coverage for its employees during the audit period in connection with SWO 16-148- 1A is $770.60. Penalty Calculation for SWO 16-198-1A Ms. Jackson calculated a total penalty against Respondent in connection with SWO 16-198-1A in the amount of $19,115.84, as reflected in the Second Amended Order of Penalty Assessment. The Department correctly imputed penalty against Respondent in the amount of $91.68 each for uninsured payroll to Mr. Gonzalez and Mr. Lopez. The evidence supported a finding that these workers were Respondent’s statutory employees on June 8, 2016, and were not enrolled on the PMI leasing roster. The Department did not correctly calculate the penalty associated with salesmen Dylan Robinson, Jarod Bell, Kevin Miller, Mark Medley, Matt Flynn, and Todd Zulauf. The Department did not correctly calculate the penalty associated with roofing contractors Abraham Martinez- Antonio, Edwin Kinsey, Dustin Hansel, Efrian Molina-Agustin, Jose Mejia, Joseph Howard, Keith Mills, Samuel Pedro, and Tommy Miller. The Department did not correctly calculate the penalty against Respondent associated with Mr. Shields, Respondent’s qualifier. Based on a review of Respondent’s complete “untimely” records, the Department discovered direct payments made to additional employees not included on the Second Amended Order of Penalty Assessment. Respondent made a direct payment to Ethan Burch in the amount of $602.50 during the audit period. Ethan Burch is one of Respondent’s full-time clerical employees. The evidence is insufficient to determine whether the payment of $602.50 was insured or uninsured payroll. As such, the Department did not prove it correctly calculated the penalty associated with Mr. Burch. Respondent also made a direct payment to Chelsea Hansel in the amount of $965 during the audit period. Ms. Hansel is another clerical employee. Ms. Hansel’s PMI enrollment was delayed due to some background investigation. Respondent paid Ms. Hansel for work she completed prior to enrollment. The direct payment to Ms. Hansel constitutes uninsured payroll. The Department correctly calculated the penalty associated with the payment to Chelsea Hansel. The correct penalty amount to be imposed against Respondent for failure to secure payment of workers’ compensation coverage for its employees (Gonzalez, Lopez, and Chelsea Hansel) during the audit period in connection with SWO 16-198-1A is $187.80.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers’ Compensation, finding that Royal Roofing and Restoration, Inc., violated the workers’ compensation insurance law and, in DOAH Case No. 17-0879, assessing a penalty of $770.60; and in DOAH Case No. 17-1558, assessing a penalty of $187.80. DONE AND ENTERED this 24th day of January, 2018, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 2018.
The Issue The issue is whether Respondent’s request for an administrative hearing was timely filed by virtue of the doctrine of equitable tolling.
Findings Of Fact The Division is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees and corporate officers. § 440.107, Fla. Stat. Respondent is a Florida limited liability company engaged in the construction business. Its offices are located at 2474 Ambassador Avenue, Spring Hill, Florida. To enforce this requirement, the Division performs random inspections of job sites and investigates complaints concerning potential violations of workers’ compensation rules. On June 6, 2018, James Acaba, a Division compliance inspector, conducted a compliance investigation at a job site in Lutz, Florida. Mr. Acaba observed two individuals working at the job site: Respondent’s owner, Mr. Smith; and Mr. Smith’s step- son. Mr. Smith claimed he had an exemption for himself. Mr. Acaba ascertained that Mr. Smith’s exemption expired on January 19, 2017. Mr. Acaba determined that: Mr. Smith’s step-son was working for $12.00 an hour; had been working for Respondent for about a week; and did not have workers compensation coverage. On June 6, 2018, a Stop-Work Order and a Request for Production of Business Records for Penalty Assessment Calculation purposes were hand-served on Mr. Smith at the job site. The Stop-Work Order contained an Order of Penalty Assessment, which explained how a penalty is calculated, but gave no specific amount pending a review of Respondent’s financial records. Mr. Smith was advised to provide the requested business records within 10 business days or by June 16, 2019. Mr. Smith requested information on how to have the Stop- Work Order removed. Mr. Acaba explained to Mr. Smith