The Issue The issues to be resolved in this proceeding concern whether the Respondent failed to abide by the coverage requirements of the Florida Workers' Compensation Law embodied in Chapter 440, Florida Statutes, by not obtaining a workers' compensation insurance policy and whether the Petitioner properly assessed a penalty against the Respondent pursuant to Section 440.107, Florida Statutes.
Findings Of Fact Investigator Pangrass conducted a random inspection of a construction site at 9 Pecan Drive Pass, Ocala, Florida, on December 18, 2002. On that occasion he observed several people working, hanging drywall. Investigator Pangrass spoke to one of the workers, Daniel Maloney, and asked him, to identify his employer. Daniel Maloney identified the Respondent as his employer. When Maloney identified him the Respondent was only 10 feet away and the noise level at the site was such that the Respondent could hear himself being identified as the employer. The Respondent did not then deny that he was Daniel Maloney's employer. Daniel Maloney stated he had worked for the Respondent full-time for two months and was paid by the hour. The Respondent told Mr. Pangrass he was unable to complete the work at the job without additional labor. Mr. Maloney assisted the Respondent by "hanging the ceiling." The Respondent offered a hearsay statement of Mr. Maloney, wherein he stated, "I am the employee." The Respondent confirmed that he had a prior employment relationship with Daniel Maloney and that Daniel Maloney wanted to work with the Respondent. Another worker observed by Mr. Pangrass, Desmond Neil, told Investigator Pangrass that he worked for the Respondent part-time and was paid by the hour. The Respondent had used the services of Desmond Neil on prior occasions and stated "we do a job for Holiday the day before." The Respondent told Mr. Pangrass that he was trying to get workers' compensation for Desmond Neil. The Respondent made a statement against his own interest and said he "re-hired" Desmond Neil because Neil could not get a workers' compensation exemption. The Respondent's use of the word "re-hired" is significant because in a prior compliance matter the Respondent had employed Desmond Neil and agreed to terminate Desmond Neil's employment. The Respondent in testimony, changed his version of the facts and said that he re-hired Desmond Neil, but that Neil worked for Charles Brandon. Investigator Pangrass interviewed the Respondent. During this interview the Respondent stated he had labor expenses connected with his business. He testified he was paid by Holiday Builders and then in turn paid Desmond Neil and Daniel Maloney. Charles Brandon did not employ or was not the sole employer of Desmond Neil or Daniel Maloney on December 18, 2002. Investigator Pangrass contacted Mr. Brandon, who stated he knew the Respondent was going to hire helpers. Mr. Brandon was not at the job-site to direct Desmond Neil or Daniel Maloney and could only be reached by phone. The Petitioner's evidence that the Respondent was the employer of Desmond Neil and Daniel Maloney on December 18, 2002, instead of Mr. Brandon or some other person or entity, is the most persuasive and is accepted. The Respondent offered conflicting evidence regarding who provided money to Desmond Neil and Daniel Maloney. The Respondent offered a hearsay statement of Daniel Maloney that Holiday Builders was Daniel Maloney's employer. The Respondent said that when Holiday Builders pays him (the Respondent) he then pays his employees. The Respondent changed his testimony, however, and then said Charles Brandon gave him checks to give to the employees. (Implying that they were Brandon's employees in this version of his story.) The Respondent submitted a signed statement to the Petitioner indicating that he had no employees between 1999 and 2002, in evidence as Petitioner's Exhibit 10-B. The Respondent recognized the signature on that statement as being his own, but professed not to remember who wrote it or what it said. The Respondent, however, did admit to having at least one employee in 2001, directly contradicting his own statement. The Respondent also testified that the only times he used Desmond Neil's services were the two times Investigator Pangrass stopped by the Respondent's job sites. It is a trifle too coincidental that the only two times the investigator visited the job sites were the only times when the Respondent purportedly used the services of Desmond Neil. This is especially the case since Desmond Neil's testimony and even that of the Respondent himself tend to contradict that statement. Finally, the Respondent admitted that he did not have a workers' compensation policy for any employees. In summary, the evidence adduced by the Petitioner is deemed more consistent and credible and is accepted. It was thus demonstrated that the Respondent had one or more employees at the times pertinent hereto.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties it is, therefore, RECOMMENDED that a Final Order be entered by the Department of Financial Services, Division of Workers' Compensation directing that the Respondent stop work and cease his operations until such time as he secures workers' compensation coverage for employees and directing that the Respondent pay a penalty in the amount of $1,100.00. DONE AND ENTERED this 4th day of December, 2003, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with Clerk of the Division of Administrative Hearings this 4th day of December, 2003. COPIES FURNISHED: John M. Iriye, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Berisford Champagnie 15508 Southwest 34th Avenue Ocala, Florida 34473 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Level 11 Tallahassee, Florida 32399-0300
The Issue This is a rule challenge proceeding pursuant to Section 120.56(4), Florida Statutes, in which the Petitioners and the Intervenor assert that they are substantially affected by an agency statement that violates Section 120.54(1)(a), Florida Statutes. The subject matter at issue here concerns the method of determining the order of layoff of some of the Respondent's employees.
Findings Of Fact Stipulated facts In 1996, the federal government modified and/or reformed welfare to require eligible participants to obtain employment. The Florida Legislature enacted Chapter 414, Florida Statutes, also known as the WAGES law, which required the Respondent to provide certain services to applicants for and participants in the WAGES program, including work activities, training, and other job-related services, which the Respondent termed "front-end services." Those services were primarily provided by Career Service employees of the Respondent. In 1998, the Florida Legislature amended portions of the WAGES law to require that local WAGES coalitions, instead of the Respondent, provide those front-end services to WAGES participants, effective October 1, 1998. As a direct result therefor, the Respondent was required to lay off approximately 700 career service employees. As a part of the implementation of the announced layoff of employees, Respondent requested approval of a method of determining the order of layoff, pursuant to Rule 60K- 17.004(3)(g), Florida Administrative Code, which provides: (g) Agencies shall then choose and consistently apply one of two methods, or another method as approved by the Department of Management Services, in determining the order of layoff. These methods are commonly referred to as "bumping." Option 1: The employee at the top of the list shall have the option of selecting a position at the bottom of the list based on the number of positions to be abolished, e.g., 20 positions in the affected class, 5 positions to be abolished. The employee at the top of the list can select any of the positions occupied by the 5 employees at the bottom of the list. The next highest employee on the list then has the option of selecting any of the positions occupied by the 4 remaining employees at the bottom of the list with the process continuing in this manner until the 5 employees at the top of the list have exercised their option. Option 2: The employee at the top of the list has the option of selecting any position occupied by any employee on the list with fewer retention points in the class. The next highest employee and remaining employees shall be handled in a similar manner until the list is exhausted. Rather than selecting Option 1 or Option 2, set forth in the published rule, the Respondent requested approval of an alternative method of determining the order of layoff. By letter dated August 17, 1998, the Department of Management Services (DMS) approved the method of determining order of layoff set forth in its correspondence. The method of determining the order of layoff is described by DMS in its approval letter as: The option you have chosen will allow adversely affected employees to select any position in the affected class and series, in the competitive area approved in our August 5, 1998 letter. Neither the Respondent's request for approval of the alternate method of determining the order of layoff, nor DMS' approval of that method, have been adopted in substantial conformity with Section 120.54, Florida Statutes. The Respondent's request for approval of the alternate method of layoff was intended to apply solely to the layoff occasioned by changes in the WAGES law. Facts based on evidence at hearing Florida Public Employees Council 79, AFSCME, is the certified bargaining agent for approximately 67,000 career service employees of the State of Florida. As such, it represents the employees of the Department who were affected by the subject layoff. The individual Petitioners, Betty Hall, Diana Lomas, Mercedes Valdez, and Elizabeth Judd, are members of the AFSCME collective bargaining unit. The challenged bumping procedure was not reached by collective bargaining. Under the alternative layoff method approved for the Respondent by DMS, employees with the greater number of retention points received enhanced bumping rights, permitting them to "bump" employees with fewer retention points in the same class and in the class series. Conversely, by this alternative procedure, employees with fewer retention points were accorded diminished protection against bumping. These employees could be bumped not only by employees with greater retention points in the class, but also by employees with greater retention points in other classes in the class series. For example, Consuelo Casanovas, from Petitioners' Exhibit 8, who was adversely affected in her position of Employment Security Representative I, was accorded bumping rights to positions in her class and to positions in the other two classes in the class series, Customer Services Specialist and Interviewing Clerk. Had the Respondent elected Option 1 or Option 2 in the published rule, Rule 60K-17.004(3)(g), Florida Administrative Code, Ms. Casanovas would not have had the right to bump to positions in the other two classes, and persons in those other two classes would not have been subject to bumping by Ms. Casanovas.1
The Issue Whether Petitioner failed to obtain workers’ compensation insurance meeting the requirements of Chapter 440, Florida Statutes, and, if so, the penalty that should be imposed.
