The Issue The issue in this case is whether Respondent had a sufficient amount of workers’ compensation coverage during the time period in question; and, if not, what penalty should be imposed.
Findings Of Fact The Division is the state agency responsible for enforcing the requirement in chapter 440, Florida Statutes (2015),1/ that employers in Florida secure workers’ compensation coverage for their employees. While an exemption can be obtained for up to three corporate officers, any employer in the construction industry with at least one employee must have workers’ compensation coverage. § 440.02(15), Fla. Stat. Kent Howe works for the Division as a compliance investigator based in Orlando, Florida. As part of his job responsibilities, Mr. Howe visits construction sites in order to verify that employers in the construction industry have obtained workers’ compensation coverage for their employees. Mr. Kehr was the owner and sole corporate officer of JNK. Mr. Howe visited a construction site in Port Orange, Florida, on the morning of December 10, 2015, and saw Mr. Kehr and two other men building the interior walls/frames of a house. Mr. Howe talked to the two men (James Hicks and James Garthwait) working with Mr. Kehr, and they reported that Mr. Kehr was paying them approximately $8.00 an hour. Mr. Kehr told Mr. Howe that Messrs. Hicks and Garthwait had been working for him for approximately two hours that morning. Mr. Kehr also stated that he had not obtained workers’ compensation coverage for Messrs. Hicks and Garthwait. Following those conversations, Mr. Howe returned to his car and accessed the Division’s Coverage and Compliance Automated System (“CCAS”) and learned that JNK had no workers’ compensation coverage. Mr. Howe also determined from CCAS that Mr. Kehr had obtained an exemption from workers’ compensation coverage that had been in effect from November 18, 2014, through November of 2016.2/ After relaying that information to his supervisor, Mr. Howe received authorization to serve Mr. Kehr with a Stop- Work Order, and he did so on December 10, 2015. That Stop-Work Order required JNK to “cease all business operations for all worksites in the State” based on the Division’s determination that JNK had failed to obtain workers’ compensation coverage. In addition, the Stop-Work Order stated that JNK would be penalized an amount “[e]qual to 2 times the amount [JNK] would have paid in premium when applying approved manual rates to the employer’s payroll during periods for which it [had] failed to secure the payment of compensation within the preceding 2-year period.” Along with the Stop-Work Order, Mr. Howe also served a “Request for Production of Business Records for Penalty Assessment Calculation” (“the BRR”) on Mr. Kehr. In order to ascertain JNK’s payroll disbursements during the relevant time period and the resulting penalty for JNK’s failure to obtain workers’ compensation coverage, the BRR requested that JNK remit several different types of business records covering the period from November 10, 2014, through December 10, 2015. Mr. Howe explained during the final hearing that the Division usually reviews business records pertaining to the two years preceding the Stop Work Order.3/ Because JNK came into existence on November 10, 2014, the Division’s review was limited to examining the period between November 10, 2014, and December 10, 2015. The business records sought by the Division included items such as time sheets, payroll summaries, check journals, certificates of exemption, and evidence that any JNK subcontractors had obtained workers’ compensation coverage. Section 440.107(7)(e) provides that if an employer fails to provide business records sufficient to enable the Department to ascertain the employer’s actual payroll for the time period in question, then the Division will estimate the employer’s actual payroll for that time period by imputing the employer’s payroll based on the statewide average weekly wage. The Division then multiplies that amount by two. JNK did not provide business records typically sought by the Division. Instead, JNK responded to the BRR by producing a written statement from Mr. Kehr indicating that he founded JNK in November of 2014, but did no work until July of 2015. That initial job involved fixing a set of stairs for $200. Afterwards, Mr. Kehr performed three separate small jobs between July and November of 2015, earning approximately $550. Because the Division could not ascertain JNK’s actual payroll from the documentation provided by JNK, the Division imputed JNK’s payroll for the time period in question and issued an Amended Order of Penalty Assessment on January 19, 2016, seeking to impose a penalty of $61,424.04. Phillip Sley calculated the aforementioned penalty amount by filling out a worksheet that has been adopted by the Division through Florida Administrative Code Rule 69L-6.027. The first step in completing the worksheet required Mr. Sley to assign a classification code to the type of work that Mr. Howe witnessed Messrs. Kehr, Hicks and Garthwait performing at the Port Orange worksite on December 10, 2015. Classification codes come from the Scopes® Manual, which has been adopted by the Department through rule 69L-6.021. Each code within the Scopes® Manual pertains to an occupation or type of work, and each code has an approved manual rate used by insurance companies to assist in the calculation of workers’ compensation insurance premiums. The imputed weekly payroll for each employee and corporate officer “shall be assigned to the highest rated workers’ compensation classification code for an employee based upon records or the investigator’s physical observation of that employee’s activities.” See Fla. Admin. Code. R. 69L-6.028(3)(d). In the instant case, Mr. Sley determined “5645” was the appropriate classification code. According to the Scopes Manual, [w]hen all of the carpentry work in connection with the construction of residential dwellings not exceeding three stories in height is performed by employees of the same carpentry contractor or general contractor responsible for the entire dwelling construction project, the work is assigned to Code 5645. This includes the construction of the sill, rough framework, rough floor, wood or light-gauge steel studs, wood or lighted-gauge steel joists, rafters, roof deck, all types of roofing materials, sidewall sheathing, siding, doors, wallboard installation, lathing, windows, stairs, finished flooring, cabinet installation, fencing, detached structures, and all interior wood trim. Mr. Sley’s next step in calculating the penalty amount was to determine the period of non-compliance. With regard to Mr. Kehr, the Department asserted that JNK failed to have workers’ compensation coverage between the date of JNK’s inception (November 10, 2014) and the date that Mr. Kehr received an exemption from the workers’ compensation coverage requirement (November 18, 2014). Despite having no evidence that Messrs. Hicks and Garthwait worked for JNK on any day other than December 10, 2015, the Division’s penalty calculation was based on an assumption that Messrs. Hicks and Garthwait worked for