several options available to him to have the Stop-Work Order released: obtain a workers’ compensation policy; engage an employee leasing company; or terminate the step-son’s employment. On June 14, 2018, Mr. Smith provided Mr. Acaba a letter reflecting Respondent’s “reduction in (its) workforce.” On June 15, 2018, Mr. Smith secured the reinstatement of his exemption to work for Respondent. However, Mr. Smith did not provide the requested business records. On November 10, 2018, the Division served an Amended Order of Penalty Assessment (Amended Order) at the address Mr. Smith provided during the June 6, 2018, job site encounter. This Amended Order provided the total penalty amount of $35,769.16. According to Mr. Smith, his girlfriend, Samantha Nigh, signed for the Amended Order on November 10, 2018, saw the large amount of the penalty assessment, and “decided not to show” it to Mr. Smith. Ms. Nigh did not testify during the hearing. The Amended Order contained a Notice of Rights, which stated that, if Respondent wished to contest the penalty, a petition seeking a hearing had to be filed with the Division within twenty-one calendar days of the Amended Order. It also stated that the petition “must be filed with Julie Jones, DFS Agency Clerk, Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399- 0300.” The Amended Order included the following: FAILURE TO FILE A PETITION WIHTIN TWENTY-ONE(21) CALENDAR DAYS OF RECEIPT OF THIS AGENCY ACTION CONSTITUTES A WAIVER OF YOUR RIGHT TO ADMINISTRATIVE REVIEW OF THIS AGENCY ACTION. This meant that a petition had to be filed, and in the hands of the Agency Clerk no later than December 3, 2018. Although the actual due date was Saturday, December 1, 2018, Respondent could have filed the petition by the close of business on Monday, December 3, 2018. Florida Administrative Code Rule 18.106.103. Mr. Smith did not provide the date on which he became aware of the Amended Order. However, once he was aware of it, Mr. Smith knew the 21-day period to file a petition had expired, and admitted at hearing “it was already too late.” On December 14, 2018, 33 days after the Division served the Amended Order, and 11 days after the actual due date, the Division received Respondent’s hearing request. As a result of the late filing, the Division issued an Order to Show Cause (OTSC) on January 10, 2019. The OTSC required Respondent to show cause why the December 14, 2018, hearing request should not be dismissed as untimely. In the written response to the OTSC, Mr. Smith asserted that his brother, Edward Unger, “was only on the job site for the one day,” and Mr. Unger could “provide proof of employment elsewhere further (sic) showing he was not of our employment at the time.” Additionally, the response provided that “due to [an] emergency family situation where Byron Smith, owner, had to take a minor leave of absence to be with a close family member who had emergency open heart coronary bypass surgery. . ., the days and dates got scrambled with emotions clouding what needed to be done promptly.” The Division construed this conversation as possibly excusing the late filing and forwarded the matter to DOAH to resolve that narrow issue. During the hearing, Mr. Smith testified that his girlfriend, Ms. Nigh, prepared the OTSC response, but that his signature was on the document. Mr. Smith never clarified or corrected that Mr. Unger was his brother or step-son, and he merely reiterated the family problem and personal issues, without further detail or explanations, as his excuse. Lastly, Mr. Smith admitted that at the time Mr. Acaba observed the two working on June 6, 2018, he was breaking the rules, but “it was a huge penalty.” There is no credible evidence that Mr. Acaba gave Respondent’s owner, Mr. Smith any information that would cause him to miss the deadline for filing the petition.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that that the Department of Financial Services, Division of Workers’ Compensation, enter a final order dismissing Respondent’s request for a hearing as untimely. DONE AND ENTERED this 31st day of May, 2019, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of May, 2019. COPIES FURNISHED: Mattie Birster, Esquire Department of Financial Services Office of the General Counsel 200 East Gaines Street Tallahassee, Florida 32399 (eServed) Byron K. Smith, Jr. Smith's Interior Finishes, LLC 17829 Laura Lee Drive Shadyhills, Florida 34610 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
The Issue 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.
