The Issue Whether Respondent failed to secure the payment of workers’ compensation in violation of Sections 440.10(1), 440.38(1) and 440.107(2), Florida Statutes, by materially misrepresenting and concealing employee duties as to avoid proper classification for premium calculation, and if so, what is the appropriate penalty?
Findings Of Fact The Department is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. Respondent is a commercial welding corporation based in Putnam County, Florida. It has been in business as an active Florida corporation since the early 1950s. Its principal office is located at 1301 Madison Street, Palatka, Florida 32177. Petitioner is an “employer” for purposes of Chapter 440, Florida Statutes. Respondent is in the business of welding, fabrication and erection of structural steel, fabrication and installation of metal handrails and fire escapes to existing buildings, and various other metal fabrication and welding operations. Respondent is engaged in the construction industry. At all material times, Respondent maintained a policy of workers’ compensation insurance for all of its employees. Respondent’s workers’ compensation insurance at issue in this case was obtained through the Florida Retail Federation Insurance Fund, and was in place since February 1, 2002. Pursuant to the Department's statutory authority, after receiving a referral based on a fatal accident at a site where Respondent was providing work, Investigator Daniel Pfaff of the Department's Division of Workers' Compensation, Bureau of Compliance, conducted an investigation into Respondent’s workers’ compensation coverage. The investigator reviewed payroll records as well as certificates of insurance. Respondent cooperated with the Department’s investigation, providing all requested documents and responding to the questions of Petitioner’s investigation. Investigator Pfaff determined that Respondent had not secured workers’ compensation coverage consistent with the job descriptions of its employees. At the final hearing it was shown that, indeed, the job classification code2/ listed on Respondent's workers' compensation policy for Respondent's non-clerical work used to determine premiums paid by Respondent was not appropriate for much of the work Respondent was performing. The job classification code on Respondent’s workers’ compensation policy for the non-clerical work performed by Respondent was 3822. Classification code 3822 encompasses manufacturing or assembling automobile, bus, truck, or trailer bodies made of die pressed steel. Classification code 3822 does not encompass fabrication of iron or steel outside of a welding shop, erection of iron or steel structures, fabrication and installation of metal handrails and fire escapes to existing buildings, or operation of machinery to lift materials used to erect buildings (collectively "off-site erection work"). Based upon contracts provided by Respondent to the Department, the Department determined that the proper classification codes for the off-site erection work performed by Respondent’s employees were 5040 and 5057. Classification code 5040 encompasses the erection of iron or steel frame structures, the assembly and fabrication of iron or steel frame structures at the erection site, welding operations incidental to steel erection work, and the installation of iron or steel balconies, fire escapes, and staircases to existing buildings. Classification code 5057 encompasses iron or steel erection not otherwise classified in the Scopes® Manual. After it was determined that Respondent did not have the proper workers’ compensation insurance, Investigator Pfaff issued a Stop Work Order and Order of Penalty Assessment against Respondent on behalf of the Department on February 12, 2010. The Stop-Work Order is on a form with supporting allegations that may be selected by checking the box next to the allegation. The boxes checked on the Stop-Work Order comprise the following allegation: “Failure to secure the payment of workers’ compensation in violation of sections 440.10(1), 440.38(1) and 440.107(2) Florida Statutes by: materially misrepresenting and concealing employee duties as to avoid proper classification for premium calculation.” The allegation selected in the Amended Order of Penalty Assessment refines the allegation of the Stop-Work Order by alleging “Failure to secure the payment of workers’ compensation within the meaning of section 440.107(2), F.S., by: materially misrepresenting or concealing employee duties so as to avoid proper classification for premium calculations.” The Second Amended Order of Penalty Assessment contains no separate allegation, but rather references the original Stop-Work Order and Order of Penalty Assessment and the Amended Order of Penalty Assessment. No other charging documents were provided by Petitioner in support of the proposed penalty. At the final hearing, Petitioner presented evidence demonstrating that the appropriate job classification code for the majority of Respondent’s work was 5040. It also provided evidence that $60,873.60 was the amount of penalty that would be due if a violation had occurred. The penalty amount was calculated by using payroll amounts provided by Respondent and the approved rates for the proper job classification codes to determine the amount of premium that should have been paid and then, after giving Respondent credit for previous premiums paid, multiplying the result by 1.5 in accordance with applicable rules. Petitioner, however, did not provide sufficient evidence that Respondent failed “to secure the payment of workers’ compensation in violation of sections 440.10(1), 440.38(1) and 440.107(2) Florida Statutes by materially misrepresenting and concealing employee duties as to avoid proper classification for premium calculation” as alleged in the Stop-Work Order. Rather than showing that Respondent misrepresented or concealed employee duties to avoid proper classification, the evidence indicated that Respondent believed that its company was compliant with Florida workers’ compensation coverage requirements. While the Scopes® Manual explains the various job classification codes, there was no evidence that the Scopes® Manual has ever been provided to Respondent or that Respondent was the one who selected the job classification codes that were on its workers’ compensation policy. The job classification description for classification code 3822 provided on premium summaries and statements from the insurance agent and carrier to Respondent were different at different times. One description was “auto, bus, truck body, MFG/steel” and another was “auto, bus, truck, trailer manufacturing, die press.” The self-audit reports abbreviate job classification 3822 as “Auto bus truck body mfg/steel.” These abbreviations do not give notice that Respondent’s job classification was wrong. In addition, the evidence showed that Respondent’s workers’ compensation insurance carrier conducted regular audits of Respondent's operations. Respondent cooperated with the