JNK from November 10, 2014, through December 10, 2015. Mr. Sley’s next step was to calculate JNK’s gross payroll for the time period in question. Because JNK did not provide the Division with business records that would have enabled the Division to calculate JNK’s actual payroll, Mr. Sley based JNK’s payroll on the statewide average weekly wage determined by the Department of Economic Opportunity for the time period in question.4/ Mr. Sley then multiplied that amount by two.5/ After converting the payroll numbers into a percentage, Mr. Sley multiplied the payroll amounts by the approved manual rate. As noted above, every classification code is associated with a particular manual rate determined by the Office of Insurance Regulation, and a manual rate corresponds to the risk associated with a particular occupation or type of work. Manual rates associated with potentially dangerous activities will have higher manual rates than activities with little or no potential danger. Mr. Sley’s next step was to calculate a premium for obtaining workers compensation coverage for Messrs. Kehr, Hicks, and Garthwait. Mr. Sley then multiplied that premium by two in order to calculate the individual penalties resulting from JNK not having workers’ compensation coverage for Messrs. Kehr, Hicks, and Garthwait. The sum of those amounts was $61,424.04. The evidence produced at the final hearing established that Mr. Sley utilized the correct class code, average weekly wage, and manual rates in his calculation of the penalty set forth in the Amended Order of Penalty Assessment. The Division has demonstrated by clear and convincing evidence that JNK was in violation of the workers’ compensation coverage requirements of chapter 440. In particular, the Division proved by clear and convincing evidence that Mr. Kehr had no workers’ compensation coverage for himself and no exemption from November 10, 2014, through November 17, 2014. However, the Division did not demonstrate by clear and convincing evidence that Messrs. Hicks and Garthwait were employees of JNK on any day other than December 10, 2015. Mr. Kehr testified during the final hearing that Messrs. Hicks and Garthwait were working for him on December 10, 2015. He also testified that he was paying them at a rate of $8.00 an hour. However, Mr. Kehr persuasively testified that Messrs. Hicks and Garthwait had not worked for him at any other time between November 10, 2014, and December 10, 2015. The undersigned finds Mr. Kehr’s testimony on this point to be credible. Messrs. Hicks and Garthwait did not testify during the final hearing in this matter. There is no evidence that Messrs. Hicks and Garthwait worked for JNK at any time other than December 10, 2015. Because there is no evidence indicating that Messrs. Hicks and Garthwait were employees of JNK at any time other than December 10, 2015, during the time period in question, the undersigned finds that the Department failed to carry its burden of proving that $61,424.04 is the appropriate penalty. Based on the above findings, the undersigned finds that the correct penalty resulting from Mr. Kehr’s lack of coverage is $627.48. The worksheet completed by Mr. Sley indicates that is the amount of the $61,424.04 penalty associated with Mr. Kehr’s lack of coverage. As for the penalties associated with the lack of coverage for Messrs. Hicks and Garthwait on December 10, 2015, the undersigned multiplied the average weekly wage utilized by the Division ($841.57) by two. That results in a weekly gross payroll amount of $1,683.14. Dividing $1,683.14 by five results in a daily gross payroll amount of $336.63. Dividing $336.63 by 100 and then multiplying the result by 15.91 (the approved manual rate utilized by the Division for the period from January 1, 2015, through December 10, 2015) yields a daily premium of $53.62. Multiplying $53.62 by two results in a penalty of $107.23. Multiplying $107.23 by two yields $214.46, JNK’s penalty for not having workers’ compensation coverage for Messrs. Hicks and Garthwait on December 10, 2015. JNK’s total penalty is $841.94. Because section 440.107(7)(d)1. mandates a minimum penalty of $1,000, the undersigned finds that $1,000 is the correct penalty for the instant case.
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 imposing impose a $1,000 penalty on Donald Kehr, d/b/a JNK Framing Inc., a Dissolved Florida Corporation. DONE AND ENTERED this 10th day of August, 2016, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of August, 2016.
The Issue Did Respondent fail to comply with Sections 440.10 and 440.38, Florida Statutes, and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the agency of the State of Florida government responsible for enforcing the statutory requirement, pursuant to Chapter 440, Florida Statutes, that employers secure the payment of workers' compensation for the benefit of their employees. Respondent works in the construction industry, specifically as it relates to drywall services. On February 25, 2004, Petitioner's investigator, David Kunz, visited Respondent's worksite at 400 West Bay Street in Jacksonville, Florida (also known as the Bennett Federal Building). Petitioner's investigator observed 12 workers engaged in drywall construction. Mr. Kunz spoke with Respondent's project foreman at the worksite, and with the assistance of a Spanish-speaking colleague, he interviewed all of Respondent's workers at the site. A representative of the general contractor, Skanska, U.S.A., furnished Petitioner's investigator with a certificate of workers' compensation insurance which had been provided to the general contractor by Respondent as a subcontractor on the Bennett Federal Building job. The address listed for Respondent was in North Carolina, and the producer of the policy also had a North Carolina address. The next day, Petitioner's investigator obtained a copy of Respondent's workers' compensation insurance policy. After reviewing the policy, the investigator concluded that Respondent had violated Florida's Workers' Compensation Law, because an endorsement applying Florida premium rates was not a part of the policy. Mr. Kunz then issued a Stop Work Order to Respondent on February 26, 2004. The Stop Work Order required Respondent to cease its business operations immediately, due to its lack of compliance with Chapter 440, Florida Statutes. By the Stop Work Order, Respondent was charged with failure to secure the payment of workers' compensation that met the requirements of Chapter 440, Florida Statutes, and the Florida Insurance Code, because North Carolina premium rates, rather than Florida premium rates, had been applied. The Stop Work Order indicated that the penalty amount assessed against Respondent would be subject to amendment based on further information provided by Respondent, including the provision of business records. St. Paul's Insurance Companies maintain a presence in Orlando, Florida, but the documents subsequently provided by Respondent to the investigator as purported proof of Respondent's compliance with Chapter 440, Florida Statutes, did not meet all necessary Florida requirements. The carrier on Respondent's policy is St. Paul