Findings Of Fact Olender is a Delaware corporation that is registered to do business in Florida and engaged in the business of construction. Primarily, Olender frames the walls of structures and installs siding, windows and moisture barriers to such structures. Such activities are construction activities under the Florida’s workers’ compensation law. See Ch. 440, Fla. Stat., and Fla. Admin. Code R. 69L-6. On June 22, 2006, an investigator for the Department visited the Alta Westgate Apartment complex construction project, located at 6872 Alta Westgate Drive, Orlando, Florida. The visit was prompted by a “confidential tip” received by the Department from Tyler Balsinger, a former employee of Petitioner. The Alta Westgate complex is owned by Alta Westgate, LLC. The general contractor responsible for the construction of the complex was W.P. South Builders. The overall project manager for the general contractor was Robert Beliveau. The on-site representative for the general contractor was Danny Campbell. Mr. Campbell provided the Department’s investigator with a list of subcontractors on the project worksite. The list reflected that the subcontractor for framing was Olender and that John Olender was the person in charge of the company’s work at the project site. Among other things, the contract also included the installation of a moisture barrier, generally known as Tyvek, on the framed structures. Because of the nature of construction work, it is not unusual to have several subcontractors on a construction worksite at the same time. It is unlikely that Olender was the only subcontractor working on the day the Department’s investigator visited the Alta Westgate project. The subcontract required that Olender secure the payment of workers’ compensation on its employees. The evidence was not clear regarding whether the general contractor, under its subcontract with Olender, would provide workers’ compensation insurance on the employees of Olender’s subcontractors. However, the evidence was clear that J.P. Builders did not secure such workers’ compensation insurance on the employees of Olender’s subcontractors. Mr. Campbell also provided the certificate of insurance for Petitioner. The certificate reflected that Modern Business Associates, Inc. (MBA), an employee leasing company, provided workers’ compensation for Olender’s leased employees. See § 468.520, Fla. Stat. MBA entered into a client service agreement with Olender. Under the agreement, Olender would lease employees from MBA and MBA would provide payroll services and workers’ compensation coverage for the employees it leased to Petitioner. The agreement terminated on August 30, 2006. MBA’s Client Service Agreement with Petitioner states on p. 3: Insurance Coverage. MBA is responsible for providing Workers’ Compensation coverage to workers employed by MBA and assigned to Client, in compliance with applicable law, and as specified in the Proposal. Workers performing services for Client not covered by this Agreement and not on MBA’s payroll shall not be covered by the workers’ compensation insurance. Client understands, agrees, and acknowledges that MBA shall not cover any workers with workers’ compensation coverage who has not completed and submitted to MBA an employment application and tri- fold, and which applicant has not been reviewed and approved for hire by MBA. (emphasis supplied) Other than information necessary to supply its services, MBA was not aware of any specific project or projects on which Olender was working when it leased employees from MBA. John Olender and Ruben Rojo were two employees that Olender leased from MBA and for whom MBA provided workers’ compensation insurance. The workers’ compensation policy complied with Florida’s workers’ compensation requirements. After speaking with Mr. Campbell, the Department’s investigator, who is fluent in Spanish, walked around the complex’s worksite. She did not have a hardhat on. She eventually saw about 10 to 12 workers on the third floor of one of the buildings under construction (Building 8 or 9). The Department’s investigator could not say if they were framing. At some point, John Olender, the company’s project superintendent, saw the Department’s investigator, noticed she did not have any safety equipment on, and went to meet her. The investigator yelled to the workers on the third floor and showed her Department badge or identification. She was speaking Spanish to them. The workers ran in an effort to avoid the Department’s investigator. Mr. Olender, who does not speak or understand Spanish, sent for Ruben Rojo. Mr. Rojo is the assistant superintendent for Olender and works under John Olender. He is fluent in Spanish. He does not hire employees for Olender, but oversees the work being performed under Olender’s subcontracts. The Department’s investigator continued to attempt to explain to the workers that she was not interested in their immigration status, but was there to make sure they were covered by workers’ compensation insurance. At least some of the workers came down to talk to her. Mr. Rojo thought the investigator was asking about the workers’ immigration status and told them that they did not have to talk to her. However, apparently some workers very reluctantly gave her limited information. The workers who talked to her were Pedro Antonio Mendez, Jaco Sarmentio, Juan Cardenas, Alvaro Don Juan Diaz, Jose Varela Orellana, Nesto Suarez Ventura, Miguel Martinez Diaz, Jose Perez Renaldo and Antonio Hernandez. She did not obtain any addresses, phone numbers or other identifying information from the employees. The evidence did not show whether these individuals gave the Department’s investigator the correct information. Importantly, they did not tell her who their employer was or what duties they were performing. None of these individuals testified at the hearing. John Olender did not recognize these workers. Mr. Rojo told the investigator that Olender subcontracted the framing portion of its contract to “T-Bo”. T-Bo was also known as Primitivo Torres. In his deposition testimony, Mr. Torres did not recognize these workers’ names. He also thought that most of the workers he employed for his framing subcontract with Olender were illegal immigrants. Mr. Torres was unclear in his testimony regarding his status with Olender. He did indicate that he worked in both Orlando and Tampa. Apparently, at times, he was an employee and at other times he was a subcontractor. He was listed as a leased employee under MBA’s contract with Olender. The evidence suggests, but does not prove, that Mr. Torres was a person who supplied immigrant workers to construction sites. In Orlando, Mr. Torres lived in an apartment complex in the Rosemond area with his employees. The rent was sometimes paid by Olender and then deducted from the remuneration paid to Mr. Torres. Mr. Torres paid his employees from the money he received under his subcontract with Olender. Mr. Torres also testified that when the Department’s investigator contacted him in June 2006, to discuss workers’ compensation insurance, he told her that he neither secured the payment of workers’ compensation for himself nor for the other workers in both Tampa and Orlando. Donna Knoblauch, who oversaw Olender’s main office, received a faxed copy of a certificate of workers’ compensation insurance from Mr. Torres. However, the faxed certificate was an illegible copy of what appeared to be a certificate of liability insurance issued by a company in Texas. The certificate does not have a legible “sent date,” a legible workers’ compensation policy number, legible dates of coverage, a legible producer name, or any information indicating that coverage includes the State of Florida. The document is insufficient to demonstrate that Mr. Torres provided workers’ compensation coverage for his employees that worked under his subcontract with Olender. John Olender testified that Mr. Torres utilized, at most, 20 framers for the construction at Alta Westgate. Mr. Torres corroborates that number and indicates that various people worked in crews of around five. On the other hand, Danny Campbell testified that Olender had approximately 20 workers when the project started, increased to approximately 75 people performing framing duties on the worksite and decreased to about 20 workers by the time the Department’s investigator visited the worksite. Mr. Campbell testified that on January 22, 2006, he believed that Olender had approximately five individuals for the punch-out group, three–to-five cleaners, a forklift operator, approximately two individuals installing the Tyvek moisture- barrier paper, two individuals performing window installation and approximately 15–to-20 individuals installing siding at the worksite. No other testimony supports the number of workers Mr. Campbell believed to be at the jobsite on June 22. On balance, the best evidence of the approximate number of workers was that of Mr. Olender and Mr. Torres. However, these figures were only estimates of the actual number which may have been less than 20 workers. In any event, the employment of these 12 workers on the third floor was not demonstrated by the evidence. Their names did not appear on the list of employees leased by Olender from MBA and were otherwise, unknown to the Mr. Olender, Rojo and Torres. While at the jobsite, the Department’s investigator also spoke with Victor Ibarra. Mr. Ibarra drove a forklift and indicated that he worked for Olender. Again, no address or other identifying information was supplied to the investigator. Later, the investigator spoke with a woman who purported to be Mr. Ibarra’s wife. There was no information on the forklift indicating that it belonged to Olender and Olender denies employing a person named Victor Ibarra. Mr. Campbell testified in his deposition that Olender had forklifts on the jobsite. However, he did not testify that the forklift Victor Ibarra drove on June 22, 2006, was owned by Olender. Likewise, Mr. Campbell did not testify that Mr. Ibarra was an employee of Olender. Mr. Ibarra’s name did not appear on the list of leased employees provided by MBA. The Department's investigator included Mr. Ibarra as an employee of Olender based on Mr. Ibarra’s statements. However, the evidence presented by the Department is not sufficient to establish that Mr. Ibarra was an employee of Olender, since Mr. Ibarra did not testify at the hearing. Mr. Campbell’s testimony does not corroborate the hearsay statements of Mr. Ibarra since the testimony does not indicate the forklift Mr. Ibarra drove belonged to Olender or to another subcontractor on the project. After talking to Mr. Ibarra, the Department’s investigator met Rosa Barden, Martha Alvarado and Ismael Ortiz, who were applying a moisture barrier paper known as “Tyvek” to a building at the construction site. The three individuals told the investigator that that they had been hired by Mr. Rojo on behalf of Olender and had only worked for about a day. The investigator included these three individuals as employees of Olender. No addresses or other contact information was obtained by the investigator. None of these individuals testified at the hearing. Mr. Rojo testified that he did not know the three individuals on the “paper crew” and did not hire them. None of the three individuals were