audits. During the course of the audits, the insurance auditor would go to Respondent’s premises where the auditor was able to observe the types of machinery, equipment, and operations used by Respondent. Despite evidence on the premises indicating that Respondent was engaged in work beyond the scope of job classification code 3822 established at the final hearing, there is no evidence that the auditors, carriers, or agents ever questioned the workers’ compensation insurance job classification codes that were on Respondent’s policy, summaries, and audit forms that they transmitted to Respondent. Aside from cooperating with regular audits and allowing inspection of its premises, Respondent also provided additional information to its agent and carrier regarding its operations through Respondent’s requests for certificates of insurance for various off-site jobs. Investigator Pfaff has substantial experience in the insurance industry as an adjustor, special investigator and supervisor in property and casualty for over 30 years. As part of the investigation, investigator Pfaff obtained a number of Respondent’s certificates of insurance. The certificates of insurance were introduced as Petitioner’s Exhibit 21. Investigator Pfaff provided credible testimony that there was no real reason to send out a certificate of insurance unless a company was planning to perform work for another company. The certificates of insurance were issued by Respondent’s insurance agent at Respondent’s request for off- site erection work for a variety of different companies located in a variety of counties, and contain information showing that Respondent was performing work outside its premises. Respondent’s representative testified that Respondent informed its insurance agent of the location of the work each time a certificate of insurance was issued. The Department demonstrated that the off-site erection work being performed by Respondent was not consistent with the workers’ compensation classification code in place for Respondent. The certificates of insurance, however, were approved by the insurance agent or carrier, and neither expressed any concern that the workers’ compensation insurance coverage was insufficient in any respect. In addition, the carrier was made aware of the type of work performed by Respondent by prior claims. Respondent had previously reported two other workers’ compensation incidents which arose from work performed off of the premises. One previous off-site erection work incident involved an injury resulting from an employee falling from a crane, and the other involved an employee’s fall through a roof skylight. The insurance carrier was made aware that off-site erection and construction work was being performed by Respondent in each of these incidents. Even though it was established at the final hearing that job classification code 3822 utilized for Respondent’s workers’ compensations insurance for those incidents should not have covered the off-the-premises incidents, Respondent’s insurance carrier and insurance agent never suggested that Respondent’s workers’ compensation coverage was deficient or erroneous. In sum, Petitioner did not show that Respondent materially misrepresented or concealed employee duties in order to avoid proper classification for premium calculation of its workers’ compensation policy.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered dismissing the Stop-Work Order, Order of Penalty Assessment, Amended Order of Penalty Assessment, and Second Amended Order of Penalty Assessment issued against Respondent, and ordering the return of any penalty paid by Respondent under the Periodic Payment Agreement. DONE AND ENTERED this 24th day of November, 2010, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of November, 2010.
The Issue The issues in this case are whether Professional Staffing and Payroll Services, LLC, failed to secure the payment of workers' compensation coverage for its employees in violation of chapter 440, Florida Statutes (2014), and, if so, the penalty that should be imposed.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation insurance coverage for their employees, pursuant to chapter 440, Florida Statutes. Respondent, Professional Staffing and Payroll Services, LLC, is a registered Florida limited liability company. At all times relevant to this proceeding, its business address was 1400 Colonial Boulevard, Suite 260, Fort Myers, Florida. Respondent actively engaged in business during the period from February 1, 2015, to June 17, 2015. On June 2, 2015, Petitioner's compliance investigator, Jack Gumph, conducted a workers' compensation compliance investigation at a worksite located at 8530 Palacio Terrace North, Lot 67, Hacienda Lakes, Naples, Florida. At the worksite, Gumph observed five workers nailing down plywood on the trusses of the roof of a house under construction. One of the workers, Fernando Fernandez, identified himself as the job foreman. Mr. Fernandez and the other four workers were employed by J.S. Valdez, Inc. ("JSV"). These workers were engaged in carpentry work installing plywood. This type of carpentry work is classified as National Council on Compensation Insurance ("NCCI") class code 5403 and is considered a type of construction activity under Florida Administrative Code Rule 69L-6.021(2)(cc). The evidence established that JSV was a client company of Global Staffing Services, LLC ("GSS"), and that GSS supplied the workers to JSV. The evidence further established that all five workers Gumph observed at the Palacio Terrace jobsite were employees of GSS. Using the State of Florida's Coverage and Compliance Automated System ("CCAS") computer database, Gumph determined that JSV did not have workers' compensation insurance covering any of its employees, and that GSS had workers' compensation coverage only for two secretarial/clerical employees. Through research in the Florida Department of State, Division of Corporations Sunbiz database ("Sunbiz"), Gumph discovered that GSS was part of three related——as Gumph characterized it, "commingled"——business entities; these entities were GSS, Global Staffing Payroll, LLC ("GSP"), and Professional Staffing and Payroll Services, LLC, the named Respondent in this case. Ivan Hernandez was shown in Sunbiz as being the managing member of GSS and GSP. At that time, the managing member of Respondent was shown as being Martha Coloma. Gumph suspected that Respondent was leasing construction workers, who are engaged in hazardous work, through a staffing company that was characterized as a secretarial/clerical business (NCCI code 8810)——a substantially less hazardous occupation. The effect of classifying of these business as "secretarial/clerical" is that a much lower workers' compensation premium rate applies.2/ Gumph prepared requests for production of business records ("RPBR") for each of the related business entities and visited the business address listed in Sunbiz for GSS to personally serve them on Hernandez. The business was located in a strip