Fire and Marine Insurance Company. The "producer" was "Insur A Car Commercial" in North Carolina. The "producer" is the agent responsible for processing the policy for the insurance carrier. Respondent's workers' compensation insurance policy lists U & M Contractors, Inc., 9036 Arborgate Dr., Apt. A, Charlotte, NC 28273 in the "Insured" column. The policy number is 6S16UB-0130B52-8-03. Respondent's insurance policy was "produced" outside Florida. Respondent had procured workers' compensation insurance from an insurance carrier which was appropriately licensed to do business in Florida, but Respondent did not maintain at all times a Florida endorsement to its policy indicating that the applicable premium rates were Florida premium rates. Respondent's workers' compensation insurance policy includes no Florida endorsement showing the application of Florida premium rates. Only North Carolina is listed in Item 3A of Respondent's workers' compensation policy. The endorsement (WC 00 03 26 (A)) for "Other States Insurance" in Respondent's policy specifically states that it "does not satisfy the requirements of that state's workers' compensation law" for any state not listed in Item 3A. Florida is not listed in Item 3A. The "Extension of Information" page of Respondent's workers' compensation insurance policy indicates the type of work that Respondent intends to perform, pursuant to the policy. The type of work is indicated by a class code, or number, assigned to the type or category of work. The Extension of Information page assigns class code 5445 (drywall installation) as to the work Respondent would be performing under the policy. The source for the class codes is the SCOPES Manual, published by the National Council on Compensation Insurance (NCCI). Petitioner's Agency's adoption of the SCOPES Manual was accomplished by Florida Administrative Code Rule 69L-6.021. Respondent's policy's Extension of Information page further indicates that a premium rate (rate per $100.00 of remuneration provided to Respondent's employees) of $10.20 had been applied by the insurer for class code 5445, and that the premium rate was for North Carolina, not Florida. By contrast, the approved Florida premium rate for class code 5445 is $20.88 per $100.00 of remuneration. The source for Florida premium rates is the NCCI Basic Manual. Mr. Kunz testified that the Basic Manual is used regularly by workers' compensation investigators. Mr. Kunz issued an Agency Request for Business Records on February 26, 2004, the same date as the Stop Work Order. He specifically sought Respondent's payroll records, because Chapter 440 requires Petitioner "to calculate the penalty of an employer who is in noncompliance based on the employer's payroll." Some payroll records were forwarded to Mr. Kunz by Respondent. Some payroll records were provided to one of Petitioner's fellow investigators by a general contractor for whom Respondent had subcontracted drywall installation at the Bennett Federal Building worksite. The latter records were part of a separate investigation, but were shared between the two investigators. However, several weeks of Respondent's payroll records were not initially provided from any source. Respondent's payroll records include, among other entries, the names of its workers and the dates and amounts of remuneration provided to those workers. The records indicate that Respondent provided remuneration to its workers in the years 2003 and 2004. The penalty period assigned by Petitioner against Respondent is from November 17, 2003, through February 25, 2004, because November 17, 2003, was the day that work on the Bennett Federal Building began, and February 25, 2004, was the date listed in the Stop Work Order. Mr. Kunz used the payroll records he had to calculate an initial penalty amount of $74,479.90. Payroll for weeks not accounted for in Respondent's first production of payroll records was imputed by Mr. Kunz in the initial penalty amount, pursuant to Chapter 440, by calculations based on the first records he had. He issued the First Amended Penalty Assessment Order (Amended Order) to Respondent on March 3, 2004, in the amount of $74,479.90. A subsequent production of records by Respondent caused Petitioner to recalculate the penalty for some weeks for which payroll previously had only been imputed. The recalculation caused the assessed penalty amount to decrease to $51,779.50, and on March 9, 2004, a second Amended Order in the amount of $51,779.50 was issued to Respondent. The second Amended Order included the imputation of payroll for Respondent's two owners, Juan Mitchell (Mitchell) and Hector Urbina (Urbina). Mr. Kunz had received no payroll records at any time for the two owners, though he had twice specifically requested those records. He determined that the owners were named on Respondent's insurance policy and had actually been present on the Florida worksite. Mitchell and Urbina are classified under code 5445 (drywall installation). Their respective average weekly wages for the entire penalty period was imputed according to Chapter 440, and the penalty amount for Mitchell and Urbina was calculated by first multiplying the evaded premium amount by the premium rate for class code 5445. The evaded premium amount was determined by taking the amount of wages for a penalty period, dividing it by one hundred (100), and multiplying it by the premium rate for the pertinent class code. The evaded premium amount was then multiplied by 1.5 to arrive at the penalty amount assessed for Mitchell ($4,434.72) and for Urbina ($4,434.72). The 1.5 multiplier is specifically required by Section 440.107(7)(d)1., Florida Statutes. Wages were similarly imputed for the following employees for February 23, 24, and 25, in 2004, because records did not exist for that partial work week: Alex Rosales; Jose Jimenez: Julio Betata; Orlin Betata; Erick Estrada; Melvin Landaverde; Neptale Lopez; and Jose Valentin. In calculating the penalty for the remainder of Respondent's workers for whom payroll records were provided, Petitioner's investigator similarly applied the foregoing methodology.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order that affirms the Stop Work Order and assesses the $51,779.50 penalty cited in the Second Amended Order. DONE AND ENTERED this 7th day of April, 2005, in Tallahassee, Leon County, Florida. S ELLA JANE P. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 7th day of April, 2005. COPIES FURNISHED: Joe Thompson Assistant General Counsel Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399 Juan Carlos Mitchell U & M Contractors 1912 Southwest 67th Avenue Fort Lauderdale, Florida 33068 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue to be resolved in this proceeding concerns whether the Respondent was operating its business without workers' compensation coverage for employees in violation of the below-referenced provisions of Chapter 440, Florida Statutes, whether it continued its business operations in violation of a Stop Work Order issued August 11, 2005, in purported violation of Section 440.107(7)(a), Florida Statutes (2005), and what, if any, penalty is warranted.
