The Issue Whether Petitioner, Moncrief Bail Bonds, Inc., conducted business operations in the State of Florida without obtaining workers' compensation coverage, meeting the requirements of Chapter 440, Florida Statutes (2005), in violation of Subsection 440.107(2), Florida Statutes (2002 through 2005). If so, what penalty should be assessed by Respondent, Department of Financial Services, Division of Workers' Compensation, pursuant to Section 440.107, Florida Statutes (2005),1 and Florida Administrative Code Rule, Chapter 69L.
Findings Of Fact Respondent is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees. § 440.107, Fla. Stat. Petitioner is a corporation domiciled in Florida, and engaged in the business of issuing bail bonds. On August 3, 2005, Respondent's investigator, Robert Cerrone, visited Petitioner's office location at 3910 South John Young Parkway, Orlando, Florida, on a referral from his supervisor. He interviewed a number of persons at the office site. Cerrone documented his investigation in the narrative of his Initial Investigative Report. Based upon these field interviews, Respondent determined that the workers were employed by Petitioner. Cerrone contacted Petitioner's president, Russell Bruce Moncrief, and inquired whether Petitioner had secured the payment of workers' compensation, to which Moncrief responded that he had never secured the payment of workers' compensation for his business. Subsequent to the site visit, it was determined that Petitioner did not have a State of Florida workers' compensation insurance policy to provide workers' compensation coverage for any of its workers. Florida law requires that an employer who has four or more employees, engaged in non-construction work in Florida, obtain a Florida workers' compensation policy. Petitioner was an employer, with four or more employees, all of whom were paid remuneration, during all times material to the instant case. Florida Administrative Code Rule 69L-6.019(2) requires that in order for an employer to comply with Subsections 440.10(1)(g) and 440.38(7), Florida Statutes, any policy or endorsement used by an employer to prove coverage of workers' compensation for employees engaged in Florida work, must be issued by an insurer that holds a valid certificate of authority in the State of Florida. Chapter 440, Florida Statutes, allows an individual to apply for an election to be exempt from workers' compensation benefits. Only the named individual on the application is exempt from carrying workers' compensation insurance coverage. During the relevant time period, there were no current, valid exemptions for Petitioner. 11. Subsections 440.107(3) and 440.107(7)(a), Florida Statutes, authorize Respondent to issue Stop-Work Orders to employers unable to provide proof of workers' compensation coverage. Failure to provide such proof is deemed "an immediate serious danger to public health, safety, or welfare " On August 3, 2005, Respondent issued and served on Petitioner a SWO and Order of Penalty Assessment for failing to obtain coverage that meets the requirements of Chapter 440, Florida Statutes, and the Insurance Code, Chapter 624, Florida Statutes. Also at that time, Cerrone issued a Request for Production of Business Records for Penalty Assessment to Petitioner, seeking business records for the period August 3, 2002, through August 3, 2005. Employers conducting business in Florida are required to keep business records that enable Respondent to determine whether the employer is in compliance with the workers' compensation law. Petitioner complied with the records request and provided Respondent with the requested payroll records for the time period between August 3, 2002, and August 3, 2005. Utilizing the records provided, and applying the statutorily mandated penalty calculation methodology, the penalty for Respondent was calculated by assigning a class code to the type of work conducted by the employees, utilizing the manual approved by rule. The approved manual rate was multiplied by the wages paid to the employee per one hundred dollars, and the product therof was then multiplying by 1.5. The Amended Order, which assessed a penalty of $51,499.34, was personally served on Petitioner on August 4, 2005. On August 12, 2005, Petitioner entered into a Payment Agreement Schedule for Periodic Payment of Penalty, and was issued an Order of Conditional Release from the SWO by Respondent. Petitioner made a down payment of ten percent of the assessed penalty, provided proof of compliance with Chapter 440, Florida Statutes, by obtaining six exemptions for officers of the corporation, and agreed to pay the remaining penalty in 60 equal monthly installments. The entities listed on the Amended Order penalty worksheet were Petitioner's employees, during the relevant period, and none had valid workers' compensation exemptions or workers' compensation coverage. At the hearing, Petitioner attempted to provide an alternative class code for the calculation of the penalty that significantly reduced his penalty. Petitioner alleged that his workers were misclassified by Respondent as Class Code 7720, police officers and drivers, when in fact they should have been classified under Class Code 8810, clerical office employees. Petitioner contends that the calculation of the penalty imposed is inaccurate. Specifically, six of Respondent's employees, although these individuals held bail bonds licenses, performed only clerical duties and did not go into the field to apprehend persons in violation of their bail bond or court order. Their rate of compensation was based on their experience and knowledge, rather than their job descriptions. Petitioner introduced evidence that the current workers' compensation policy, which exempts six employees, is less than the premium calculated by Respondent. Class Code 7720, utilized by Respondent, is the most appropriate code for bail bondsmen regardless of whether their duties were mostly performed in the office. Furthermore, all of the individuals on the penalty worksheet classified under Class Code 7720 possess surety agent (bail bond) licenses, and are thus able to function as bail bondsmen in their full capacity, including, but not limited to apprehending individuals. At the final hearing, Petitioner provided information that six of its employees had obtained workers' compensation exemptions, four of which listed the employee's duties as "bail bondsman" and two as "clerical." Petitioner also alleged that his workers were independent contractors, but did not provide evidence to support that assertion.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is, RECOMMENDED that Petitioner enter a Final Order, as follows: Petitioner failed to secure worker's compensation coverage for its employees, as required by statute; and Petitioner be assessed a penalty of $51,499.34. DONE AND ENTERED this 16th day of February, 2007, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 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 February, 2007.