mall that housed various types of businesses. As he was entering the business, he noted that the name shown at the entrance was "Professional Staffing." The business manager explained that GSS was opened in 2013, and that on February 1, 2015, the business name had been changed to Professional Staffing and Payroll Services——the named Respondent in this proceeding. Upon inquiry, Gumph was told that Hernandez was "out of state." Almost as soon as he left Respondent's business office, Gumph received a call from Hernandez, who confirmed that he was the owner and chief executive officer of both GSS and Respondent. Gumph scheduled an appointment with Hernandez for June 16, 2015. However, Hernandez did not keep that appointment or call Gumph back to reschedule the appointment. It was obvious to Gumph that Hernandez was avoiding him. In researching the Sunbiz records for Respondent, Gumph also noted that on June 16, 2015, the managing member's name had been changed from Martha Coloma to Ivan Hernandez. He also rechecked the CCAS and NCCI databases for Respondent and noted that only a few days before, a workers' compensation policy had been issued for Respondent. The policy listed the business as "secretarial/clerical" and had a total exposure of $143,000 to cover four secretarial/clerical employees. He also noted that GSS had a workers' compensation policy that was effective from August 15, 2014, to August 15, 2015, and that this policy did not cover any additional insured entities, so its coverage did not extend to Respondent or its employees. Gumph contacted Martha Coloma, who was employed by All Florida Financial Services, LLC, a payroll preparation and bookkeeping firm. Coloma told Gumph that in January 2015, Hernandez had asked her to amend the Sunbiz records for Respondent to be shown as Respondent's managing member. Coloma also told Gumph that Hernandez requested that she find a Professional Employer Organization ("PEO") leasing company that would secure workers' compensation coverage for approximately 40 to 50 of his employees who were engaged in construction work.3/ Coloma was unsuccessful, so Hernandez directed her to obtain another policy for secretarial/clerical employees. She obtained the policy covering the four secretarial/clerical employees. Thereafter, Gumph spoke directly with Hernandez, who confirmed that he employed 40 to 50 construction workers. He told Gumph that he had tried to obtain a policy but had been unable to do so. On June 17, 2015, Gumph issued a Stop-Work Order and Order of Penalty Assessment to Respondent, and also served a RPBR on Respondent. In response, Respondent provided business records consisting of bank statements from a Regions Bank account covering the period from February 1, 2015, to February 28, 2015. Respondent did not provide any copies of checks written during this period. Respondent also provided business records consisting of bank statements and copies of checks from a Fifth Third Bank payroll account for Respondent for the period of March 1, 2015, through June 17, 2015. The evidence establishes that between February 1, 2015, and June 12, 2015, Respondent employed 437 employees—— the great majority of whom worked in construction jobs——for whom Respondent failed to secure workers' compensation insurance coverage. For the period between June 13, 2015, and June 17, 2015, Respondent secured workers' compensation coverage for four secretarial/clerical employees. Based on the business records provided, Lynne Murcia, Petitioner's penalty auditor, calculated the penalty to be assessed against Respondent. Pursuant to section 440.107(7)(d)1., the penalty for failing to secure workers' compensation is equal to two times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during the period for which the employer failed to secure coverage during the two-year period preceding issuance of the Stop-Work Order. Here, because Respondent became a business entity on or about February 1, 2015, the penalty period applicable to this proceeding commenced on February 1, 2015, and ran through June 17, 2015, the date on which the Stop-Work Order and Penalty Assessment were served on Respondent.4/ Respondent did not obtain any exemptions from the workers' compensation coverage requirement for the period between February 1, 2015, and June 17, 2015. The business records Respondent provided in response to the RPBR were not sufficient to enable Petitioner to calculate Respondent's payroll for the period commencing on February 1, 2015, and ending on February 28, 2015. Accordingly, Petitioner imputed the gross payroll for Respondent's employees identified in the taxable wage report for the period covering February 1, 2015, through February 28, 2015, the statewide average weekly wage effective at the time of the Stop-Work Order, multiplied by two. The imputed wages for these employees over this period amounted to $2,544,907.68. For the period commencing on March 1, 2015, and ending on June 17, 2015, Respondent provided records sufficient to enable Petitioner to determine Respondent's actual gross payroll. For this period, Respondent's gross payroll amounted to $1,202,781.88. The evidence shows that for the period from February 1, 2015, through June 12, 2015, Respondent failed to secure workers' compensation coverage for any of its employees. On June 13, 2015, Respondent secured workers' compensation covering four secretarial/clerical employees. This coverage did not extend to Respondent's employees engaged in work other than secretarial/clerical work. For the period from June 13, 2015, to June 17, 2015, Respondent's gross payroll was calculated as $22,507.37. In calculating the applicable penalty, Respondent received a credit of $923.98 for the premium paid on the policy secured on June 12, 2015. This amount was deducted from the penalty owed. In calculating the penalty, Murcia determined the NCCI class code applicable to each employee according to his or her job, and applied the pertinent approved NCCI rates to determine the amount of the evaded premium for each employee. Pursuant to this method, Murcia calculated a total penalty of $645,019.36, which was reflected in the Amended Order of Penalty Assessment. In sum, Petitioner demonstrated, by clear and convincing evidence, that Respondent failed to secure workers' compensation coverage for its employees, in violation of chapter 440. The clear and convincing evidence further establishes that Petitioner correctly calculated a penalty of $645,019.36 to be assessed against Respondent pursuant to sections 440.107(7)(d)1. and 440.107(7)(e) and rule 69L-6.028.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: The Department of Financial Services, Division of Workers' Compensation, enter a final order determining that Respondent Professional Staffing and Payroll Services, LLC, violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage and imposing a penalty of $645,019.36. DONE AND ENTERED this 10th day of February, 2016, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of February, 2016.