listed as leased employees with MBA. However, Olender’s subcontract clearly lists the application of Tyvek as a part of its contract. Additionally, the payment information supplied by the general contractor shows that Olender was paid for Tyvek application on all the buildings in the complex. Unlike Mr. Ibarro’s testimony, the contract and payment evidence independently corroborates the otherwise hearsay statements of these three individuals and Olender should have provided workers compensation insurance on them. There was no evidence that Olender provided such workers’ compensation insurance; such failure violates Chapter 440, Florida Statutes. See §§ 440.10(1)(g) and 440.38(7), Fla. Stat., and Fla. Admin. Code R. 69L-6.019. In total, the Department’s inspector met with John Olender for approximately one hour discussing the work performed by Olender and the employees retained by Olender. During this meeting, Mr. Olender, identified members of a “punch-out” crew who had worked on the project. The punch-out crew repaired any defects in framing prior to inspection. The names supplied by Mr. Olender were Juan Gonzalez, Miguel, Sal, William, WI Gerardo (noted as El Guardo in the third Amended Order of Penalty assessment), Pedro, Jacobo and Boso. Mr. Olender did not know their last names. The evidence did not show the period of time that the punch-out crew would have been working at the project site. Presumably, they would have begun some time after the initial building was framed. The Department’s investigator did not personally see the punch-out crew at the project. Mr. Olender also informed the Department’s investigator that he did not handle matters concerning workers’ compensation insurance and that she would have to contact the Company’s main office in Missouri. He provided the number for the office. He also gave the investigator the number for Michael Olender, the president of the company and the number for Mr. Torres. The investigator issued a Workers’ Compensation Request for Production of Business Records to Olender. She left the Request with John Olender. The request for records asked for certain categories of Olender’s business records for the period of January 22, 2004 to June 22, 2004. Of importance here, the Department requested records in categories 1, 4, 5 and 6. In general, category 1 covers all payroll records, including checks and check stubs, time sheets, attendance records and cash payment records. Categories 4, 5 and 6 cover all records that relate to subcontractors, including their identity, contract, payment thereof, workers compensation coverage for all the subcontractor’s employees, and/ or the employees’ exemption status. These records are required to be maintained by a company doing business in Florida. Mr. Campbell testified that some members of the punch- out crew often approached him about whether he had paid Olender so that they in turn could be paid. Again, none of these individuals testified at the hearing. However, given the admissions of Olender’s employee and Mr. Campbell’s testimony, the evidence supports the conclusion that the eight individuals on the punch-out crew were employed by Olender. None of these employees were leased employees and therefore, were not covered by the workers’ compensation policy provided by MBA. There was no evidence that Olender secured any workers' compensation insurance on these eight employees. Such failure violates Chapter 440, Florida Statutes. See §§ 440.10(1)(g) and 440.38(7), Fla. Stat., and Fla. Admin. Code R. 69L-6.019. The Department’s investigator contacted Ms. Knoblauch while she was on her way to a medical appointment. The investigator requested Olender’s proof of workers’ compensation insurance. Ms. Knoblauch told the investigator that she was not at the office where the records were kept, but on the way to a medical appointment. She said she would be returning to the office after the appointment. The investigator said she needed the records immediately. Ms. Knoblauch offered to skip her appointment and requested time to turn around and return to the office. The investigator refused to permit her the time to return to the office. At some point, MBA supplied the Department’s investigator with a list of Olender’s leased employees. The list did not contain any of the names she had gathered during her visit to the worksite. Within a few hours from the beginning of the investigation, the Department's investigator issued a Stop Work Order and an Order of Penalty Assessment on June 22, 2006. The Order was served via certified mail on Michael Olender and Olender’s legal counsel. The Stop Work Order required that Olender "cease all business operations in this state" and advised that a penalty of $1,000.00 per day would be imposed if Olender were to conduct any business in violation of the Stop Work Order. Additionally, along with the Order, the Department issued and served on Petitioner via certified mail a Division of Workers’ Compensation Request for Production of Business Records for Penalty Calculation, requesting records for a period of three years. The request, made pursuant to Section 440.107(7), Florida Statutes, asked the employer to produce, for the preceding three years, documents that reflected payroll, proof of insurance, workers’ compensation audit reports, identity, duration, contracts, invoices and check stubs reflecting payment to subcontractors, proof of workers’ compensation coverage for those subcontractors, employee leasing company information, temporary labor service information, and any certificate of workers’ compensation exemption. The request asked for the same type of records that had been requested earlier. Neither request for records was specific to a particular construction job that Olender may have performed work on. The investigator informed Mr. Campbell that Petitioner was being issued a Stop-Work Order and gave him a copy of the Order. Mr. Campbell faxed the Order to Olender’s office in Missouri. The Department’s investigator also checked the Department’s Coverage and Compliance Automated System (“CCAS”) database. The system tracks workers' compensation insurance policy information provided by workers’ compensation carriers on an insured employer. The database did not contain an entry that reflected a current State of Florida workers' compensation insurance policy for Olender. The database did reference that Olender had a stop-work order served on it on July 12, 2002, which had been lifted on July 31, 2002, with payment of the penalty. Florida law requires that employers maintain a variety of business records involving their business. See § 440.107(5), Fla. Stat., and Fla. Admin. Code R. 69L-6.015. The Rule is limited to records regarding a business’ employees and any payout by the employer to any person. In this case, under the Rule, the only records Olender was required to maintain related to its employees and its subcontractor, Mr. Torres. There was no evidence regarding any other subcontractors Olender may have contracted with. The only records supplied by Olender to the Department were the records from MBA that included workers’ compensation information and W-2 forms for Olender’s leased employees, the illegible proof of insurance for Mr. Torres and copies of checks from Olender to Mr. Torres for the subcontract. Those records reflected that John Olender, Ruben Rojo and Primitivo Torres were leased employees and covered by workers’ compensation insurance under Olender’s contract with MBA. Olender supplied no records regarding workers’ compensation coverage for the eight employees who were members of the punch- out crew, the three workers who were members of the paper crew or the 12 workers who were on the third floor. When an employer fails to provide requested business records that the statute requires it to maintain, the Department is required to impute the employer's payroll using "the statewide average weekly wage as defined in Section 440.12(2)." § 440.107(7)(e), Fla. Stat., and Fla. Admin. Code R. 69L-6.028. The penalty for failure to secure the workers' compensation insurance coverage required by Florida law is 1.5 times the premium that would have been charged for such coverage for each employee identified by the Department. The premium is calculated by applying the approved manual rate for workers' compensation insurance coverage for each employee to each $100.00 of the gross payroll for each employee. In this case, the Department, after several amended assessments, imputed the payroll for Olender for the period beginning January 22, 2004, Petitioner’s date of incorporation, and ending June 26, 2006. Included in the calculation were the eight individuals on the punch-out crew identified by John Olender, the 12 employees who were working on the third floor, the forklift driver Victor Ibarra, and the three individuals on the paper crew. In calculating the premium for workers' compensation insurance coverage, the Department's investigator used the risk classifications and definitions of the National Council of Compensation Insurance, Inc. ("NCCI") SCOPES Manual. The appropriate code for Olender’s employees was classification code 5561 which covers framing of multiple family dwellings. The gross payroll imputed to each of the 27 employees was $683.00 per week. The Department then utilized the imputed payroll for same employees for the years 2004 and 2005. The Department’s calculation resulted in an assessed penalty of $1,205,535.40. However, the evidence establishes that Olender had 11 direct employees rather than 27 employees during the period of the Alta Westgate contract. Olender’s performance under that contract began on April 3, 2006. Other than the period of time involved with the Alta Westgate project, there was no evidence regarding the period of time Olender conducted business in Florida that would require it to comply with Florida law. The date of incorporation of Olender is insufficient to demonstrate that Olender engaged in any business in Florida that would require it to comply with Florida’s workers’ compensation law. Therefore, the penalty calculation must be modified to reflect only those eleven employees for the time period Olender performed under its contract on the Alta Westgate project.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order: Finding that Olender Construction Co., Inc., failed to have Florida workers' compensation insurance coverage for 11 of its employees, in violation of Sections 440.10(1)(a) and 440.38(1), Florida Statutes; and Recalculating the penalty against Olender. DONE AND ENTERED this 14th day of March, 2008, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER 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 14th day of March, 2008. COPIES FURNISHED: Colin M. Roopnarine, Esquire Department of Financial Services, Division of Workers Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Jeremy T. Springhart, Esquire Broad and Cassel 390 North Orange Avenue, Suite 1500 Orlando, Florida 32801 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issues in this case are whether Respondent, Gary the Carpenter Construction, Inc., failed to comply with the requirements of Sections 440.10, 440.107, and 440.38, Florida Statutes, and, if so, the appropriate amount of penalty which should be assessed against Respondent.