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 issue addressed in this proceeding is whether Petitioner is entitled to retain retirement benefits received by him during the time periods May 19, 1983, through December 31, 1983; May 18, 1984, through December 31, 1984; and May 17, 1985 through June 30, 1985.
Findings Of Fact On June 26 and 27, 1990, respectively, the Respondent and the Petitioner submitted to the Hearing Officer their proposed Findings of Fact. In the Appendix to the Recommended Order the Hearing Officer submitted recommended rulings thereon. The following constitutes the rulings in this Final Order on those proposed Findings of Fact. The Petitioner's proposed Findings of Fact Nos. 1, 2, and 3 are hereby accepted and adopted in that they are supported by competent, substantial evidence. The Petitioner's proposed Finding of Fact No. 4 is hereby rejected as an ultimate finding of fact in that it a recitation of isolated bits and pieces of testimony of witnesses, and it is not proper as an ultimate finding of fact. The Petitioner's proposed Finding of Fact No. 5 is hereby rejected upon the authority of Cantor v. Cochran, 184 So.2d 173 (Fla.), in that it is based upon statements of the parties as to the working relationship, which under the Cantor case is not competent evidence. The Petitioner's proposed Finding of Fact No. 6 is hereby rejected upon the grounds and for the reason stated in Paragraph No. 3. The Petitioner's proposed Finding of Fact No. 7 is accepted to the extent that on November 1, 1984, the Petitioner was an employee of the Union County School Board, and continued as such through June 30, 1987, but the remainder of that proposed Finding of Fact No. 7 is hereby rejected in that it is based on the statements and arrangements of the parties, which, based upon the Cantor case do not constitute competent evidence. The Petitioner's proposed Findings of Fact Nos. 8, 9, and 11, are hereby rejected in that each of them is ambiguous, irrelevant, not based upon any competent substantial evidence in the record, and do not serve to either prove or disapprove any of the issues in this cause. The Petitioner's proposed Finding of Fact No. 10, is hereby rejected in that is erroneous as to the dates in question and as to the number of hours in the School Board workweek. The dates in 1983, 1984, and 1985, during which the Petitioner's retirement benefits had been suspended because of exceeding the 780-hour work limitation were as follows: May 19, 1983, through December 31, 1983; May 18, 1984, through December 31, 1984; and May 17, 1985, through June 30, 1985. The Respondent's proposed Finding of Fact Nos. 1 through 8 are each hereby accepted and adopted in that they are each based upon competent, substantial evidence.
Recommendation It is accordingly, RECOMMENDED: That the Division enter a Final Order finding that Petitioner was overpaid retirement benefits for the time periods of May 25, 1985 through June 30, 1985, in the amount of $3024.66. DONE and ORDERED this 31st day of August, 1990, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of August, 1990.
The Issue The issues in this case are: whether Petitioners have standing to challenge the agency statements in the Division of Workers' Compensation Bulletin No. 234; whether the agency statements in Bulletin No. 234 constitute a "rule" as defined by Subsection 120.52 (15), Florida Statutes; and, if yes, whether the Department violated Subsection 120.54(1), Florida Statutes, by not adopting the statements in accordance with the rulemaking procedures.