The Issue The Principal issues in this matter are whether the Department of Financial Services, Division of Workers’ Compensation acted appropriately and within its’ statutory authority when it entered the Second Amended Order of Penalty Assessment and Stop-Work Order against the Petitioner for failing to secure workers’ compensation insurance for their employees when 4 tequired by Florida law, and whether any provisions of the Florida Workers’ Compensation Law provide for the mitigation or rescission of penalties against the Petitioner. 1 PRELIMINARY STATEMENT. This proceeding arose out of the requirement in Florida workers’ compensation law that employers must secure the payment of workers’ compensation insurance for the protection of their employees. The Petitioner in this matter is a Florida corporation currently doing business as a neighborhood food and convenience store in Fort Walton Beach, Florida. On April 26, 2011, Larry Eaton, a Compliance Investigator for the Florida Department of Financial Services, Division of Workers’ Compensation conducted a random job site workers’ compensation compliance investigation at the Petitioner’s place of business. After concluding the Petitioner had four (4) employees and did not maintain workers’ compensation insurance, the Department issued a Stop-Work Order and delivered a request for the production of business records. The Petitioner and their accountant cooperated with the Department’s investigation and provided records that were used to determine the mandated statutory monetary penalty for failing to maintain workers’ compensation insurance. The Petitioner then executed a penalty payment plan with the Department and also came into compliance with Florida’s Workers’ Compensation Law. The Petitioner has consistently objected to the Departments mandated statutory penalty as excessive, in violation of both the Florida and Federal Constitution, and contrary to the “principle of proportionality”. The Department originally referred this matter to this Hearing Officer for a F.S. 120.57(2) informal hearing, but that matter was closed when the Parties agreed a disputed issue of fact existed. This matter was then forwarded to the Florida Division of Administrative Hearings to hold a formal hearing pursuant to F.S. 120.57(1), and after discovery, the Administrative Law Judge closed his file after a finding there were no disputed issues of material fact. This matter was again assigned to this Hearing Officer to hold a telephonic informal hearing pursuant to Section 120.57(2), Florida Statutes, which occurred on November 1, 2011. Both Parties timely submitted Proposed Recommended Orders. EXHIBITS AND WITNESSES The Department submitted Eleven (11) Exhibits that are admitted into evidence without objection and include the following: Respondents Exhibit |: A copy of the Petitioner’s corporate status as contained within the Florida Secretary of State Records, dated April 26, 2010, the same day as the Departments random workers’ compliance Investigation. Respondent’s Exhibit 2: A two (2) page April 26, 2010, printout from the Department’s Financial Services Coverage and Compliance Automated System (“CCAS”) database for Mubarak Trading Corporation, Inc. teflecting no evidence of workers’ compensation insurance coverage and no exemptions from coverage. Respondent’s Exhibit 3: A copy of the Department’s hand delivered April 26, 2010 Stop- Work Order. Respondents Exhibit 4: A copy of the Department’s hand delivered April 26, 2011, Request for Production of Business Records for Penalty Assessment Calculation. Respondents Exhibit 5: A twenty six (26) page composite exhibit of the Petitioner’s payroll and -business records provided to the Department’s workers’ compensation compliance investigator. Respondent’s Exhibit 6: A copy of the Department’s May 12, 2010 Amended Order of Penalty Assessment hand delivered to the Petitioner on May 13, 2010. Respondent’s Exhibit 7: A copy of the Department’s’ Payment Agreement Schedule for Periodic Payment of Penalty executed by the Petitioner on May 13, Respondent's Exhibit 8: Respondent’s Exhibit 9: Respondent’s Exhibit 10: Respondent’s Exhibit 11: 2010, wherein the Petitioner paid Eighteen Hundred ($1,800.00) dollars as a ten percent (10%) down-payment on the Department’s Administrative Penalty. A copy of the Department’s Order of Conditional Release From Stop-Work Order dated May 13, 2010, that was entered after the execution and payment reflected in Respondent's Exhibit 7. A copy of the Department’s Second Amended Order of Penalty Assessinent dated February 2, 2011. A five (5) page excerpt from the National Council on Compensation Insurance, Inc. (“NCCI”) Scopes Manual description of Classification Code 8017 (Retail Store). A forty-nine (49) page excerpt of NCCI approved Manual Rates for Classification Code 8017, used in the calculation of the Department’s May 12, 2010, Amended Order for Penalty Assessment and February 2, 2011, Second Amended Order of Penalty Assessment. The Petitioner submitted two (2) exhibits that were admitted into evidence and consist of the following: Petitioner’s Exhibit 1: Petitioner’s Exhibit 2. A two (2) page copy of the Petitioner’s timely filed request for an informal proceeding to contest his administrative penalty, pursuant to Section 120.57(2), Florida Statutes, A four (4) page May 5, 2011, letter of tax representation from Mr. Chris Marsh and Mr. James Marsh, who provide accounting and tax services for and on behalf of Mubarak ‘Trading Corporation, Inc. The Department called two (2) witnesses to testify at the telephonic informal hearing, including Mr. Larry Eaton, a workers’ compensation compliance investigator for the Department, and Mrs. Michelle Newcomer, a workers’ compensation penalty calculator for the Department. The Petitioner offered