Findings Of Fact The Department of Financial Services (hereinafter referred to as the “Department”), is the state agency charged with the responsibility of enforcing the requirement of Section 440.107, Florida Statutes, that employers in Florida secure workers' compensation insurance coverage for their employees. § 440.107(3), Fla. Stat. Respondent, Gary the Carpenter Construction, Inc. (hereinafter referred to as “GTC”), is a Florida corporation, which at the times relevant employed subcontractors in the performance of its general contracting business located in Key West, Florida. GTC and its subcontractors, at the times relevant, were performing construction activities in the State of Florida. On March 25, 2008, GTC was renovating a structure at 1300 Virginia Street, Key West, Florida. An investigator of the Department’s Division of Workers’ Compensation (hereinafter referred to as the “Division”), conducted a compliance check at the construction site, determining that GTC was the general contractor and that it was using an out-of-state business entity, Pryjomski Construction (hereinafter referred to as “Pryjomski”), as a subcontractor. A Stop-Work Order was issued to Pryjomski. Pryjomski is a Michigan corporation. As a result of the Division investigator’s findings with regard to Pryjomski, on or about April 22, 2008, a Business Records Request was made by the Division to GTC. In response to the records request, GTC provided documentation of its workers’ compensation coverage. Those records were reviewed by Russell Gray, the Department’s “Penalty Calculator.” Based upon his review of GTC’s records, it was found that GTC’s employees were covered for workers’ compensation insurance through an employee leasing service. The records provided by GTC also indicated, however, that GTC utilized the services of numerous subcontractors. A review of Department records concerning the subcontractors revealed that four of the subcontractors utilized by GTC did not meet coverage requirements: Christian Construction, Perez Painting, Pryjomski, and Tiles Etcetera. The accuracy of the penalty assessment proposed by the Department attributable to Christian Construction and Perez Painting was stipulated to by the parties, and GTC did not contest that amount of the penalty assessment attributable to those two subcontractors. Pryjomski As to Pryjomski, it was discovered that it had two Certificates of Liability Insurance (hereinafter referred to as “Certificates”), both with issuance dates after March 25, 2008, the date the Division’s investigator conducted the compliance check at GTC’s construction site. A 2007-2008 workers’ compensation policy was issued two days after March 25, 2008, and a 2006-2007 workers’ compensation policy was issued September 29, 2009. Obviously, these policies were obtained by Pryjomski because it had no coverage for 2006-2007 and 2007- 2008, as of March 25, 2008. Even if the policies obtained by Pryjomski had been effective prior to March 25, 2008, the policies were written by an out-of-state insurance company not licensed to write policies in Florida, and the policies did not have a Florida Endorsement under “Item 3A” of the declaration page of the policies. Any policy issued to an out-of-state business like Pryjomski must have an endorsement indicating that the foreign entity is paying Florida rates for Florida classification codes. This endorsement is found under “Item 3A” of the declaration page of a policy. The Pryjomski policies did not have the appropriate endorsement. At the times relevant to this matter, Pryjomski was not listed by the Department as a business with appropriate workers' compensation coverage in Florida. GTC could not, therefore, have exercised due diligence in an effort to ensure that Pryjomski had the required insurance coverage when it utilized Pryjomski’s construction services. If due diligence had been exercised, GTC would have been aware of Pryjomski’s lack of appropriate coverage. Based upon documentation provided by GTC, the Division calculated the total amount of Pryjomski’s “payroll” for which GTC was responsible. Absent any receipts for materials for which the payments were made by GTC to Pryjomski, the Division treated 20 percent of the payments as non-payroll pursuant to Florida Administrative Code Rule 69L-6.035(1)(i). Payroll for 2007, less materials, was determined to be $22,106.00. For 2008, payroll, less materials, was determined to be $10,811.93. Utilizing the “finish carpentry” classification code (number 5437) and the approved manual rate therefore of the National Council on Compensation Insurance of 13.01, the penalty for 2007 was determined to be $4,313.99. The rate for 2008 was determined to be 10.47, and the penalty was determined to be $1,698.02. Tiles Etcetera Tiles Etcetera had previously been issued a Certificate of Exemption from coverage for Gregory Veliz, the president of Tiles Etcetera. That Certificate, however, expired on August 23, 2007. Any contract amounts paid to Tiles Etcetera by GTC while the Certificate was in effect are not subject to assessment and have not been included in the penalty assessment in this matter. Amounts paid by GTC to Tiles Etcetera while the Certificate of Exemption had expired are subject to penalty. Based upon documentation provided by GTC, the Division calculated the total amount of “payroll” paid to Tiles Etcetera for which GTC was responsible. Absent any receipts for materials for which the payments were made by GTC to Tiles Etcetera, the Division treated 20 percent of the payments as non-payroll pursuant to Florida Administrative Code Rule 69L- 6.035(1)(i). Payroll for the period from August 24, 2007, to October 19, 2007, less materials, was determined to be $22,269.17. Utilizing the tile installation classification code (number 5438) and the approved manual rate therefore of the National Council on Compensation Insurance of 8.34, the penalty for 2007 was determined to be $2,786.88.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order: Finding that Respondent, Gary the Carpenter Construction, Inc., failed to secure the payment of workers’ compensation for its employees, in violation of Section 440.107, Florida Statutes; and Assessing a penalty against Gary the Carpenter Construction, Inc., in the amount of $11,122.74. DONE AND ENTERED this 31st day of March, 2009, in Tallahassee, Leon County, Florida. LARRY J. SARTIN 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 31st day of March, 2009. COPIES FURNISHED: Kristian E. Dunn, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Jerry D. Sanders, Esquire Vernis & Bowling of Key West, P.A. 604 Truman Avenue, Suite 3 Key West, Florida 33040 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issues to be resolved in this proceeding concern whether the Petitioner corporation's workers' compensation insurance policy was in compliance with the provisions of Chapter 440, Florida Statutes, cited below, despite not having a specific Florida endorsement; whether the Department properly issued a Stop Work Order against the Petitioner and whether the proposed penalty of $240,927.55 was properly assessed.
Findings Of Fact The Petitioner, American Coatings, Inc., is a commercial painting corporation based in Tennessee. It has been in business since 1994 in the State of Tennessee, and through a predecessor entity, since 1985. The Petitioner does business in other states, including the State of Florida, and in fact operates in approximately 14 states. It has done so since the year 2000. It has had no workers' compensation claims from any of its Florida work sites during the entire time it has operated in Florida. On February 19, 2008, the Petitioner was painting portions of the premises at "the Estates of Rockledge" in Rockledge, Florida. It had other operations in Florida in the three years prior to February 28, 2008. When the Petitioner applied for workers' compensation coverage in Tennessee, the Petitioner advised its broker and insurance carrier that it maintained operations in Florida. The workers' compensation carrier and agent provided certificates of workers' compensation insurance for the Petitioner's Florida operations which supported its good faith belief that it had valid workers' compensation insurance in Florida. Respondent presented no evidence that Mr. Carswell and the Petitioner have committed fraud, misrepresentation, or omission concerning the obtaining and maintaining of workers' compensation insurance coverage for its Florida operations. There was no attempt to conceal the fact that the Petitioner had insurable operations in Florida. For the three years prior to February 28, 2008, the Petitioner maintained a policy of workers' compensation insurance for all employees, including those employees that performed operations in Florida. A workers' compensation premium was paid for each employee in question for all periods in the three years preceding February 28, 2008. The Respondent is an Agency of the State of Florida responsible for enforcing the various statutory requirements of Chapter 440, Florida Statutes, including Sections 440.107 and 440.38, Florida Statutes (2007). Its authority includes Section 440.10(1)(a), Florida Statutes, which imposes upon all employers in Florida the obligation to secure the payment of workers' compensation. The Respondent is statutorily charged with the obligation to monitor employers operating in Florida, to ensure that statutory employers maintain appropriate workers' compensation coverage on employees. There is no dispute that the Petitioner, is an "employer" for purposes of Sections 440.02(16)(a) and 440.02(17)(b)2., Florida Statutes (2007). It was operating in the construction industry and regularly employed at least one person. Pursuant to the Division's statutory authority, Investigator Eugene Wyatt of the Department's Division of Workers' Compensation, Bureau of Compliance, visited the subject worksite in Brevard County, Florida, where an apartment complex was under