Findings Of Fact Prior to the 2002 legislative session, pursuant to Sections 440.02 and 440.05, Florida Statutes (2001), certain persons in the construction industry could elect to be exempt from the provisions of Chapter 440, Florida Statutes (2001). Pursuant to Section 440.05(3), Florida Statutes (2001), upon receipt of proper notice and documentation, the Department issued certificates of exemptions to persons seeking the Workers' Compensation exemption, unless the Department determined that the information contained in the notice was invalid. Between July 1, 2000, and June 30, 2002, approximately 130,000 construction-related exemptions were active. Pursuant to Subsection 440.05(6), Florida Statutes (2001), a construction industry certificate of election to be exempt is valid for a period of two years after the effective date on the certificate, unless the certificate was properly revoked. Prior to July 1, 2002, the certificates of exemption were issued pursuant to Subsection 440.05(3), Florida Statutes (2001). These certificates of exemptions were applicable without regard to the value or cost of any particular building project on which the exemption holder may be working. During the 2002 legislative session, the Florida Legislature enacted Section 5, Chapter 2002-236, Laws of Florida. Portions of this law amended Section 440.02(14), Florida Statutes. These amendments ("2002 Amendments") state, in relevant part, the following: (14)(b) "Employee" includes any person who is an officer of a corporation and who performs services for remuneration for such corporation within this state, whether or not such services are continuous. Any officer of a corporation may elect to be exempted from this chapter by filing written notice of the election with the division as provided in Section 440.05. As to officers of a corporation who are actively engaged in the construction industry, no more than three officers may elect to be exempt from this chapter by filing written notice of the election with the division as provided in s. 440.05. However, any exemption obtained by a corporate officer of a corporation actively engaged in the construction industry is not applicable with respect to any commercial building project estimated to be valued at $250,000 or greater. An officer of a corporation who elects to be exempt from this chapter by filing a written notice of the election with the division as provided in s. 440.05 is not an employee. Services are presumed to have been rendered to the corporation if the officer is compensated by other than dividends upon shares of stock of the corporation which the officer owns. 1. "Employee" includes a sole proprietor or a partner who devotes full time to proprietorship or partnership and, except as provided in this paragraph, elects to be included in the definition of employee by filing notice thereof as provided in s. 440.05. Partners or sole proprietors actively engaged in the construction industry are considered employees unless they elect to be excluded from the definition of employee by filing written notice of the election with the division as provided in s. 440.05. However, no more than three partners in a partnership that is actively engaged in the construction industry may elect to be excluded. A sole proprietor or partner who is actively engaged in the construction industry and who elects to be exempt from this chapter by filing a written notice of the election with the division as provided in s. 440.05 is not an employee. For purposes of this chapter, an independent contractor is an employee unless he or she meets all of the conditions set forth in subparagraph (d)1. 2. Notwithstanding the provisions of subparagraph 1., the term "employee" includes a sole proprietor or partner actively engaged in the construction industry with respect to any commercial building project estimated to be valued at $250,000 or greater. Any exemption obtained is not applicable, with respect to work performed at such a commercial building project. "Employee" does not include: 1. An independent contractor, if: * * * Notwithstanding the provisions of this paragraph or any other provision of this chapter, with respect to any commercial building project estimated to be valued at $250,000 or greater, a person who is actively engaged in the construction industry is not an independent contractor and is either an employer or an employee who may not be exempt from the coverage requirements of this chapter. * * * (Amendments are underlined.) The above-quoted 2002 amendments became effective on July 1, 2002. After the legislature enacted Chapter 2002-236, Laws of Florida, but prior to its effective date, the Department issued Bulletin No. 234 ("Bulletin No. 234" or "Bulletin"), which states in relevant part the following: TO: All Exemption Holders FROM: Annemarie Craft, Interim WC Administrator DATE: June 20, 2002 SUBJECT: Law Changes Regarding Exemptions On July 31, 2002, important changes in the workers' compensation law regarding exemptions take effect. This Bulletin is intended to notify you of some of those changes. Exemption holders working on a commercial building project valued at $250,000 or greater must purchase workers' compensation coverage, or be covered under a valid Florida Workers Compensation policy. The changes apply to you if you are: A corporate officer of a corporation that is actively engaged in the construction industry; A sole proprietor or partner who is actively engaged in the construction industry; or A person who is actively engaged in the construction industry as an independent contractor. Beginning July 1, 2002, if you are a corporate officer of a corporation that is actively engaged in the construction industry, or a sole proprietor or partner who is actively engaged in the construction industry, then your exemption will not apply to any work performed at a commercial building project valued at $250,000 or greater. If you work at a commercial building project valued at $250,000 or greater, then you must secure workers' compensation coverage in accordance with s. 440.38. The value of the project is the