the testimony of its’ President Ziad (“Mike”) Mubarak, as well as their tax advisors, Mr. Christopher Marsh, and Mr. James Marsh. Both Parties submitted Proposed Recommended Orders. FINDINGS OF FACT. Pursuant to Section 440.107, Florida Statutes, the Respondent is the state agency tesponsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. The Petitioner is a Florida corporation that first registered with the Florida Department of State on July 15, 1993, and was in good-standing on April 26, 2010, the date on which the Department conducted their random workers’ compensation compliance investigation. (Respondent’s Exhibit 1.) On April 26, 2011, the Respondents Workers’ Compensation Compliance Investigator, Mr. Larry Eaton, conducted a random compliance investigation at the Principal Business Address of Mubarak Trading Corporation, Inc., in Fort Walton Beach, Florida. (Respondent’s Exhibit’s 2, 3, and 4.) Upon entering the Petitioner’s work-place on April 26, 2011, the Department’s compliance investigator conducted a field interview, as well as a database search to confirm the existence of four (4) employees of Mubarak Trading Corporation, Inc., and the lack of either workers’ compensation insurance or exemptions from workers? compensation insurance coverage. (Respondent’s Exhibits 2, 3, and 4.) Upon finding four (4) employees and no workers’ compensation insurance coverage for those employees, the Department’s compliance investigator hand delivered an April 26, 2010, Stop Work Order, as well as a Request for Production of Business Records for Penalty Assessment Calculation seeking payroll information for the past three (3) years. (Respondent’s Exhibits 3 and 4.) The Petitioner provided business records to the Department in response to their Request, and based on those records, an Amended Order of Penalty Assessment was hand delivered to the Petitioner on May 13, 2010, in the amount of Seventeen Thousand Seven Hundred Ninety One and 76/100 Dollars ($17,791.76). (Respondent’s Exhibits 5 and 6.) Under protest, and in the effort to remove the Department’s April 26, 2010, Stop Work Order, the Petitioner executed a Payment Agreement Schedule for Periodic Payment of Penalty on May 13, 2010, paying Eighteen Hundred Dollars ($1,800.00) to the Department as a ten percent (10%) down-payment of the administrative penalty. (Respondent’s Exhibit 7.) The Petitioner did not purchase a policy of workers’ compensation insurance, but instead the Corporation’s President obtained an exemption from the requirement of being covered by workers’ compensation insurance. With only three (3) remaining non- exempt employees, Florida law does not require an underlying worker’s compensation insurance policy, and Mubarak Trading Corporation, Inc., was no longer in violation of Florida Workers’ Compensation Law. , Mrs. Michelle Newcomb, Penalty Calculator for the Florida Department of Financial Services, Division of Workers’ Compensation, Bureau of Compliance, was assigned the task of calculating the statutory penalty to be assessed against Mubarak Trading Corporation, Inc., for failing to secure workers’ compensation insurance. Utilizing NCCI Class Code 8017 for retail stores, the appropriate NCCI premium pages for Class Code 8017, and the documentation provided by the Petitioner, the Department calculated the mandated statutory penalty of Seventeen Thousand Seven Hundred Ninety One and 76/100 ($17,791.76) in their May 12, 2010, Amended Order for Penalty Assessment (Respondent’s Exhibit 6, 10 and 11.) The Department’s administrative penalty was ultimately adjusted downward to Sixteen Thousand, Four Hundred Twenty Nine and 44/100 Dollars ($16,429.76), as reflected in the Department’s February 2, 2011, Second Amended Order of Penalty Assessment. (Respondents Exhibit 9.) There are no disputed issues of material fact in this matter. The Petitioner’s Proposed Recommended Order acknowledges “[t]he calculation of the Section 440.107(7)(d) penalty is not in question...” The Petitioner has consistently objected to the “excessive” amount of the Department’s penalty, challenged the Department’s authority to assess unconstitutional penalties, and argues the penalty assessed violates the “principle of proportionality.”
Conclusions Christopher O. Marsh, Econotax 139 Beal Parkway SE, Ste. 102 ne Fort Walton Beach, Florida 32548 f Representative for Mubarak Trading Corp, Inc. Jamila Georgette Gooden, Esq. Florida Department of Financial Services Division of Legal Services Tallahassee, Florida 32399-4429 Attorney for the Florida Department of Financial Services, Division of Workers’ Compensation
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that a Final Order be entered affirming the Division of Workers’ Compensation Second Amended Order of Penalty Assessment in the amount of Sixteen Thousand Four Hundred Twenty Nine and 44/100 Dollars ($16, 429.44). Respectfully submitted this 19" day of December, 2011. Department of Financial Services 3700 Lifford Circle Tallahassee, Florida 32309 Phone: (850)668-9820 Fax: (850)668-9825 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the above and foregoing Recommended Order has been provided by US Mail to: Mr. Christopher Marsh, Econotax, on behalf of Mubarak Trading Corporation, Inc., 139 Deal Parkway, SE, Suite 102, Fort Walton Beach, Florida 32548 and via hand delivery in the interests of judicial economy to Alexander Brick, Esq. Department of Financial Services, Division of Legal Services, 200 East Gaines Street, Tallahassee, FL 32399-4429 this 19" day of December, 2011. Alan J. ~ 2h -13-
The Issue The issue is whether Petitioner properly issued a Stop Work Order (SWO) and Second Amended Penalty Assessment against Respondent for failing to obtain workers' compensation insurance that meets the requirements of Chapter 440, Florida Statutes.