construction. Mr. Wyatt inquired at the general contractor's headquarters trailer and was told that a painting subcontractor known as American Coatings was employing workers on the site. Using the Federal Employer Identification Number, Mr. Wyatt checked with the Department's Coverage and Compliance Automated System (CCAS) data base and learned that American Coatings, Inc. the Petitioner, which did business in Florida as A.C. Painting, Inc., did not have a record of a Florida workers' compensation coverage policy since December of 2003. Upon inquiry of the general contractor's supervisor at the job site, Mr. Wyatt learned that American Coatings, Inc., had furnished proof of insurance to the general contractor. It was shown as a certificate of liability insurance from American Coatings, in evidence as Department's Exhibit 17. Investigator Wyatt contacted the agent who had produced the Certificate of Insurance and asked if a Florida endorsement had been procured for that policy. He was told that the policy had a "an all states" endorsement. Mr. Wyatt then contacted the underwriter and was told that it was a policy for Tennessee and not for Florida (apparently Tennessee rates and codes applied). The investigator then contacted Benjamin Carswell, the President of the Petitioner. He informed him that in his view the company was not in compliance with the Florida requirement that workers' compensation policies covering Florida work and Florida employees be specifically endorsed for the State of Florida. He stated that he would issue a Stop Work Order, which he did on February 19, 2008. (SWO). The SWO was posted at the worksite and served personally on Mr. Carswell on February 21, 2008. After the Petitioner entered into an installment payment plan as to the penalty, the SWO was ended with an Order of Conditional Release, on February 28, 2008. The Petitioner sent a copy of consolidated insurance policy number WC8263193, by fax to Terrence Phillips, the chief of the Respondent's Orlando compliance office. The information page of this policy showed that only Tennessee was listed in item 3A of the policy. Item 3C stated that the policy was in effect in all other states, however, except for North Dakota, Ohio, Washington, West Virginia, and the states listed in item 3A. Item 4 listed various occupational classifications with their codes and the premium rates for each. The codes were for the State of Tennessee. The effect of these terms was that Florida was included in the category for "all other states." Florida Law requires that Florida be listed as a state in item 3A, and requires a policy to utilize Florida class codes, rates, rules, and manuals, in order for an employer to be compliant with workers' compensation coverage requirements of Chapter 440, Florida Statutes. Investigator Wyatt determined that compliance was deficient and that a penalty should be calculated and assessed. He therefore served a request for production of business records on Mr. Carswell on February 21, 2008. The business records were necessary to construct the payroll amounts and number of employees at issue, so that the penalty, based upon the Petitioner's Florida Payroll, could be calculated. Mr. Carswell believed in good faith, throughout all times pertinent to this matter that his company was compliant with Florida workers' compensation coverage requirements. After compliance was called into question, however, he also obtained an additional workers' compensation insurance policy, apparently obtained on or about February 20, 2008. It showed that coverage was effective, related back to May 1, 2007. Based upon this additional policy, the Petitioner provided Investigator Wyatt with an additional certificate of insurance for this policy. On March 6, 2008, Investigator Wyatt learned that the SWO was a duplicate and had to be substituted. A new SWO was issued as an amended SWO. A Second Amended Order of Penalty Assessment and an Amended Order of Conditional Release from SWO, under the second SWO number of 08-092-D4, was issued. Investigator Wyatt calculated the penalty by reviewing the business records supplied by the Petitioner and determining what each employee had been paid between February 23 and December 31, 2005; during all of 2006; during all of 2007 and between January 1, and February 22, 2008. Each employee's payroll, for each year or portion thereof, was divided by 100 and multiplied by an actuarial figure known as the "approved manual rate," which is related to the job duties the employee performed. In the case at hand, all the employees were engaged in commercial painting and, therefore, their classification codes were all 5474. Each trade, occupation or profession has a particular code assigned to it by the National Council on Compensation Insurance (NCCI) and each code has its own rate, the codes and rates being adopted in the Respondent Agency's Rules. The product of one one-hundredth of the gross payroll, and the approved manual rate, constitutes the "evaded premium." In effect this is the insurance premium the employer should have paid during the years it did not actually secure the appropriate payment of workers' compensation for its Florida Employees (proper Florida or Florida-endorsed coverage). Each employee's premium added together was then multiplied by the statutory factor of 1.5 in order to determine the total penalty amount the Respondent seeks to assess. The penalty amount herein was calculated using the correct Florida Approved Manual Rate and class codes. The Respondent established that its calculations indicated that, for the Florida employees of the Petitioner, based upon its Florida payrolls for the three year period in question, the total workers' compensation premium, under the Florida rate, would be in the amount of $160,618.15. Based upon that Florida workers' compensation premium amount, when multiplied by the statutory factor of 1.5 times that amount, the Respondent arrived at a total proposed assessed penalty of $240,927.55. The Petitioner established, through the testimony of Mr. Carswell that, for the time period at issue, for the Florida employees and payroll, the Petitioner had paid workers' compensation premiums of $111,682.21 for the coverage it had in effect. It acknowledges that this was not paid pursuant to Florida rates, rather it was based upon Tennessee rates. It is the position of the Petitioner that the difference in premiums. between the above Florida premium amount, and the premium that the Petitioner actually paid, was $48,935.94. The Petitioner maintains that this differential is what really should be determined to be the unpaid or "evaded" premium, based upon Florida rates, and, if that amount was multiplied by 1.5 then the total penalty actually due should be $73,403.91. An initial penalty payment of $24,092.76 has already been made by the Petitioner. Periodic penalty payments, assessed beginning March 2008, and continuing, have been paid in the amount of $36,139.40. The total penalty already paid by the Petitioner, as of the hearing date, is thus $60,232.16. The Petitioner contends that the actual penalty to be paid should be based upon the differential between the correct total premium due, when using the correct Florida manual rate, and the total premium actually paid by the Petitioner, which, when applied in the above-referenced calculation results in the penalty due of $73,402.91. This would then be reduced by $60,232.17, the amount already paid, for a total remaining amount due of $13,171.75, as of the hearing date.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, finding that the Petitioner failed to fully secure the payment of workers' compensation for its employees in the manner prescribed by the above-referenced authority and that a penalty in the amount of $73,402.91 is due, less a credit of $60,232.16 already paid, and with credit applied to the above amount for penalty payments made since January 28, 2009. DONE AND ENTERED this 5th day of May, 2009, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of May, 2009. COPIES FURNISHED: Robert L. Dietz, Esquire Zimmerman, Kiser & Sutcliffe, P.A. Post Office Box 3000 Orlando, Florida 32802 Thomas H. Duffy, Esquire Douglas D. Dolan, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Tracey Beal, Agency Clerk Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Honorable Alex Sink Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The Principal issues in this matter are whether the Department of Financial Services, Division of Workers’ Compensation acted appropriately and within its’ statutory authority when it entered the Second Amended Order of Penalty Assessment and Stop-Work Order against the Petitioner for failing to secure workers’ compensation insurance for their employees when 4 tequired by Florida law, and whether any provisions of the Florida Workers’ Compensation Law provide for the mitigation or rescission of penalties against the Petitioner. 