Findings Of Fact The Department of Financial Services, Division of Workers' Compensation (Department) is an agency of the State of Florida charged with enforcing the statutory requirements requiring employers to secure the payment of workers' compensation benefits by obtaining insurance coverage therefor for employees, as mandated by Section 440.107, Florida Statutes (2005). The Respondent, Krashco, Inc., d/b/a J. Krash's Sports Bar (Krashco, Inc.) is a Florida corporation domiciled in Panama City, Florida. On August 11, 2005, it was engaged in the business of operating J. Krash's Sports Bar at 1508 Calhoun Avenue in Panama City, Florida. Patricia Krossman is a Workers' Compensation Investigator for the Department. She conducts investigations into all types of business to verify that they have required workers' compensation insurance coverage or are statutorily exempt. She visited J. Krash's Sports, Bar accompanied by her supervisor, William Dorney, and another investigator on August 11, 2005. J. Krash's Sports Bar is a business owned by the Respondent Krashco, Inc. Upon entering the bar, Ms. Krossman, observed several customers and a bartender. She inquired of the bartender whether the owner was present. She was then introduced to Mr. Matthew McDonough who identified himself as the accountant for Krashco, Inc. Mr. Dorney was present and witnessed this encounter with Mr. McDonough. Mr. Krossman interviewed Mr. McDonough who stated that he handled all the business for Krashco, Inc., and that Krashco, Inc., had one full-time employee and six hourly employees. Mr. McDonough provided the names of those employees to Ms. Krossman and told her that Krashco, Inc., had no workers' compensation insurance policy to cover those employees. This revelation was corroborated by Mr. Dorney who was also present. Mr. McDonough identified Ms. Janis Kay Porter-Krasno as the sole officer of the corporation, Krashco, Inc. He provided the telephone number for Ms. Krasno and Investigator Krossman telephoned Ms. Krasno. She confirmed the number and the names of the employees of Krashco, Inc., and J. Krash's Sports Bar. She also confirmed that Krashco, Inc., had no workers' compensation coverage. In accordance with Chapter 440, Florida Statutes, insurance carriers report to the Department the issuance to businesses of workers' compensation insurance policies. The Department issues workers' compensation insurance exemptions also. The Department maintains an electronic database of employer coverage and exemptions in its Coverage and Compliance Automated System (CCAS), which allows investigators to determine whether an employer has secured workers' compensation insurance coverage or whether that employer has an exemption from coverage. This database is used in the normal course of the Department's investigations. Ms. Krossman utilized the CCAS data base in the subject investigation. This database confirmed that the Respondent had no workers' compensation coverage and no exemption from coverage from any officer of the Respondent corporation at the time of the investigation. (See Department exhibits three and four in evidence). The Department has a policy or statutory interpretation which it carries out, concerning its duties under Section 440.107(7)(a), Florida Statutes (2005), requiring that if an employer who is required to secure payment of workers' compensation benefits has failed to do so, that failure is deemed an immediate serious danger to public health safety or welfare and results in the issuance of a "Stop Work Order" by the Department. In view of her investigation as described, Investigator Krossman determined that the Respondent was in violation of the workers' compensation law. This was because it employed more than four individuals, for whom the Respondent was required to secure the payment of workers' compensation and yet had no workers' compensation for any of its employees. Investigator Krossman's supervisor, Mr. Dorney, reviewed the results of Ms. Korssman's investigation and agreed with her and authorized her to issue a Stop Work Order to the Respondent due to its failure to comply with the relevant requirements of Chapter 440, Florida Statutes. Indeed, the Respondent ultimately stipulated its liability for the charge that it violated Section 440.107(7), Florida Statutes (2005), by not securing the payment of workers' compensation for the employees in question. The Stop Work Order was served on Krashco, Inc., on August 11, 2005, alerting that employer in accordance with Section 440.107(7)(d), Florida Statutes (2005), that a penalty would be assessed and that the penalty might be amended based on further information obtained, including the production of business records by the employer. The Stop Work Order also advised that if the employer conducted any business operations in violation of the Stop Work Order that a penalty of $1,000.00 per day of violation would be assessed. Under the mandate of Section 440.107(5), Florida Statutes (2005), and Florida Administrative Code Rule 69L-6.015, Florida employers are required to maintain business records that enable the Department to determine whether an employer is complying with the workers' compensation law. On August 11, 2005, Ms. Krossman issued and hand served on Krashco, Inc., a written request for production of business records for purposes of a penalty assessment calculation. On September 14 and 19, 2005, the Respondent's accountant provided business records to the Department. After reviewing those business records, Investigator Krossman again consulted with her supervisor Mr. Dorney, who authorized her to issue an Amended Order of Penalty Assessment. The Amended Order of Penalty Assessment is the Department's Exhibit 9 in evidence. The Amended Order was issued and served on Respondent on September 26, 2005, and assessed a total penalty of $49,979.79 under the authority of Section 440.107(7)(d)1. and (c), Florida Statutes (2005). The penalty calculations pertaining to each of the employees listed appeared in a three page worksheet attached and incorporated as part of Department's exhibit nine in evidence. Investigator Krossman selected the appropriate NCCI class code for Krashco Inc.'s business, and its corresponding premium rate, in order to apply that to each employee's wages. The Department relies on these premium rates and the classification codes for these purposes in the normal course of its regulation of such matters.1/ Ultimately, at hearing, the Respondent stipulated that it did not dispute the charge in the Amended Order and does not dispute the accuracy of the penalty calculation.2/ In light of the requirements of Section 440.107(7)(d)1., Florida Statutes (2005), Investigator Krossman calculated the penalty for the period of non-compliance back to September 1, 2002, pursuant to the three year "reach back standard" in the statute. The premium which had thus been evaded which the Respondent would have paid had it secured workers' compensation insurance was thus shown to be $7,986.43. The statutorily provided penalty on that amount of evaded premium multiplied by the statutory standard of 1.5 times resulted in a penalty amount of $11,979.79. Respondent also stipulated at the hearing that it had violated the Stop Work Order issued on August 11, 2005, by continuing to conduct its business operations of J. Krash's Sports Bar through September 19, 2005. This engendered an additional penalty as provided in Section 440.107(7)(a) and (c), Florida Statutes (2005). Investigator Krossman calculated the additional penalty at $1,000.00 per day of violation time from August 12, 2005 through September 19, 2005, at $38,000.00. This results in a total aggregate assessed penalty, pursuant to the Amended Order, of $49,979.79. The business of Respondent Krashco, Inc., is J. Krash's Sports Bar. Its principal place of business is 1508 Calhoun Avenue, Panama City, Florida 32405. Section 440.107(7)(a), Florida Statutes (2005), requires a cessation of all business operations by an employer when a Stop Work Order is issued by that employer by the Department. The Stop Work Order "shall remain in effect until the Department issues an order releasing the Stop Work Order upon a finding that the employer has come into compliance with the coverage requirements of this Chapter and has paid any penalty assessed under this section."3/ Krashco, Inc., has never paid any part of the assessed penalty pursuant to the Amended Order or the Second Amended Order filed later. The Department has never issued an Order of Release from the Stop Work Order. Nevertheless, the Respondent Krashco, Inc., after September 19, 2005, continued the business operations of J. Krash's Sports Bar. Officers of corporations may elect an exemption from