Findings Of Fact The Division is a component of the Department of Financial Services. It is responsible for enforcing the workers' compensation coverage requirements pursuant to Section 440.107, Florida Statutes. Nobel is a corporation operating as a moving business in Florida. Nobel was incorporated in 2004 and has been operating with an active status since its inception. Yaniv Dalei is the sole owner and president of Nobel. On June 9, 2009, Petitioner's investigator, Cesar Tolentino, visited 18255 Northeast 4th Court, North Miami, Florida ("business site"), after being referred to the location to investigate Respondent for compliance with the Florida Workers' Compensation Law. At the business site, Petitioner's investigator spoke to the manager, and saw the bookkeeper and the receptionist during the visit. Respondent was not at the business site, but was out of the country in Panama when Tolentino visited. Respondent spoke to Tolentino by telephone. Respondent informed Tolentino that he had five employees and that he "was in the process of obtaining workers' compensation insurance." While at the business site, Tolentino, used the Department of Financial Services' Coverage and Compliance Automated System (CCAS), and confirmed Respondent lacked insurance for the payment of workers' compensation coverage. Additionally, Petitioner's investigator verified through the CCAS that Nobel had not secured an employee leasing company to secure workers' compensation insurance for its employees as well as found that no exemptions from workers' compensation had been issued in connection with Nobel. Petitioner's investigator also performed a National Council on Compensation Insurance search on Nobel while at the business site. The search revealed that Nobel's employees had not had workers' compensation insurance in the past. On June 9, 2009, Petitioner's investigator issued a SWO and posted it at the business site. The SWO required Respondent to cease all business operations. On June 10, 2009, Respondent obtained a certificate of insurance for workers' compensation coverage with the effective date being the same. The policy was issued by One-Stop Insurance Agency. Respondent provided the certificate to Tolentino upon receipt. On June 12, 2009, Petitioner's investigator issued to Respondent a Division of Workers' Compensation Request for Production of Business Records for Penalty Assessment Calculation ("Request"). Soon thereafter, Respondent responded to the Request and provided Petitioner's investigator with the requested records. Petitioner's investigator forwarded the documents to Jorge Pinera, Petitioner's penalty calculator, for review. On or about July 17, 2009, Petitioner issued an Amended Order of Penalty Assessment assessing a penalty of $74,794.38 against Respondent. On August 10, 2009, Respondent entered into a payment agreement with the Division. Respondent provided the Division a $7,480.00 cashier's check and agreed to pay the remainder of the assessed penalty in monthly installments. As a result, Petitioner issued an Order of Conditional Release for Nobel to operate. On March 3, 2010, Respondent supplied an employee list with position descriptions to Petitioner. After reviewing the document, Petitioner changed some employee class codes to indicate a lower rate for some occupations and recalculated the penalty amount owed with the new class codes. For the recalculation, Petitioner's penalty calculator, Russell Gray, used the following calculation from the penalty worksheet: (a) Respondent's total gross payroll from June 10, 2006, through June 9, 2009, was $1,010,001.32; (b) the total workers' compensation premium that Respondent should have paid for its employees during the relevant time period was $45,483.96; and (c) the premium was multiplied by the statutory factor of 1.5 resulting in a penalty assessment in the amount of $68,224.81. The new calculation superseded the Amended Order and a Second Amended Order of Penalty Assessment was issued March 3, 2010, reducing Respondent's penalty to $68,224.81.1 During the hearing, Respondent admitted not having workers' compensation coverage for his employees. He said, "Yes, you're right I needed to have workers' compensation but as I said . . . I never knew that I needed to have workers' compensation . . . I'm here to ask for forgiveness."
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, issue a final order affirming the Stop Work Order and Second Amended Order of Penalty Assessment in the amount of $68,224.81. DONE AND ENTERED this 20th day of April, 2010, in Tallahassee, Leon County, Florida. S JUNE C. McKINNEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of April, 2010.
The Issue 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.
The Issue The issues in this case are whether Respondent, Gary the Carpenter Construction, Inc., failed to comply with the requirements of Sections 440.10, 440.107, and 440.38, Florida Statutes, and, if so, the appropriate amount of penalty which should be assessed against Respondent.