1 PRELIMINARY STATEMENT. This proceeding arose out of the requirement in Florida workers’ compensation law that employers must secure the payment of workers’ compensation insurance for the protection of their employees. The Petitioner in this matter is a Florida corporation currently doing business as a neighborhood food and convenience store in Fort Walton Beach, Florida. On April 26, 2011, Larry Eaton, a Compliance Investigator for the Florida Department of Financial Services, Division of Workers’ Compensation conducted a random job site workers’ compensation compliance investigation at the Petitioner’s place of business. After concluding the Petitioner had four (4) employees and did not maintain workers’ compensation insurance, the Department issued a Stop-Work Order and delivered a request for the production of business records. The Petitioner and their accountant cooperated with the Department’s investigation and provided records that were used to determine the mandated statutory monetary penalty for failing to maintain workers’ compensation insurance. The Petitioner then executed a penalty payment plan with the Department and also came into compliance with Florida’s Workers’ Compensation Law. The Petitioner has consistently objected to the Departments mandated statutory penalty as excessive, in violation of both the Florida and Federal Constitution, and contrary to the “principle of proportionality”. The Department originally referred this matter to this Hearing Officer for a F.S. 120.57(2) informal hearing, but that matter was closed when the Parties agreed a disputed issue of fact existed. This matter was then forwarded to the Florida Division of Administrative Hearings to hold a formal hearing pursuant to F.S. 120.57(1), and after discovery, the Administrative Law Judge closed his file after a finding there were no disputed issues of material fact. This matter was again assigned to this Hearing Officer to hold a telephonic informal hearing pursuant to Section 120.57(2), Florida Statutes, which occurred on November 1, 2011. Both Parties timely submitted Proposed Recommended Orders. EXHIBITS AND WITNESSES The Department submitted Eleven (11) Exhibits that are admitted into evidence without objection and include the following: Respondents Exhibit |: A copy of the Petitioner’s corporate status as contained within the Florida Secretary of State Records, dated April 26, 2010, the same day as the Departments random workers’ compliance Investigation. Respondent’s Exhibit 2: A two (2) page April 26, 2010, printout from the Department’s Financial Services Coverage and Compliance Automated System (“CCAS”) database for Mubarak Trading Corporation, Inc. teflecting no evidence of workers’ compensation insurance coverage and no exemptions from coverage. Respondent’s Exhibit 3: A copy of the Department’s hand delivered April 26, 2010 Stop- Work Order. Respondents Exhibit 4: A copy of the Department’s hand delivered April 26, 2011, Request for Production of Business Records for Penalty Assessment Calculation. Respondents Exhibit 5: A twenty six (26) page composite exhibit of the Petitioner’s payroll and -business records provided to the Department’s workers’ compensation compliance investigator. Respondent’s Exhibit 6: A copy of the Department’s May 12, 2010 Amended Order of Penalty Assessment hand delivered to the Petitioner on May 13, 2010. Respondent’s Exhibit 7: A copy of the Department’s’ Payment Agreement Schedule for Periodic Payment of Penalty executed by the Petitioner on May 13, Respondent's Exhibit 8: Respondent’s Exhibit 9: Respondent’s Exhibit 10: Respondent’s Exhibit 11: 2010, wherein the Petitioner paid Eighteen Hundred ($1,800.00) dollars as a ten percent (10%) down-payment on the Department’s Administrative Penalty. A copy of the Department’s Order of Conditional Release From Stop-Work Order dated May 13, 2010, that was entered after the execution and payment reflected in Respondent's Exhibit 7. A copy of the Department’s Second Amended Order of Penalty Assessinent dated February 2, 2011. A five (5) page excerpt from the National Council on Compensation Insurance, Inc. (“NCCI”) Scopes Manual description of Classification Code 8017 (Retail Store). A forty-nine (49) page excerpt of NCCI approved Manual Rates for Classification Code 8017, used in the calculation of the Department’s May 12, 2010, Amended Order for Penalty Assessment and February 2, 2011, Second Amended Order of Penalty Assessment. The Petitioner submitted two (2) exhibits that were admitted into evidence and consist of the following: Petitioner’s Exhibit 1: Petitioner’s Exhibit 2. A two (2) page copy of the Petitioner’s timely filed request for an informal proceeding to contest his administrative penalty, pursuant to Section 120.57(2), Florida Statutes, A four (4) page May 5, 2011, letter of tax representation from Mr. Chris Marsh and Mr. James Marsh, who provide accounting and tax services for and on behalf of Mubarak ‘Trading Corporation, Inc. The Department called two (2) witnesses to testify at the telephonic informal hearing, including Mr. Larry Eaton, a workers’ compensation compliance investigator for the Department, and Mrs. Michelle Newcomer, a workers’ compensation penalty calculator for the Department. The Petitioner offered the testimony of its’ President Ziad (“Mike”) Mubarak, as well as their tax advisors, Mr. Christopher Marsh, and Mr. James Marsh. Both Parties submitted Proposed Recommended Orders. FINDINGS OF FACT. Pursuant to Section 440.107, Florida Statutes, the Respondent is the state agency tesponsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. The Petitioner is a Florida corporation that first registered with the Florida Department of State on July 15, 1993, and was in good-standing on April 26, 2010, the date on which the Department conducted their random workers’ compensation compliance investigation. (Respondent’s Exhibit 1.) On April 26, 2011, the Respondents Workers’ Compensation Compliance Investigator, Mr. Larry Eaton, conducted a random compliance investigation at the Principal Business Address of Mubarak Trading Corporation, Inc., in Fort Walton Beach, Florida. (Respondent’s Exhibit’s 2, 3, and 4.) Upon entering the Petitioner’s work-place on April 26, 2011, the Department’s compliance investigator conducted a field interview, as well as a database search to confirm the existence of four (4) employees of Mubarak Trading Corporation, Inc., and the lack of either workers’ compensation insurance or exemptions from workers? compensation insurance coverage. (Respondent’s Exhibits 2, 3, and 4.) Upon finding four (4) employees and no workers’ compensation insurance coverage for those employees, the Department’s compliance investigator hand delivered an April 26, 2010, Stop Work Order, as well as a Request for Production of Business Records for Penalty Assessment Calculation seeking payroll information for the past three (3) years. (Respondent’s Exhibits 3 and 4.) The Petitioner provided business records to the Department in response to their Request, and based on those records, an Amended Order of Penalty Assessment was hand delivered to the Petitioner on May 13, 2010, in the amount of Seventeen Thousand Seven Hundred Ninety One and 76/100 Dollars ($17,791.76). (Respondent’s Exhibits 5 and 6.) Under protest, and in the effort to remove the Department’s April 26, 2010, Stop Work Order, the Petitioner executed a Payment Agreement Schedule for Periodic Payment of Penalty on May 13, 2010, paying Eighteen Hundred Dollars ($1,800.00) to the Department as a ten percent (10%) down-payment of the administrative penalty. (Respondent’s Exhibit 7.) The Petitioner did not purchase a policy of workers’ compensation insurance, but instead the Corporation’s President obtained an exemption from the requirement of being covered by workers’ compensation insurance. With only three (3) remaining non- exempt employees, Florida law does not require an underlying worker’s compensation insurance policy, and Mubarak Trading Corporation, Inc., was no longer in violation of Florida Workers’ Compensation Law. , Mrs. Michelle Newcomb, Penalty Calculator for the Florida Department of Financial Services, Division of Workers’ Compensation, Bureau of Compliance, was assigned the task of calculating the statutory penalty to be assessed against Mubarak Trading Corporation, Inc., for failing to secure workers’ compensation insurance. Utilizing NCCI Class Code 8017 for retail stores, the appropriate NCCI premium pages for Class Code 8017, and the documentation provided by the Petitioner, the Department calculated the mandated statutory penalty of Seventeen Thousand Seven Hundred Ninety One and 76/100 ($17,791.76) in their May 12, 2010, Amended Order for Penalty Assessment (Respondent’s Exhibit 6, 10 and 11.) The Department’s administrative penalty was ultimately adjusted downward to Sixteen Thousand, Four Hundred Twenty Nine and 44/100 Dollars ($16,429.76), as reflected in the Department’s February 2, 2011, Second Amended Order of Penalty Assessment. (Respondents Exhibit 9.) There are no disputed issues of material fact in this matter. The Petitioner’s Proposed Recommended Order acknowledges “[t]he calculation of the Section 440.107(7)(d) penalty is not in question...” The Petitioner has consistently objected to the “excessive” amount of the Department’s penalty, challenged the Department’s authority to assess unconstitutional penalties, and argues the penalty assessed violates the “principle of proportionality.”
Conclusions Christopher O. Marsh, Econotax 139 Beal Parkway SE, Ste. 102 ne Fort Walton Beach, Florida 32548 f Representative for Mubarak Trading Corp, Inc. Jamila Georgette Gooden, Esq. Florida Department of Financial Services Division of Legal Services Tallahassee, Florida 32399-4429 Attorney for the Florida Department of Financial Services, Division of Workers’ Compensation
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that a Final Order be entered affirming the Division of Workers’ Compensation Second Amended Order of Penalty Assessment in the amount of Sixteen Thousand Four Hundred Twenty Nine and 44/100 Dollars ($16, 429.44). Respectfully submitted this 19" day of December, 2011. Department of Financial Services 3700 Lifford Circle Tallahassee, Florida 32309 Phone: (850)668-9820 Fax: (850)668-9825 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the above and foregoing Recommended Order has been provided by US Mail to: Mr. Christopher Marsh, Econotax, on behalf of Mubarak Trading Corporation, Inc., 139 Deal Parkway, SE, Suite 102, Fort Walton Beach, Florida 32548 and via hand delivery in the interests of judicial economy to Alexander Brick, Esq. Department of Financial Services, Division of Legal Services, 200 East Gaines Street, Tallahassee, FL 32399-4429 this 19" day of December, 2011. Alan J. ~ 2h -13-
The Issue The issue in these consolidated cases is whether two Petitions for Resolution of Reimbursement Dispute are entitled to be considered on the merits, or whether, instead, they should be dismissed.