value of the entire project and not merely the value of a part, such as the amount attributed to a particular subcontract. This applies to projects in existence on July 1, 2002, as well as projects to be started on or after July 1, 2002. * * * 5. If you are a sole proprietor, partner, or corporate officer, you are permitted to maintain a certificate of election to be exempt issued pursuant to s. 440.05, F.S., while actively working on a commercial building project valued at $250,000 or greater; however, that exemption is not applicable with respect to work performed at a commercial building project valued at $250,000 or greater. In summary, Bulletin No. 234 states unequivocally the Department's practice which limits the use of exemption certificates for workers' compensation insurance. According to the Bulletin, beginning July 2, 2002, "exemption holders working on a commercial building project valued at $250,000 or greater must purchase workers' compensation coverage, or be covered under a valid Florida Workers' Compensation policy." Next, the Bulletin states that, beginning July 1, 2002, "if you are a corporate officer of a corporation that is actively engaged in the construction industry, or a sole proprietor or partner engaged in the construction industry, then your exemption will not apply to any work performed at a commercial building project valued at $250,00 or greater." Finally, the Bulletin provides that, "this applies to projects in existence on July 2002, as well as projects to be started on or after July 1, 2002." The Department contends that the Bulletin is only for informational and notification purposes and that it merely paraphrases the provisions of Section 5, Chapter 2002-236, Laws of Florida. Furthermore, the Department asserts that the Bulletin was never intended to create any obligations or requirements that the Department will enforce in any action that the Department engages in regarding the applicability of exemptions. Based on the Department's belief that Bulletin No. 234 was only for the purpose of notifying all exemption holders of changes in the law, the Department did not adopt the Bulletin in accordance with rulemaking procedures in Section 120.54, Florida Statutes. Notwithstanding the Department's argument in paragraph 11, as reflected within the four corners of the Bulletin, exemption holders actively engaged in the construction industry working on commercial building projects valued at $250,000 or greater after July 1, 2002, must be covered by workers' compensation insurance, pursuant to the requirements of Chapter 440, Florida Statutes (2002), regardless of when the exemption certificates were obtained. Contrary to the Department's view, the agency statements in Bulletin No. 234 adversely affect the rights of some exemption holders and require compliance with the provisions contained therein. Implicit in the terms of the Bulletin is that an exemption holder who fails to comply with its terms, will be subject to enforcement actions under Chapter 440, Florida Statutes. The extrinsic evidence presented by the Department, that it will not take such action in reliance of the Bulletin, is not controlling. The Florida Home Builders' Association ("FHBA") is a Florida corporation, comprised of approximately 15,000 members. Of those members, approximately 5,000 to 6,000 are builder members that are actively engaged in the construction of housing or other developments. Hundreds of the builder members are involved in commercial construction activities. The remaining members are associate members comprised of industries, trades, and services that do business with the builder members. Associate members who are construction subcontractors are engaged in commercial building activities. Most commercial construction projects that are new construction (as opposed to renovations) which FHBA members work on exceed $250,000 in value. FHBA members who are providing services at commercial building projects with a value over $250,000 have a reasonable expectation that they will continue to provide such services in the future. Over 2500 member companies of FHBA have active workers' compensation exemption certificates for at least one employee each, issued, prior to July 1, 2002, pursuant to Section 440.05, Florida Statutes (2001). These members are involved in commercial building projects estimated to be valued at $250,000 or greater and which started prior to July 1, 2002. Several dozen FHBA members affected by the limitations on the exemptions stated in Bulletin No. 234 have contacted the FHBA for advice. FBHA members who are contractors, whose exemptions are limited based on Bulletin No. 234, must attempt to secure workers' compensation insurance. Subcontractors to these members whose exemptions are limited must obtain insurance. To the extent the subcontractor has workers' compensation insurance obligations under existing contracts, either the subcontractor, the prime contractor or the owner of the project must absorb the cost of workers' compensation insurance premiums. The possibility also exists that the subcontractor may be forced off the job if he does not obtain the insurance and/or the cost of premiums cannot be accounted for. The FHBA lobbies the Florida Legislature and executive agencies on issues that effect the construction industry, including workers' compensation insurance. The Florida Associated General Contractors' Council ("A.G.C. Council") is a Florida corporation which has approximately 2,000 members. Of these members, approximately 800 are contractors and subcontractors actively engaged in the construction industry in Florida. The remaining members are involved in construction-related businesses. The approximately 800 A.G.C. Council members engaged in construction activities are all commercial builders. Most of the projects on which they work on are valued at over $250,000. Of the approximately 800 A.G.C. Council members engaged in construction, 48 have active exemption certificates for from one to three employees each. Approximately twenty to thirty A.G.C. Council members who worked on commercial