Findings Of Fact The Department of Financial Services (hereinafter referred to as the “Department”), is the state agency charged with the responsibility of enforcing the requirement of Section 440.107, Florida Statutes, that employers in Florida secure workers' compensation insurance coverage for their employees. § 440.107(3), Fla. Stat. Respondent, Gary the Carpenter Construction, Inc. (hereinafter referred to as “GTC”), is a Florida corporation, which at the times relevant employed subcontractors in the performance of its general contracting business located in Key West, Florida. GTC and its subcontractors, at the times relevant, were performing construction activities in the State of Florida. On March 25, 2008, GTC was renovating a structure at 1300 Virginia Street, Key West, Florida. An investigator of the Department’s Division of Workers’ Compensation (hereinafter referred to as the “Division”), conducted a compliance check at the construction site, determining that GTC was the general contractor and that it was using an out-of-state business entity, Pryjomski Construction (hereinafter referred to as “Pryjomski”), as a subcontractor. A Stop-Work Order was issued to Pryjomski. Pryjomski is a Michigan corporation. As a result of the Division investigator’s findings with regard to Pryjomski, on or about April 22, 2008, a Business Records Request was made by the Division to GTC. In response to the records request, GTC provided documentation of its workers’ compensation coverage. Those records were reviewed by Russell Gray, the Department’s “Penalty Calculator.” Based upon his review of GTC’s records, it was found that GTC’s employees were covered for workers’ compensation insurance through an employee leasing service. The records provided by GTC also indicated, however, that GTC utilized the services of numerous subcontractors. A review of Department records concerning the subcontractors revealed that four of the subcontractors utilized by GTC did not meet coverage requirements: Christian Construction, Perez Painting, Pryjomski, and Tiles Etcetera. The accuracy of the penalty assessment proposed by the Department attributable to Christian Construction and Perez Painting was stipulated to by the parties, and GTC did not contest that amount of the penalty assessment attributable to those two subcontractors. Pryjomski As to Pryjomski, it was discovered that it had two Certificates of Liability Insurance (hereinafter referred to as “Certificates”), both with issuance dates after March 25, 2008, the date the Division’s investigator conducted the compliance check at GTC’s construction site. A 2007-2008 workers’ compensation policy was issued two days after March 25, 2008, and a 2006-2007 workers’ compensation policy was issued September 29, 2009. Obviously, these policies were obtained by Pryjomski because it had no coverage for 2006-2007 and 2007- 2008, as of March 25, 2008. Even if the policies obtained by Pryjomski had been effective prior to March 25, 2008, the policies were written by an out-of-state insurance company not licensed to write policies in Florida, and the policies did not have a Florida Endorsement under “Item 3A” of the declaration page of the policies. Any policy issued to an out-of-state business like Pryjomski must have an endorsement indicating that the foreign entity is paying Florida rates for Florida classification codes. This endorsement is found under “Item 3A” of the declaration page of a policy. The Pryjomski policies did not have the appropriate endorsement. At the times relevant to this matter, Pryjomski was not listed by the Department as a business with appropriate workers' compensation coverage in Florida. GTC could not, therefore, have exercised due diligence in an effort to ensure that Pryjomski had the required insurance coverage when it utilized Pryjomski’s construction services. If due diligence had been exercised, GTC would have been aware of Pryjomski’s lack of appropriate coverage. Based upon documentation provided by GTC, the Division calculated the total amount of Pryjomski’s “payroll” for which GTC was responsible. Absent any receipts for materials for which the payments were made by GTC to Pryjomski, the Division treated 20 percent of the payments as non-payroll pursuant to Florida Administrative Code Rule 69L-6.035(1)(i). Payroll for 2007, less materials, was determined to be $22,106.00. For 2008, payroll, less materials, was determined to be $10,811.93. Utilizing the “finish carpentry” classification code (number 5437) and the approved manual rate therefore of the National Council on Compensation Insurance of 13.01, the penalty for 2007 was determined to be $4,313.99. The rate for 2008 was determined to be 10.47, and the penalty was determined to be $1,698.02. Tiles Etcetera Tiles Etcetera had previously been issued a Certificate of Exemption from coverage for Gregory Veliz, the president of Tiles Etcetera. That Certificate, however, expired on August 23, 2007. Any contract amounts paid to Tiles Etcetera by GTC while the Certificate was in effect are not subject to assessment and have not been included in the penalty assessment in this matter. Amounts paid by GTC to Tiles Etcetera while the Certificate of Exemption had expired are subject to penalty. Based upon documentation provided by GTC, the Division calculated the total amount of “payroll” paid to Tiles Etcetera for which GTC was responsible. Absent any receipts for materials for which the payments were made by GTC to Tiles Etcetera, the Division treated 20 percent of the payments as non-payroll pursuant to Florida Administrative Code Rule 69L- 6.035(1)(i). Payroll for the period from August 24, 2007, to October 19, 2007, less materials, was determined to be $22,269.17. Utilizing the tile installation classification code (number 5438) and the approved manual rate therefore of the National Council on Compensation Insurance of 8.34, the penalty for 2007 was determined to be $2,786.88.