Findings Of Fact The Department is the state agency with exclusive jurisdiction to resolve reimbursement disputes between health care providers and carriers under section 440.13(7), Florida Statutes (2019),2/ part of the Workers' Compensation Law. Dr. Aponte is a physician. As such, he is a health care provider, as defined in section 440.13(1)(g). Dr. Aponte operates a business called Body Contouring, Inc., at which he provides medical services to patients, including injured workers. Sedgwick Claims Management Services, Indemnity Insurance Company of North America, The Hartford Medical Bill Processing Center, and Twin City Fire Insurance Company are carriers, as defined in section 440.13(1)(c). At issue in both cases are bills submitted by Dr. Aponte to one of the referenced carriers for services provided to injured workers, which were paid, in part, and adjusted by the carrier. In each case, Dr. Aponte was notified of the adjustments to each bill by means of an Explanation of Bill Review (EOBR) from the carrier explaining why his bill was not fully paid. If a health care provider such as Dr. Aponte is dissatisfied with a carrier's adjustment or disallowance of charges on a bill for services to an injured worker, the provider's recourse is to serve a Petition for Resolution of Reimbursement Dispute on the Department within 45 days after the provider receives the EOBR. In both consolidated cases, Dr. Aponte seeks to contest certain carrier adjustments to bills submitted for services he rendered to injured workers. The specific adjustments he seeks to contest are reductions to his charges that were explained in EOBRs as being made pursuant to a contractual arrangement. Each EOBR making this adjustment identified a preferred provider organization (PPO) network--Coventry Pend and Transmit, or Coventry P&T--and each EOBR explained that the PPO reduction was made pursuant to the terms of Dr. Aponte's/Body Contouring, Inc.'s contract with Aetna. Dr. Aponte seeks to contest these PPO reductions because he claims that the contract with Aetna was terminated. The merits of the reimbursement disputes are not at issue, however. The sole issue presented is whether the Department should accept Dr. Aponte's petitions and proceed to resolve the reimbursement disputes presented. Case No. 19-1517 On May 2, 2018, an injured worker had a 15-minute outpatient office visit with Dr. Aponte at Body Contouring, Inc. Dr. Aponte submitted a bill for the 15-minute outpatient office visit to the employer's carrier. The billed amount was $125.00. The bill was adjusted by the carrier for two reasons explained in an EOBR issued on May 11, 2018. The carrier reduced the charge because it exceeded the fee schedule allowance in the Florida Workers Compensation Health Care Provider Reimbursement Manual (Provider Manual). The carrier also reduced the charge by an additional $25.37, based on a written contractual arrangement. The EOBR identified the "PPO Network" as Coventry Pend and Transmit, or Coventry P&T, and the explanatory notes indicated that the Coventry P&T PPO reduction was "in accordance with your Aetna contract." After the two adjustments, Dr. Aponte was paid $54.63. The May 11, 2018, EOBR included the notice required by the Department for carrier EOBR forms. The notice specified that the health care provider may elect to contest the disallowance or adjustment of payment under section 440.13(7), and that such an election must be made by the provider within 45 days of receipt of the EOBR. Dr. Aponte did not timely serve a Petition for Resolution of Reimbursement Dispute on the Department to contest the adjustments in the May 11, 2018, EOBR. Instead, he communicated directly with the carrier. Ultimately, on February 6, 2019, Dr. Aponte resubmitted the same bill to the carrier for the 15-minute outpatient office visit on May 2, 2018, with the same $125.00 charge, and asked the carrier to reconsider. That same day--February 6, 2019--the carrier issued a second EOBR. The EOBR indicated that payment of the resubmitted $125.00 bill was disallowed in its entirety, and gave the following explanation: "billing error: duplicate bill." Dr. Aponte prepared a Petition for Resolution of Reimbursement Dispute on the form required by the Department (incorporated by reference in a rule), and served it on the Department on February 8, 2019. Dr. Aponte's petition asserted that the EOBR he was contesting was received on February 6, 2019, which was the date on which the second EOBR was issued. Dr. Aponte identified a single issue in dispute: whether the carrier improperly adjusted the charge by applying a PPO network reduction of $25.37. Dr. Aponte contended that "there is no contract between Luis Aponte, MD/Body Contouring[,] Inc.[,] and Coventry." However, the PPO network adjustment was not made in the February 6, 2019, EOBR. The adjustment Dr. Aponte wanted to contest was made in the May 11, 2018, EOBR. Dr. Aponte attached both the May 11, 2018, EOBR and the February 6, 2019, EOBR to his petition. He added the following explanation for attaching the two EOBRs: "A petition for resolution of reimbursement dispute was previously submitted to the FL Dept. Financial Services on 07/30/18 initiating this reimbursement dispute." The Department reviewed the petition and attachments to determine if the petition was timely served. Since the 45-day window to serve a petition begins to run upon receipt of the EOBR, the Department has a "computation of time" rule providing alternative ways for a provider to prove the date of EOBR receipt. See Fla. Admin. Code R. 69L-31.008. One way is by showing a date stamp affixed by the provider to the EOBR on the date of receipt. Another way is through a verifiable login process. The third way is to show the postmark date on the envelope in which the EOBR was received, in which case five calendar days is added to the postmark date to allow for mail time. If the provider does not utilize one of these three methods to prove the date of receipt, the Department will use the "default" method in its rule, whereby the EOBR receipt date is deemed to be five calendar days after the date on which the EOBR was issued. Dr. Aponte did not utilize one of the three options in the Department's rule, which are set forth in the form petition, to prove the dates on which he received either EOBR. As noted above, he completed the petition by giving only the date on which he received the second EOBR. The Department applied the default method in its rule to determine the receipt date of the first EOBR, which is the EOBR that made the PPO reduction adjustment sought to be challenged. The Department determined that Petitioner was deemed to have received the first EOBR on May 16, 2018. Accordingly, the deadline for serving a petition to contest the adjustments in the May 11, 2018, EOBR was June 30, 2018, 45 calendar days after May 16, 2018. The Petition for Resolution of Reimbursement Dispute at issue in this case, served on the Department on February 8, 2019, was more than seven months too late.3/ Petitioner offered no evidence or argument to excuse his untimely submittal. Case No. 19-2653 Dr. Aponte provided services to an injured worker at Body Contouring, Inc., on October 10, 2018, and October 31, 2018, for which Dr. Aponte submitted bills to the employer's carrier. Bill for Services on October 10, 2018 On October 10, 2018, Dr. Aponte saw the patient for an outpatient office visit at Body Contouring, Inc., at which Dr. Aponte provided prolonged evaluation and management (E&M). Dr. Aponte's charges submitted to the carrier were $450.00 for the office visit and $220.00 for the prolonged E&M service. An EOBR was issued on November 16, 2018, adjusting both charges for two reasons explained in the EOBR. Both charges were reduced because they exceeded the fee schedule in the Provider Manual. Both charges were further reduced by a total of $79.91 pursuant to a written contractual arrangement. The EOBR explained these adjustments as Coventry P&T PPO reductions "in accordance with your Aetna contract." After the adjustments, Dr. Aponte was paid $260.09. The 45-day deadline to serve a petition on the Department to contest the adjustments explained in the November 16, 2018, EOBR was January 5, 2019 (using the default methodology to determine the EOBR receipt date in the absence of any other evidence). Dr. Aponte did not timely serve a Petition for Resolution of a Reimbursement Dispute on the Department to contest the adjustments in the November 16, 2018, EOBR. Instead, he communicated directly with the carrier and requested a re- evaluation of the bill. The carrier issued a second EOBR on December 31, 2018, disallowing payment of both line item charges on the resubmitted bill. The explanation in the EOBR for disallowing payment was "billing error: line item service previously billed and reimbursement decision previously rendered." Bill for Services on October 31, 2018 On October 31, 2018, Dr. Aponte saw the same injured worker for another outpatient office visit at Body Contouring, Inc., at which the patient received two injections. Dr. Aponte's charges submitted to the carrier were: $300.00 for the office visit; $330.00 for one injection; and $100.00 for the other injection. An EOBR was issued on November 21, 2018, adjusting the office visit charge and disallowing the two injection charges, for reasons explained in the EOBR. The $300.00 office visit charge was reduced because it exceeded the fee schedule allowance in the Provider Manual. The charge was further reduced by $48.16, pursuant to a written contractual arrangement. The EOBR explained the latter reduction as a Coventry P&T PPO reduction, "in accordance with your Aetna contract." The EOBR also explained that both injection charges were disallowed because the documentation did not substantiate that the services billed were rendered. After the adjustments and the disallowances, Dr. Aponte was paid $110.84. The 45-day deadline to serve a petition on the Department to contest the adjustments or disallowances in the November 21, 2018, EOBR was January 10, 2019 (using the default methodology to determine the EOBR receipt date in the absence of any other evidence). Dr. Aponte did not timely serve a petition for resolution of a reimbursement dispute on the Department to contest the adjustments in the November 21, 2018, EOBR. Instead, he communicated directly with the carrier and requested a re- evaluation of the bill. The carrier issued another EOBR on December 27, 2018, disallowing payment of the resubmitted bill for services rendered on October 31, 2018. The reason given for disallowing payment as to each of the three charges on the bill was "billing error: line item service previously billed and reimbursement decision previously rendered."4/ Dr. Aponte prepared a Petition for Resolution of Reimbursement Dispute on the required form, seeking to contest the PPO adjustments made to the bills for services rendered to the same injured employee on October 10 and 31, 2018. He attached only the final re-evaluation EOBRs, issued December 31, 2018 (for the bill for services on October 10, 2018), and December 27, 2018 (for the bill for services on October 31, 2018). Dr. Aponte named the Petitioner as "Luis Aponte/Body Contouring, Inc." The instructions on the form specify that the named Petitioner must be a health care provider as defined in section 440.13(1)(b). Dr. Aponte gave a single date--January 7, 2019--as the EOBR receipt date. However, he did not select the method used to establish the EOBR receipt date, as provided in the form petition. The form instructs that if the EOBR receipt date is not established by one of the specified methods, then the EOBR receipt date will be deemed to be five days from the issue date on the EOBR. Dr. Aponte identified the issue in dispute as the PPO adjustments applied to the bills. However, neither of the re- evaluation EOBRs attached to the petition made any PPO adjustment. Dr. Aponte identified the disputed amount of the PPO adjustments as $162.69. That is the sum of the PPO adjustments made in the November 16, 2018, EOBR ($79.91), the November 21, 2018, EOBR ($48.16), and the December 7, 2018, EOBR ($34.62) (see endnote 4). Dr. Aponte did not attach any of the EOBRs that made the disputed PPO adjustments, but he did attach a letter that he identified and explained as follows: "A copy of the contract termination notice sent