coverage under the workers' compensation law as an employee (see Section 440.05). This exemption is effective, however, only for the corporation listed in the eligible officer's Notice of Election to be Exempt and which is paying that officer's salary or wages. Three new corporations were formed whereby the previous employees of Krashco, Inc., d/b/a J. Krash's Sports Bar became officers of Krashco, Inc., and those three new corporations. This is because Krashco, Inc., needed people to operate the bar on its behalf to buy goods and services to sell and dispense at its business, J. Krash's Sports Bar. Krashco, Inc.'s former employees became officers of these three newly created corporations and two of the former employees became officers of the Respondent Krashco, Inc. Krashco, Inc., d/b/a J. Krash's Sports Bar verbally contracted with these new officers of the new corporations to perform the same services for its business, J. Krash's Sports Bar, that those same individuals had been performing before becoming officers of these corporations, performing security, catering, and bartending services. Krashco, Inc.'s, principals were of the belief that it was necessary to secure the services in this manner in order to continue the operation of its business, without employees, so that it would no longer be required to have workers' compensation coverage for them. After August 11, 2005, and through most of the remainder of 2005, Ms. Janis Krasno, the President of Krashco, Inc., continued to pay these new officers, the former employees, directly with checks drawn on Krashco Inc.'s account and made payable to the individual officers as payees (not to their corporation) for the same services they had performed for the benefit of J. Krash's Sports Bar.4/ Keith Larson, an employee of Krashco, Inc., became an officer of the original Krashco, Inc., as well as Crashco, Inc., one of the three newly created corporations. Keith Larson elected an exemption from Chapter 440 as an officer of Krashco, Inc. Larson's election of exemption with Krashco, Inc., however, did not become effective until November 2, 2005. Consequently, Keith Larson continued to be paid by Krashco, Inc., as an employee through at least November 1, 2005. Six other Krashco, Inc., employees were granted exemptions (as officers of the other corporations) by the Petitioner from the requirement of workers' compensation coverage, which were all effective on August 22, 2005. This reduced the number of employees of record to less than the compliment of four (or more) for which coverage is required. This would seem, under only these circumstances, to represent the expiration of liability by the Respondent for failure to secure payment of workers' compensation and to also be the date the Stop Work Order should be rescinded and further penalties tolled. The fact is, however, that Ms. Krasno and the Respondent, Krashco, Inc., as found below, continued to pay these "former employees" with Krashco, Inc., checks made to them individually (not to their corporations), for the same job duties, until December 15, 2005. Thus they continued to function as employees of the Respondent, Krashco, Inc., until that date. After that date they were paid by a new corporation, Crashco, Inc. Ms. Janis Krasno, President of Krashco, Inc., continued to operate and run J. Krash's Sports Bar as an officer of and on behalf of Krashco, Inc., through April 28, 2006. This included payment of Krashco's expenses occasioned in the operation of the business. Ms. Krasno, President of Krashco, Inc., wrote checks through December 15, 2005, drawn on Krashco, Inc.'s bank account to pay for Krashco, Inc.'s business operation expenses, all of which were for the benefit of operating J. Krash's Sports Bar. Ms. Krasno as President of Krashco, Inc., issued checks through December 15, 2005, drawn on that corporation's account to pay the individual officers of the three new corporations which had been formed, and of Krashco, Inc., for those officers' bartending, security, and catering services, all of which were performed to continue and perpetuate the operation of J. Krash's Sports Bar. Ms. Krasno issued checks through December 15, 2005, on Krashco, Inc.'s account, to promote sales, by the promotion of upcoming activities to be held at the bar, or to purchase goods for sale at J. Krash's Sports Bar, from various vendors, for non-alcoholic drinks, restaurant supplies, food and other goods for parties. Such payments were also used to pay vendors such as Goldring Gulf Distributing Company and other distributors for alcoholic beverages to be sold in the operation of J. Krash's Sports Bar, and for incidental expenses. From August 12, 2005 through December 15, 2005, and through April 28, 2006, J. Krash's Sports Bar was generally open for business seven days a week from 2:00 p.m. to 4:00 a.m. Since September 19, 2005 through April 28, 2006, Ms. Krasno still controlled the management and operations of Krashco, Inc., d/b/a J. Krash's Sports Bar. On December 21, 2005, however, Krashco, Inc.'s, president, Ms. Krasno, who also became president of Crashco, Inc., began issuing checks drawn on the bank account of Crashco, Inc., to pay for expenses occasioned in the operation of the Respondent's business J. Krash's Sports Bar. These were payments to the same officers she had been paying since September 19, 2005, for their bartending, security, and catering services, as well as to essentially the same vendors for purchases of alcoholic beverages, etc. for sale at J. Krash's Sports Bar. Through the date of the final hearing Ms. Krasno, with checks drawn on the account of Crashco, Inc., purchased alcoholic beverages on behalf of Krashco, Inc., the holder of liquor license BEV1301819, in order to continue the business operations of Krashco, Inc., d/b/a J. Krash's Sports Bar. After December 21, 2005 and through April 28, 2006, income of sales at J. Krash's Sports Bar was deposited in Crashco, Inc.'s account. After entry of the Amended Order on September 26, 2005, the Respondent timely filed its request for a formal proceeding on October 14, 2005. This rendered the initial agency action to be non-final, to await the outcome of this de novo, proceeding.
Recommendation Having considered the foregoing findings of fact, the 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 assessing, under the Amended Order of Penalty Assessment, the Second Amended Order of Penalty Assessment and the Stop-Work Order, a penalty in the total amount of $136,979.80, together with an additional assessment for failure to secure coverage for the period of September 19, 2005 through December 15, 2005, in the manner provided in Subsection 440.107(7)(d)1., Florida Statutes (2005). DONE AND ENTERED this 8th day of January, 2007, 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 8th day of January, 2007.
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes (2014),1/ by failing to secure the payment of workers’ compensation as alleged in the Stop-Work Order and 2nd Amended Order of Penalty Assessment, and, if so, what penalty is appropriate.
Findings Of Fact The Department is the state agency responsible for the enforcement of the workers’ compensation insurance coverage requirements established in chapter 440. On June 1, 2015, Investigator Abedrabbo conducted a random workers' compensation compliance check at 11422 North 56th Street, Tampa, Florida 33617. During the course of the compliance check, Investigator Abedrabbo observed two individuals installing a stone façade on a building that was under construction at the identified address. It is undisputed that the two individuals observed by Investigator Abedrabbo were, at the time of observation, employed by Respondent. In support of its 2nd Amended Order of Penalty Assessment, the Department prepared a penalty calculation worksheet showing a total penalty owed of $17,274.30.3/ Respondent does not challenge the accuracy or method of calculating the assessed penalty, but only asserts that the penalty is “too high” and the company cannot afford to pay it.
Recommendation Based on the Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order finding that Respondent, Cortes Pre Cast Stone and Foam Corp, violated the provisions of chapter 440 by failing to secure the payment of workers’ compensation and assessing against Respondent a penalty in the amount of $17,274.30. DONE AND ENTERED this 18th day of February, 2016, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN 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 18th day of February, 2016.
The Issue Whether Gio & Sons, Inc. (Respondent) violated Sections and 440.38, Florida Statutes, and if so, what penalty should be imposed. References to sections are to the Florida Statutes (2004).