projects valued at over $250,000 and who were under prime contracts before July 1, 2002, have contacted the A.G.C. Council's office in response to Bulletin No. 234. These subcontractors were concerned that they would have to obtain workers' compensation insurance at costs that were not anticipated when they signed their contracts. The general contractors who called the A.G.C. Council Office were concerned because they had subcontractors who were going to have to obtain insurance and the general contractors were being asked to cover the costs. In some cases, subcontractors were unable to obtain insurance and the general contractor had to remove them from the job, which created an increased cost to the contractor by having to find a replacement subcontractor. The A.G.C. Council represents its members before the Florida Legislature on a number of issues of interest to the construction industry, including codes, licensing, and workers' compensation insurance. Moreover, the A.G.C. Council represents its members in administrative and judicial proceedings. The Parrish Group is a Florida corporation which provides construction, design/build, development, and realty services to its clients. It has a number of subsidiary companies which also provide construction, development, and real estate services. The companies are all commonly owned and the finances are combined and reported on a single financial statement. The Parrish Group is involved commercial construction projects, most of which have a value of over $250,000, and it intends to continue developing such commercial projects. The Parrish Group uses subcontractors for all of its construction activities, including site construction, foundation, structure, build-out, and internal build-outs. The Parrish Group has relationships with 40 to 50 subcontractors and generally uses approximately 30 of these subcontractors on any given project. The Parrish Group does not have a valid exemption, but six of the Parrish Group's regular subcontractors, including Mark Madonia, d/b/a Chop's Acoustical Ceilings, hold active exemption certificates issued prior to July 1, 2002, pursuant to Subsection 440.05(3), Florida Statutes (2001). The Parrish Group's subcontractors who held active exemption certificates issued prior to July 1, 2002, if required to obtain workers' compensation insurance, would try to pass the cost of premiums to the primary contractor, a Parrish Group subsidiary, Parrish Builders. If the subcontractor is successful in passing the cost to the primary contractor, the primary contractor would try to pass the costs on to the owner, i.e., the Parrish Group. If the subcontractor were unable to obtain the workers' compensation insurance, the primary contractor would have the subcontractor removed from the job. Alternatively, the prime contractor could retain the subcontractor as an employee, in which case the primary contractor would have to bear the cost of the additional insurance under its policy. These increased costs would not have been accounted for in the prime contract, if that contract was in effect prior to July 1, 2002. Mark Madonia is one of Parrish Group's regular subcontractors. When faced with the prospect of having to obtain workers' compensation insurance, Mr. Madonia sought a change order from Parrish Builders. The Parrish Group, as owner, agreed to the change order and bore the additional costs. When the Parrish Group's subcontractors, who had certificates of exemption, made bids used in prime contracts that were effective before July 1, 2002, the cost of workers' compensation insurance was not included in the bid. Mark Madonia, d/b/a Chop's Acoustical Ceilings, is a sole proprietor who installs ceiling grade systems. Mr. Madonia provides these services as a subcontractor to the Parrish Group and other developers. Mr. Madonia works primarily on commercial building projects, most of which are valued at over $250,000. Mr. Madonia expects to continue to work on commercial building projects valued at over $250,000 in the future. Mr. Madonia is a member of FHBA and has a valid workers' compensation exemption certificate that was issued prior to July 1, 2002. Mr. Madonia has had an exemption since 1994 and his current certificate is in effect until May 25, 2003. Prior to July 1, 2002, Mr. Madonia had not obtained workers' compensation insurance because of his exemption. When Mr. Madonia received Bulletin No. 234 on or about July 12 through 14, 2002, he attempted to obtain workers' compensation insurance. Three companies denied him coverage because he did not have a sufficient number of employees. Mr. Madonia risked being removed from jobs had he not obtained the workers' compensation coverage required by the Bulletin. Mr. Madonia eventually contracted with an employee leasing company. In order to do so, he had to make his subcontractors his employees. The cost of the employee leasing service, including workers' compensation coverage is $27.00 per $100.00 of payroll. Mr. Madonia could have been responsible for these costs, although in this case, the Parrish Group agreed to absorb the extra costs. If a valid workers' compensation insurance exemption is limited and no longer applies to commercial construction projects with a value of $250,000 or more, the general contractor for such projects will require that the affected persons provide proof of coverage or they cannot lawfully be allowed on the job site. In the event a subcontractor with an exemption needs to obtain insurance, the subcontractor would have to obtain workers' compensation insurance. If the primary contract has already been signed by the owner and the general contractor, then the costs of the job have already been set. The subcontractor may absorb the costs or, alternatively, the subcontractor could attempt to pass the additional costs of insurance premiums to the general contractor. The general contractor could then try to pass the additional costs on to the owner. In any event, either the subcontractor, the general contractor, or the owner will have to absorb the unanticipated costs of workers' compensation insurance.