to Aetna has been provided."5/ The Department reviewed the petition for completeness. The Department evaluator noted that the attached EOBRs were identified as "Re-evaluation" EOBRs that did not make the disputed PPO adjustments. However, no timeliness determination could be made because the EOBRs that explained the PPO adjustments were not attached. In addition to failing to attach the relevant EOBRs, the petition was found to also be deficient in several other respects. The Department identified all perceived deficiencies in a Notice of Deficiency sent to Dr. Aponte by certified mail. He was instructed to correct all of the deficiencies within ten days after his receipt of the notice. Dr. Aponte timely responded, and cured all perceived deficiencies except one. The Department had found the petition deficient because it named as the petitioner "Luis Aponte/Body Contouring, Inc." However, the instructions on the form petition emphasize that the named petitioner had to be a "health care provider" as defined in section 440.13(1)(g). The Notice of Deficiency required a new form petition curing "Petitioner name and mailing address. This is the provider name, not the business name." The directive is not very clear. It could be interpreted as describing what is in the petition Dr. Aponte submitted ("This is"), instead of describing what should have been in the petition. Dr. Aponte's transmittal letter, listing the documents enclosed to cure the deficiencies, states that he provided a completed petition with the Petitioner's name and address. The transmittal letter was signed, with the following typed on two separate lines below the signature line: "Luis Aponte, MD" and "Body Contouring, Inc." The enclosed petition, however, named the Petitioner in the same manner as in the original petition: "Luis Aponte/Body Contouring, Inc." The undersigned appreciates the Department's concern that a Petition for Resolution of Reimbursement Dispute must be submitted by a "health care provider" meeting the statutory definition. But in this instance, the Department was well aware that the health care provider was Luis Aponte, M.D., as were the carriers involved in reviewing and adjusting his bills, and issuing the EOBRs that Dr. Aponte is seeking to contest. Indeed, the Department's initial decision, set forth in a Reimbursement Dispute Dismissal, names the Petitioner as "Luis Aponte, M.D." The Department's Reimbursement Dispute Dismissal recites that Dr. Aponte failed to provide the curative documentation as required in the Notice of Deficiency. At hearing, the Department, through its evaluator who signed the Reimbursement Dispute Dismissal, testified that the sole deficiency not cured by Dr. Aponte was to name a petitioner that met the definition of a "health care provider." According to the Department, Dr. Aponte needed to add "M.D." after his name on the petition (as he did in the transmittal letter). The Department's evaluator also testified that since she determined that the petition had to be dismissed for failure to cure this deficiency, she did not go on to address the timeliness issue that could not be determined previously without the relevant EOBRs. Had the evaluator determined the deficiencies to be cured, she would have proceeded to assess the relevant EOBRs, which were provided by Dr. Aponte in response to the deficiency notice. She would have determined that the petition was not served on the Department within 45 days of receipt of the EOBRs that explained the contested PPO adjustments, and she would have dismissed the petition as untimely. Based on the Department's evidence and an independent assessment of the facts by which timeliness is determined, the undersigned finds that Dr. Aponte's petition, served on February 8, 2019, was not timely. The 45-day deadlines to serve petitions contesting the PPO adjustments explained in three different EOBRs were: January 5, 2019 (for the November 16, 2018, EOBR); January 10, 2019 (for the November 21, 2018, EOBR); and January 19, 2019 (for the December 7, 2018, EOBR). Dr. Aponte's petition was untimely, and not just by a day or two, but by at least 20 days. He offered no evidence or argument to excuse his untimely submittal.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered in these consolidated cases by the Department of Financial Services, Division of Workers' Compensation, dismissing as untimely the Petitions for Resolution of Reimbursement Dispute submitted by Petitioner, Luis Aponte, M.D. DONE AND ENTERED this 4th day of October, 2019, in Tallahassee, Leon County, Florida. S ELIZABETH W. MCARTHUR 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 4th day of October, 2019.
The Issue The issue is whether Petitioner violated Chapter 440, Florida Statutes, by not having workers' compensation insurance coverage, and if so, whether the Agency's calculation was proper and accurate based on the methods used to establish the payroll for Petitioner and the resulting penalty.
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. All Florida is a corporation operating as a land clearing and tree trimming or tree debris removal business in Florida. Alan McPherson is the sole owner and president of All Florida. On August 30, 2007, as a result of an anonymous tip, Denise McNeal, a workers' compensation investigator for the Division went to a land clearing site at 4441 Club Estates Drive in Naples, Florida, where an All Florida crew of workers was clearing the land using heavy equipment, to determine whether the workers had workers' compensation coverage. She interviewed approximately 11 employees who were working at the site. Ms. McNeal made inquiry into the employment relationships of these workers and attempted to determine whether the workers on the site were covered by appropriate workers' compensation insurance. After Ms. McNeal had been at the site for approximately an hour, Mr. McPherson arrived. Mr. McPherson indicated that All Florida had workers' compensation insurance through AMS Leasing. Ms. McNeal conducted a search in the Coverage and Compliance Automated System (CCAS), a database that reliably reveals whether or not there is coverage by a workers' compensation policy of insurance. The search revealed that All Florida did not have its own workers' compensation insurance and AMS was not covering the workers either. All Florida had failed to fax the employee information to AMS to start the coverage for the employees. Based on the information Ms. McNeal had at the time, and after consulting with her supervisor, Ms. McNeal issued SWO number 07-269-D7 to All Florida and a Request for Production of Business Records for Penalty Assessment Calculation ("Request for Business Records"). The Division's request asked All Florida to produce business records for the period of August 30, 2004, through August 30, 2007, including payroll records, tax returns, proof of insurance, and certificates of exemption. The Request for Business Records listed specific records that All Florida should provide the Division so that the Division could determine the workers paid by All Florida during the preceding three years. The Request for Business Records notes that the requested records must be produced within five business days of receipt. All Florida did not respond to the Division's Request for Business Records on time. On or about September 25, 2007, All Florida produced its first set of documents. At that time, Ms. McNeal did not calculate the penalty amount and deemed the records insufficient to calculate penalty. On October 1, 2007, All Florida produced a second set of business records. Ms. McNeal reviewed the records produced by All Florida and calculated a penalty of $466,262.62 for failure to obtain workers' compensation coverage. The next day, Mr. McPherson provided additional business records and Ms. McNeal recalculated the penalty again. The new penalty amount was $324,080.01 and Ms. McNeal personally served All Florida with the penalty assessment. On October 2, 2007, All Florida entered into an agreement with the Division, which consisted of putting ten percent of the penalty amount down, demonstrating proof of coverage, and agreeing upon a conditional payment plan. After reaching the agreement, All Florida was conditionally released from the SWO and permitted to resume operations because it had cured all its violations. Subsequently, All Florida provided the Division additional business records. The Division calculated a third amended penalty assessment on October 17, 2007, in the amount of $300,450.24. On November 28, 2007, Ms. McNeal had to recalculate the third amended penalty amount because she discovered an error in her use of class code 5606. She recalculated the penalty amount with the proper class code 6217, changed Alan McPherson's earnings to "payroll/premium cap" and added remuneration for Dana McPherson. The other proper class codes Ms. McNeil used in her calculations were 8742 and 8810. In Ms. McNeal's calculations, she used the business records submitted by All Florida and figured the gross payroll for the period she found to be the period of noncompliance, in the case of each assumed employee, and divided that amount by She multiplied that figure by the approved manual rate (risk of injury) for each claimed employee. This figure was multiplied by 1.5 in order to obtain the penalty for failure to obtain workers' compensation coverage for each employee. The figures for each employee used in the calculation were added and resulted in the total penalty assessment of $281.903.32, which was the ultimate sum reported in the 4th Amended Order of Penalty Assessment at issue in this case. Ms. McNeal used the correct calculation methods to determine the assessed penalty. Ms. McNeal's calculations for the 4th Amended Penalty amount were accomplished in accordance with the requirements of Subsection 440.107(7), Florida Statutes, and Florida Administrative Code Rule 69L-6.035. All Florida submitted Account QuickReport business records detailing the checks cut from the business to individuals, the amounts, dates, and a brief description. Ms. McNeal used the records to calculate payroll for the 4th Amended Order of Penalty Assessment. She correctly excluded the check if the memo description listed the payment was for something other than payroll, if the check was written to a company name, or if the check was written to a subcontractor that had an exemption. Ms. McNeal included the payment by All Florida to each individual whose name was highlighted in blue as set forth in Petitioner's exhibit 8 (hereinafter referred to as "highlighted subcontractors") as payroll in her calculation of penalty.2 Dana McPherson’s $540,000.00 was also included in the gross payroll calculations. Mr. McPherson conducted All Florida business by contracting with municipalities to get jobs. Then, All Florida would give the work from the contract to individuals and companies with their own equipment and employees to perform and complete the job for the contract. All Florida hired the highlighted subcontractors by oral contracts and did not have time to check the highlighted subcontractors' statuses because the company was inundated with contract work, on a tight schedule, and wanted to get the jobs started as soon as possible. There was a great demand for debris clearing due to the consecutive hurricanes and their devastation, which provided All Florida numerous land clearing contract opportunities. Prior to Florida Administrative Code Rule 69L-6.035 becoming effective, the Division determined payroll by reviewing the actual business records that were provided by the employer. If the actual cost of the payroll and materials or equipment rental were separated, the Division would only utilize the amount identified as payroll for payroll. If the payroll was not separated out, the whole amount was used as payroll in the calculation of penalty.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation enter a final order: Finding that All Florida violated Chapter 440, Florida Statutes, by failing to secure the payment of workers' compensation coverage for its employees; Finding that a penalty be imposed for the violation; and Calculating the penalty amount using the law that was in effect at the time the violation took place. DONE AND ENTERED this 16th day of June, 2008, 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 16th day of June, 2008.