Findings Of Fact Petitioner is the state agency responsible for enforcing provisions of Florida law, specifically Chapter 440, Florida Statutes, which require that employers secure workers’ compensation coverage for their employees. Respondent, whose principal is Giovanny Martinez, Jr. (Mr. Martinez), is in the business of providing drywall installation services. At all times material to this case, Respondent is an employer within the meaning of Section 440.02(16)(a), Florida Statutes. At all times material to this case, Respondent was legally obligated to provide workers' compensation insurance in accordance with the provisions of Chapter 440, Florida Statutes, for all persons employed by Respondent to provide drywall installation services within Florida. In particular, Chapter 440 requires that the premium rates for such coverage be set pursuant to Florida law. At all times material to this case, Respondent failed to obtain workers' compensation coverage on behalf of over 150 employees. It is undisputed that Respondent had not furnished the required coverage, and that there was no valid exemption from this requirement. Accordingly, on February 26, 2004, the Stop Work Order was properly entered. Thereafter, Petitioner reviewed Respondent's payroll records, which revealed that Respondent employed the individuals referred to in paragraph 5, whose identities are not in dispute, under circumstances which obliged Respondent to provide workers' compensation coverage for their benefit. Based upon Respondent’s payroll records, Petitioner correctly calculated the penalty amount imposed by law under all the circumstances of the case, and issued the Amended Order imposing a penalty assessment in the amount of $107,885.71. Mr. Martinez does not dispute the factual or legal merits of Petitioner's case.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order that affirms the Amended Order in the amount of $107,885.71. DONE AND ENTERED this 15th day of December, 2004, in Tallahassee, Leon County, Florida. S FLORENCE SNYDER RIVAS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of December, 2004. COPIES FURNISHED: Joe Thompson, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 Giovanny Martinez, Jr. Gio & Sons, Inc. 6910 Southwest 18th Court Pompano Beach, Florida 33068 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florid a 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue Whether Petitioner properly issued a Stop Work Order and Penalty Assessment against Respondent for failing to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes.
Findings Of Fact Petitioner is the state agency responsible for enforcing the Florida Workers' Compensation Law, chapter 440, Florida Statutes, including those provisions that employers shall be liable for, and shall secure and maintain payment of compensation for their employees who suffer work-related injuries. Respondent is an active Florida for-profit corporation, having been first incorporated on November 18, 2004. Respondent has been certified as a Building Contractor by the Department of Business and Professional Regulation, Construction Industry Licensing Board, and holds license No. CBC1253639. On March 28, 2011, Petitioner's investigator, Allen DiMaria, conducted a random inspection of a worksite at 3434 Atlantic Boulevard, Jacksonville, Florida 32207. Mr. DiMaria noticed an individual at the site cutting wood with a circular saw. He introduced himself to the individual and produced identification. Mr. DiMaria then asked the individual what he was doing and for whom he worked. The individual identified himself as Mickey Larry Griffis, Jr., stated that he was cutting wood to replace rotted wood on a privacy fence, and indicated that he was employed by Respondent. He stated that it was his first day working for Respondent, but that he had worked for Respondent in the past. Mr. DiMaria proceeded to call Respondent, as the contractor on the project, and spoke with Robert Miranda. Mr. Miranda indicated that he hired Mr. Griffis to watch work at the site, but not to do the work. Despite Mr. Miranda?s explanation, Mr. DiMaria correctly determined that Mr. Griffis was engaged in “construction” activity for which workers? compensation insurance coverage was required. Mr. DiMaria returned to his office, and consulted the Coverage and Compliance Automated System (CCAS), the statewide database for workers? compensation information, to determine Respondent?s status in the workers? compensation system. Using the CCAS, Mr. DiMaria determined that Respondent had no workers? compensation coverage on file for any employee of the company. Rather, Respondent had an exemption, which is issued by Petitioner to officers of companies, and which serves to exempt said officers from the requirement to obtain workers? compensation insurance for themselves. Pursuant to section 440.05(3), exemptions apply only to the officers of a company, not to employees. Mr. DiMaria conferred with his supervisor, who authorized him to issue a Stop-Work Order and Penalty Assessment. The consolidated Stop-Work Order and Penalty Assessment was issued on March 28, 2011, and posted on the construction site. The Order required Respondent to cease all business operations statewide. The Order also assessed a penalty equal to 1.5 times the amount the employer would have paid in premium when applying the approved manual rates to the employer's payroll for the preceding three-year period, pursuant to section 440.107(7)(d). On March 29, 2011, Mr. DiMaria issued a Request for Production of Business Records for Penalty Assessment Calculation (hereinafter the "Request") to Respondent, requiring Respondent to produce business records for the period of March 29, 2008, through March 28, 2011. The records requested included, but were not limited to business licenses, banking and account records for payroll and disbursements, and records regarding subcontractors and other leased or temporary workers. In response to the Request, Respondent provided Petitioner with certain licenses, proposals, and contracts for work performed. Respondent also sent Certificates of Election to be Exempt from Florida Workers? Compensation Law that had been issued to Respondent by Petitioner. The certificates identified the scope of Respondent?s business as demolition, painting, framing, drywall, and “certified building contractor.” All records received by Mr. DiMaria were sent by him to Cathe Ferguson, who was responsible for performing penalty calculations. Ms. Ferguson reviewed the records in order to determine the appropriate penalty based on the information provided. The penalty worksheet prepared by Ms. Ferguson indicates that no payroll information was supplied to Petitioner by Respondent regarding Mr. Griffis, the employer on-site at the time of the inspection. Therefore, Mr. Griffis? payroll was imputed pursuant to section 440.107(7)(e). Ms. Ferguson used the “Scopes Manual” published by the National Council on Compensation Insurance, and adopted by Petitioner in Florida Administrative Code Rule 69L-6.021, to determine the appropriate level of imputed compensation to Mr. Griffis. She determined that the work being performed on the site fell within class code 6400. Class code 6400 is described in rule 69L-6.021(2)(yyy) as “Fence Installation and Repair - Metal, Vinyl, Wood or Prefabricated Concrete Panel Fence Installed By Hand.” Based on the evidence related to the inspection, which indicated that Mr. Griffis was engaged in the repair of a wooden privacy fence, the work being performed by Mr. Griffis falls within class code 6400. Mr. Griffis? salary was imputed for the full three- year period from March 30, 2008, to March 28, 2011, with a total imputed payroll of $183,327.82. The workers? compensation insurance premium was calculated by multiplying one percent of the gross payroll for that period by the approved manual rate for each quarter, which resulted in a calculated premium of $14,415.62. The penalty was determined by multiplying the calculated premium by 1.5, resulting in the final penalty of $21,623.46.1/ On April 8, 2011, Petitioner issued an Amended Order of Penalty Assessment assessing a monetary penalty amount of $21,623.46 against Respondent. Respondent subsequently provided Petitioner with additional records regarding Respondent?s employees, including a number of bank records. Ms. Ferguson revised her penalty worksheet to reflect that payroll was now based on records, rather than being imputed, included a number of additional employees for fixed periods of employment, and applied different class codes. Ms. Ferguson testified that her application of the class codes was based upon her review of employee records and check ledgers provided by Respondent. Petitioner did not appear at the hearing to offer evidence to the contrary. Ms. Ferguson?s determinations were supported by competent, substantial evidence, and it is found that her determination of the appropriate class code for each employee was accurate. Total payroll for the three-year period in question was determined to be $14,676.25. Applying the same formula as that applied to determine the penalty amount reflected in the Amended Penalty Assessment, the premium was calculated to have been $1,682.15, with a resulting penalty of $2,523.27. On August 11, 2011, Petitioner issued a 2nd Amended Order of Penalty Assessment reducing Respondent's penalty from $21,623.46 to $2,523.27. Petitioner subsequently removed Al Baukecht, Mack Plumbing, and “No Name” from the list of Respondent?s employees. With that change, total payroll for the three-year period in question was reduced to $14,092.00. The premium was calculated to have been $1,646.57, and the penalty reduced from $2,523.27 to $2,469.90. On September 21, 2011, Petitioner issued a 3rd Amended Order of Penalty Assessment reducing Respondent's penalty to $2,469.90.