Findings Of Fact The Petitioner, Ana Caos, M.D., is a applicant for a restricted license to practice Medicine in the State of Florida pursuant to the provisions of Section 458.311(8), Florida Statutes. Successful completion of the Florida Board Examination is a prerequisite to licensure under Section 458.311(8), Florida Statutes. In an effort to meet that prerequisite, the Petitioner has already taken the Florida Board Examination six times since October 1, 1966. The Petitioner has passed portions of the licensure examination, but thus far she has not received a passing grade on the Basic Sciences portion of that examination. The Petitioner seeks to continue taking the licensure examination until she achieves a passing grade on all portions of the examination. On January 19, 1993, the Board of Medicine filed and served an order regarding the Petitioner's licensure application. The order reads as follows, in pertinent part: You are hereby notified pursuant to Section 120.60(3), Florida Statutes, that the Board of Medicine voted to DENY your application for licensure as a physician by examination. The Board of Medicine reviewed and considered your application for licensure by examination on November 19, 1992, in a telephone conference call originating in Tallahassee, Florida and has determined that said licensure by examination be denied, stating as grounds therefore: That you have failed to pass the FLEX examination six times since October 1986. Subsection 458.311(2), Florida Statutes, prohibits licensure of any individual who has failed the FLEX examination five times after October 1, 1986. Although the Board previously permitted you to sit for the FLEX examination for a sixth time in 1992, it has since that time determined that this provision applies to all applicants for licensure. The Board of Medicine has never adopted a rule to the effect that Section 458.311(2), Florida Statutes, applies to applicants for a restricted license under Section 458.311(8), Florida Statutes. The Board of Medicine has an existing rule that interprets several provisions of Section 458.311(8), Florida Statutes (1991). (See Rule 21M-22.020 (1)(a)-(c), Florida Administrative Code.) At the Board meeting on July 11 and 12, 1992, the Board of Medicine discussed proposed amendments to the existing rule and voted to initiate rulemaking to amend Rule 21M- 22.020(1), Florida Administrative Code, by adding to it a new subsection (d) reading as follows: (d) The phrase "successfully completes the Florida Board Examination" is interpreted as requiring obtaining a passing score as defined by Rule 21M-29.001(2) within the time frame set forth in Section 458.311(2), Florida Statutes. Specifically, if the applicant has failed the examination five times after October 1, 1986, the applicant is no longer eligible for licensure. At its meeting on July 11 and 12, 1992, the Board of Medicine instructed its legal counsel to initiate rulemaking to adopt the rule amendment quoted above. For reasons unknown to the Board's Executive Director, the Board's legal counsel had not yet filed the proposed rule amendment for adoption as of the date of the formal hearing in this case. On March 12, 1993, eleven days after the formal hearing in this case, notice of proposed rulemaking was published in the Florida Administrative Weekly. The proposed rulemaking noticed on March 12, 1993, is the same as, or substantially the same as, the proposed language described in Paragraph 5, above. The proposed rulemaking noticed on March 12, 1993, is presently the subject of a rule challenge petition filed by the Petitioner in this case. See Case No. 93-2166RP. The Petitioner in this case is also the Petitioner in Case No. 93-1801, which involves a petition filed pursuant to section 120.57(1), Florida Statutes, to challenge the proposed denial of the Petitioner's application for a license.