Findings Of Fact The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment, the Amended Order of Penalty Assessment, the 24 Amended Order of Penalty Assessment, and the 3rd Amended Order of Penalty Assessment, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Jeff Atwater, Chief Financial Officer of the State of Florida, or his designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment, the Amended Orders of Penalty Assessment, the Request for Administrative Hearing, the withdrawal of Petition, and the Order Relinquishing Jurisdiction and Closing File, and being otherwise fully advised in the premises, hereby finds that: 1. On March 14, 2011, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-083-1A to TRACY B. HINOTE, D/B/A T.H. PLASTERING. 2. On March 14, 2011, the Stop-Work Order and Order of Penalty Assessment was personally served on TRACY B. HINOTE, D/B/A T.H. PLASTERING. A copy of the Stop- Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On March 28, 2011, the Department issued an Amended Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-083-1A to TRACY B. HINOTE, D/B/A T.H. PLASTERING. The Amended Order of Penalty Assessment assessed a total penalty of $7,590.78 against TRACY B. HINOTE, D/B/A T.H. PLASTERING. . 4. On April 6, 2011, the Amended Order of Penalty Assessment was personally served on TRACY B. HINOTE, D/B/A T.H. PLASTERING. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On April 28, 2011, the Department issued a 2" Amended Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-083-1A to TRACY B. HINOTE, D/B/A T.H. PLASTERING. The 2" Amended Order of Penalty Assessment assessed a total penalty of $6,050.69 against TRACY B. HINOTE, D/B/A T.H. PLASTERING. 6. On May 3, 2011, the 2"4 Amended Order of Penalty Assessment was personally served on TRACY B. HINOTE, D/B/A T.H. PLASTERING. A copy of the 2" Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and incorporated herein by reference. 7. On April 25, 2011, the Division received from TRACY B. HINOTE, D/B/A T.H. PLASTERING a request for an administrative hearing. The request for administrative hearing is attached hereto as “Exhibit D” and incorporated herein by reference. 8. On June 28, 2011, the Department issued a 3rd Amended Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-083-1A to TRACY B. HINOTE, D/B/A T.H. PLASTERING. The 3rd Amended Order of Penalty Assessment assessed a total penalty of $2,618.57 against TRACY B. HINOTE, D/B/A T.H. PLASTERING. 9. On June 29, 2011, the 3rd Amended Order of Penalty Assessment was served by overnight mail delivery on TRACY B. HINOTE, D/B/A T.H. PLASTERING. A copy of the 3rd Amended Order of Penalty Assessment is attached hereto as “Exhibit E” and incorporated herein by reference. 10. On October 17, 2011, the Petition was forwarded to the Division of Administrative Hearings and assigned DOAH Case No. 11-5327. 11. On November 23, 2011, the Division received from TRACY B. HINOTE, D/B/A T.H. PLASTERING a withdrawal of the request for administrative hearing. The withdrawal of request for administrative hearing is attached hereto as “Exhibit F” and incorporated herein by reference. 12. On December 8, 2011, an Order Relinquishing Jurisdiction and Closing File was entered in Division of Administrative Hearings Case. No. 11-5327. A copy of the Order Relinquishing Jurisdiction and Closing File is attached hereto as “Exhibit G” and incorporated herein by reference.
The Issue The issue to be determined is whether the doctrine of equitable tolling should excuse the late filing of a Petition for Administrative Hearing filed with Respondent by Petitioner Florists Mutual Insurance Company.
Findings Of Fact Respondent, the Department, is the state agency charged with resolving disputes over reimbursement for costs of medical services provided to injured workers under workers? compensation law. Petitioner Florists was in a reimbursement dispute with Kendall. The Department issued a Determination that Florists should reimburse Kendall the sum of $100,894.54. Florists received notice of the Reimbursement Dispute Determination on April 8, 2013, via United States Postal Service certified mail. The Reimbursement Dispute Determination included a Notice of Rights advising Florists that a request for an administrative hearing on the Determination had to be received by the Department within 21 days of Florists? receipt of the Determination. It noted in bold print that failure to file a petition within that time period constituted waiver of the right to a hearing. Florists? Initial Petition was sent via certified mail from the Tallahassee office of Petitioner?s counsel located at 1701 Hermitage Boulevard, Suite 103, Tallahassee, Florida, on or about Thursday, April 25, 2013. The filing deadline was the following Monday. The Initial Petition was appropriately addressed to “Julie Jones, CP, FRP, DFS Agency Clerk, Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida.” The Initial Petition was received by the Department on Wednesday, May 1, 2013, at 10:11 a.m. The Department determined that the Initial Petition was untimely, as it was received on the twenty-third day after Florists received notice, making it two days late. Petitioner is a workers? compensation insurance carrier whose substantial interests are affected by Respondent?s Reimbursement Dispute Determination that it must reimburse health care provider Kendall $100,894.54. That determination will become final if Petitioner is determined to have waived its right to a hearing. The distance between the Tallahassee office of Petitioner?s counsel and the office of the Department is approximately four miles. From review of the United States Postal Service tracking information, it appears that after the Initial Petition was mailed, it was processed in Louisville, Kentucky, before it returned to Tallahassee, Florida, for delivery, indicating a journey of some 1,050 miles over the course of six days. Late delivery of the Petition by the United States Postal Service did not prevent Florists from asserting its rights.