Recommendation Based on the findings of fact and conclusions of law, it is RECOMMENDED that Petitioner enter a final order assessing a penalty of $2,469.90 against Respondent, Robert Miranda Construction, Inc., for its failure to secure and maintain required workers? compensation insurance for its employees. DONE AND ENTERED this 28th day of December, 2011, in Tallahassee, Leon County, Florida. S E. GARY EARLY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of December, 2011.
Findings Of Fact 8. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on February 16, 2010 and the Amended Order of Penalty Assessment issued on May 6, 2010, which are attached as “Exhibit A” and “Exhibit B,” respectively, and fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment and the Amended Order. of Penalty Assessment served’ in Division of Workers’ Compensation Case No. 10-060-D3, and being otherwise fully advised in the premises, hereby finds that: 1. On February 16, 2010, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 10-060-D3 to INITECH RESTORATION, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein INITECH RESTORATION, INC.. was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 2. On March 29, 2010, the Stop-Work Order and Order of Penalty Assessment was served by certified mail on INITECH RESTORATION, INC. A copy of the Stop-Work Order . and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On April 2, 2010, INITECH RESTORATION, INC. filed a petition requesting an administrative hearing with the Department. The petition was forwarded to the Division of Administrative Hearings on May 10, 2010, and the matter was assigned DOAH Case No. 10- 2484. 4. On May 6, 2010, the Department issued an Amended Order of Penalty Assessment to INITECH RESTORATION, INC. in Case No. 10-060-D3. The Amended Order ‘of Penalty Assessment assessed a total penalty of $50,756.24 against INITECH RESTORATION, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein INITECH RESTORATION, INC. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28- 106.2015, Florida Administrative Code. 5. On May 10, 2010, the Amended Order of Penalty Assessment was served through the Division of Administrative Hearings in Case No. 10-2484. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 6. On June 4, 2010, an Order Canceling Hearing and Placing Case in Abeyance was entered by the Administrative Law Judge, sua sponte. The Order directed the parties to advise of the status of the case by August 9, 2010. 7. On August 5, 2010, the Department filed its Response to the Order, however INITECH RESTORATION, INC. failed to comply with the Order. After receiving no response to the Order, the Administrative Law Judge entered an Order Closing File which relinquished jurisdiction of the matter to the Department for final disposition. A copy of the Order Closing File is attached hereto as “Exhibit C” and incorporated herein by reference.
Findings Of Fact 11. — The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on February 3, 2009, and the Fourth Amended Order of Penalty Assessment issued on February 5, 2010, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment and the Fourth Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-014-D2, and being otherwise fully advised in the premises, hereby finds that: 1. On February 3, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop- Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-014-D2 to ASSOCIATED WINDOW AND DOOR, INC. (ASSOCIATED). The Stop-Work Order and Order of Penalty Assessment included a Notice of rights wherein ASSOCIATED was advised that any request for an administrative proceeding to challenge or contest the Stop- Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 2. On February 3, 2009, the Stop-Work Order and Order of Penalty Assessment was served via personal service on ASSOCIATED. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On April 10, 2009, the Department issued an Amended Order of Penalty Assessment to ASSOCIATED in Case No. 09-014-D2. The Amended Order of Penalty Assessment assessed a total penalty of $99,761.78 against ASSOCIATED. The Amended Order of Penalty Assessment included a Notice of Rights wherein ASSOCIATED was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569.and 120.57, Florida Statutes. 4. The Amended Order of Penalty Assessment was served on ASSOCIATED by personal service on April 13, 2009. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On April 30, 2009, the Department issued a Second Amended Order of Penalty Assessment to ASSOCIATED in Case No. 09-014-D2. The Second Amended Order of Penalty Assessment assessed a total penalty of $76,081.13 against ASSOCIATED. The Second Amended Order of Penalty Assessment contained a Notice of Rights wherein ASSOCIATED was advised that any request for an administrative proceeding to challenge or contest the Second Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Second Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 6. The Second Amended Order of Penalty Assessment was served on ASSOCIATED by personal service on May 1, 2009. A copy of the Second Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and is incorporated herein by reference. 7. On May 22, 2009, ASSOCIATED filed a timely Petition for a formal administrative hearing in accordance with Sections 120.569 and 120.57, Florida Statutes. The Petition was forwarded to the Division of Administrative Hearings and assigned Case No. 09- 3044. . 8. On February 5, 2010, the Department issued a Fourth Amended Order of Penalty Assessment to ASSOCIATED in Case No. 09-014-D2. The Fourth Amended Order of Penalty Assessment assessed a total penalty of $1,256.24 against ASSOCIATED. The Fourth Amended Order of Penalty Assessment was served on ASSOCIATED through the Division of Administrative Hearings. A copy of the Fourth Amended Order of Penalty Assessment is attached hereto as “Exhibit D” and is incorporated herein by reference. 9. ‘On February 10, 2010, ASSOCIATED filed a Motion to Close File Due to Settlement in DOAH Case No. 09-3044. A copy of the Motion to Close File Due to Settlement filed by ASSOCIATED. is attached hereto as “Exhibit E.” 10. On February 10, 2010, Administrative Law Judge Errol H. Powell entered an Order Closing File, relinquishing jurisdiction to the Department. A copy of the February 10, 2010 Order Closing File is attached hereto as “Exhibit F.”
The Issue The issues are whether Respondent violated Sections 440.10 and 440.38, Florida Statutes (1997), by not securing workers' compensation insurance for its Florida employees; and if so, whether Petitioner properly issued a Stop Work Order and assessed civil penalties pursuant to Sections 440.107(5) and 440.107(7), Florida Statutes (Supp. 1998).
Findings Of Fact Petitioner is the state agency that is charged with the responsibility of enforcing the statutory requirements for employers to provide their employees with workers' compensation coverage. Respondent is a business, located in Savannah, Georgia, that supplies workers on a temporary basis to client businesses. The services that Respondent provides to its client businesses include the payment of payroll, taxes, and workers' compensation insurance for the temporary employees. American Interstate Insurance Company (AIIC) provided Eastern Personnel Services II, Federal Employers Identification Number (FEIN) 58-2340211, with workers' compensation insurance from November 18, 1997, through November 18, 1998, in the state of Georgia. AIIC's policy number 97WAGA1109996 did not provide coverage for any of Respondent's workers in Florida. AIIC is not authorized in Florida to write insurance for an employer with Respondent's assigned risk classification. Safeco Insurance Company of America (SICA) provided Respondent, FEIN 58-2340211, with workers' compensation insurance from December 29, 1998, through December 29, 1999, in the states of Georgia and South Carolina only. SICA's policy number WC7260735 as originally drafted, and as it existed on March 2, 1999, did not provide coverage for any workers in Florida. Paul Day is Respondent's president and sole officer and shareholder. He is also the owner of Eastern Personnel Services II, a sole proprietorship. According to AIIC's and SICA's insurance policies, both entities have the same FEIN. The record here indicates that there is no substantive difference between Respondent and Eastern Personnel Services II. Respondent's testimony to the contrary is not persuasive. 1/ For all practical purposes, Respondent and Eastern Personnel Services II were under the exclusive management and control of Mr. Day at all relevant times. Beginning as early as August 28, 1997 and continuing through March 2, 1999, Respondent provided employees to Foley & Associates Construction Co., Inc. (Foley) at one or more work sites on Amelia Island, Florida. Respondent did not secure workers' compensation insurance for these workers. Stanley Benner was one of the first of Respondent's employees to begin working at Foley's Amelia Island job site. On November 9, 1998, Mr. Benner was injured while working for Respondent. Mr. Benner filed a workers' compensation claim against Respondent and AIIC seeking compensation for his injuries. He subsequently learned that AIIC did not provide workers' compensation insurance for Respondent in Florida. Mr. Benner has received no compensation from Respondent or any insurance carrier for his work-related injury. On March 2, 1999, Mr. Benner's attorney filed a complaint with Petitioner regarding Respondent's lack of workers' compensation coverage. Robert Lambert, Petitioner's investigator immediately went to Foley's job site to investigate the complaint. Upon his arrival at the construction site, Mr. Lambert learned that Respondent had 21 employees performing general contract labor for Foley that day. Foley's office manager informed Mr. Lambert that Respondent had provided Foley with between 15 and 20 laborers per day for one year. Next, Mr. Lambert called Mr. Day who provided a certificate of insurance from SICA by facsimile transmission. However, the certificate listed Saxon and Associates, a business located in Georgia, as the certificate holder. It did not reference coverage for employees provided to Foley in Florida. Mr. Lambert then called Linda Burtchett of HGI, Inc. She is an insurance agent and the authorized representative of SICA. HGI, Inc. is the producer of SICA's policy number WC7260735. Ms. Burtchett informed Mr. Lambert that SICA's policy number WC7260735 did not cover Respondent's employees in the state of Florida. To her knowledge, Respondent had never reported any wages on a Florida payroll. Mr. Lambert issued a Stop Work Order dated March 2, 1999. The Stop Work Order required Respondent to immediately cease all work at the Foley construction site. It advised Respondent that a civil penalty in the amount of $100 would be assessed for each day that it failed to provide the required workers' compensation coverage. Later on March 2, 1999, Respondent requested HGI, Inc. to provide coverage for its Florida employees working at the Foley job site under SICA's policy number WC7260735. HGI, Inc. complied with Respondent's request. Accordingly, Petitioner correctly assessed Respondent with a civil penalty in the amount of $100 in conjunction with the Stop Work Order. Mr. Day testified that the endorsement to the SICA policy provided coverage for Respondent's Florida employees retroactive to September 29, 1998. He also testified that another of Respondent's Florida employees was injured at the Foley construction site on January 18, 1999, and received compensation under the SICA policy. Mr. Day's testimony is not credited in light of Ms. Burtchett's testimony. On March 2, 1999, Petitioner informally requested Respondent to provide business records to establish the value of its Florida payroll during the three years before Petitioner issued the Stop Work Order. Respondent refused to provide Petitioner with any payroll records. Petitioner obtained records maintained by Foley regarding Respondent's employment activities at the Amelia Island job site. Foley's records showed the number of employees that Respondent employed, the number of hours worked by each employee, and their hourly rate of pay. Respondent admitted and Foley's records confirmed that Respondent's payroll at the Foley construction site was $209,249.86 between January 5, 1998 and March 1, 1999. The National Council of Compensation Insurance (NCCI) classifies Respondent as a temporary labor service. According to the NCCI, the employment activities conducted by Respondent's employees at the Foley construction site have an assigned insurance premium rate in the conservative amount of $22.34 for each $100 of payroll. Therefore, Respondent's evaded insurance premium on a payroll of $209,249.86 is $46,746. The administrative penalty is twice the evaded premium of $46,746 or $93,492. On March 31, Petitioner properly issued a Notice and Penalty Assessment Order requiring Respondent to pay an administrative penalty in the amount of $93,492. Respondent's untimely discovery responses indicated that its Florida payroll was $196,701.62 in 1998 and $65,165.36 in 1999. Petitioner could have assessed Respondent with an administrative penalty in the amount of $115,743.26.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That Petitioner enter a final order affirming the Stop Work Order and Notice and Penalty Assessment Order with their associated penalties, plus any lawful interest. DONE AND ENTERED this 12th day of October, 1999, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of October, 1999.