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order: Finding that Respondent, Gary the Carpenter Construction, Inc., failed to secure the payment of workers’ compensation for its employees, in violation of Section 440.107, Florida Statutes; and Assessing a penalty against Gary the Carpenter Construction, Inc., in the amount of $11,122.74. DONE AND ENTERED this 31st day of March, 2009, in Tallahassee, Leon County, Florida. LARRY J. SARTIN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of March, 2009. COPIES FURNISHED: Kristian E. Dunn, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Jerry D. Sanders, Esquire Vernis & Bowling of Key West, P.A. 604 Truman Avenue, Suite 3 Key West, Florida 33040 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue 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 require employers to secure and maintain payment of workers? compensation insurance for their employees who may suffer work- related injuries. Respondent is an active Florida limited liability company, having been organized in 2006. Howard?s Famous Restaurant is a diner-style restaurant located at 488 South Yonge Street, Ormond Beach, Florida. It seats approximately 60 customers at a time, and is open for breakfast and lunch. In 2006, Edward Kraher and Thomas Baldwin jointly purchased Howard?s Famous Restaurant. They were equal partners. Mr. Baldwin generally handled the business aspects of the restaurant, while Mr. Kraher was responsible for the food. At the time the restaurant was purchased, Mr. Baldwin organized That?s Right Enterprises, LLC, to hold title to the restaurant and conduct the business of the restaurant. Mr. Baldwin and Mr. Kraher were both identified as managing members of the company.1/ On June 27, 2007, a 2007 Limited Liability Company Annual Report for That?s Right Enterprises, LLC, was filed with the Secretary of State. The Annual Report bore the signature of Mr. Kraher, and contained a strike-through of the letter that caused the misspelling of Mr. Kraher?s name. Mr. Kraher testified that the signature on the report appeared to be his, but he had no recollection of having seen the document, or of having signed it. He suggested that Mr. Baldwin may have forged his signature, but offered no explanation of why he might have done so. Although Mr. Kraher could not recall having signed the annual report, and may have had little understanding of its significance, the evidence supports a finding that Mr. Kraher did, in fact, sign the annual report for That?s Right Enterprises, LLC, as a managing member of the business entity. From March 9, 2009, through March of 2011, Mr. Kraher and Mr. Baldwin received salaries as officers, rather than employees, of That?s Right Enterprises, LLC. Their pay was substantially equivalent during that period. The paychecks were issued by the company?s accountant. Mr. Kraher denied having specific knowledge that he was receiving a salary as an officer of That?s Right Enterprises, LLC. Since Mr. Baldwin left the company, Mr. Kraher has continued to use the same accountant, and has continued to receive his salary as an officer of That?s Right Enterprises, LLC. On March 24, 2011, after having bought out Mr. Baldwin?s interest in the company by paying certain company- related debt owed by Mr. Baldwin, Mr. Kraher filed an annual report for That?s Right Enterprises, LLC. In the annual report, which was prepared and filed at his request, Mr. Kraher assumed control as the sole member and registered agent of the company. Mr. Baldwin was removed as a managing member and registered agent, and other changes were made consistent therewith. Mr. Kraher denied any understanding of the significance of his operating as the same corporate entity, but rather thought he was “buying a new LLC.” On March 8, 2012, Petitioner's investigator, Carolyn Martin, conducted an inspection of Howard?s Famous Restaurant. Ms. Martin introduced herself to one of the waitresses working at the restaurant. The waitress called Mr. Kraher from the kitchen to speak with Ms. Martin. Mr. Kraher identified himself as the owner of the restaurant for the past six years. Ms. Martin asked Mr. Kraher for evidence that Respondent?s employees were covered by workers? compensation insurance. Mr. Kraher retrieved a folder containing the restaurant?s insurance policies and information. Ms. Martin reviewed the folder, and determined that Respondent did not have workers? compensation insurance. Mr. Kraher, who was very cooperative with Ms. Martin throughout the inspection, was genuinely surprised that the restaurant employees were not covered by workers? compensation insurance. He had taken out “a million-dollar insurance policy” that he thought covered everything he needed to have. While Ms. Martin was at the restaurant, Mr. Kraher called his insurance agent who, after reviewing his file, confirmed that Respondent did not have workers? compensation insurance. Mr. Kraher immediately asked his agent to bind a policy, and paid his first six-month premium using a business credit card. A copy of the policy was quickly faxed by the agent to Ms. Martin. Ms. Martin took the names of Respondent?s employees, which included two kitchen staff and four wait staff. Some of the employees worked in excess of 30 hours per week, while others worked part-time. Ms. Martin went to her vehicle and completed a Field Interview Worksheet. Ms. Martin reviewed the Coverage and Compliance Automated System (CCAS), which is the statewide database for workers? compensation information, to confirm Respondent?s status in the workers? compensation system. Using the CCAS, Ms. Martin confirmed that Respondent had no workers? compensation coverage on file for any employee of the company. She also accessed the Florida Division of Corporations website to ascertain Respondent?s corporate status. After having gathered the information necessary to determine Respondent?s status, Ms. Martin contacted her supervisor and received authorization to issue a consolidated Stop-Work Order and Order of Penalty Assessment. The Stop-Work Order required Respondent to cease all business operations statewide. The Order of Penalty Assessment assessed a penalty, pursuant to section 440.107(7)(d), 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. The consolidated order was hand- delivered to Mr. Kraher on behalf of Respondent at 11:00 a.m. on March 8, 2012. At the time she delivered the consolidated Stop-Work Order and Order of Penalty Assessment, Ms. Martin also hand- delivered a Request for Production of Business Records for Penalty Assessment Calculation. The Request required that Respondent produce business records for the preceding three-year period, from March 9, 2009, through March 8, 2012. Respondent was given five days in which to provide the records. On or about March 12, 2012, Mr. Kraher produced three boxes of business records to Ms. Martin. Those records were forwarded by Ms. Martin, and placed in the queue for review by the penalty auditor. The records were reviewed by Petitioner?s penalty auditor, Lynne Murcia, and were found to be insufficient to establish the actual compensation paid to Respondent?s employees for the preceding three year period. Therefore, pursuant to section 440.107(7)(e), salaries were imputed for each of the six employees based on the statewide average weekly wage. Ms. Murcia used the “Scopes Manual” published by the National Council on Compensation Insurance to ascertain the classification of Respondent?s business, based upon the nature of the goods and services it provided. Class code 9082, titled “Restaurant NOC,” is described as “the „traditional? restaurant that provides wait service.” Ms. Murcia correctly determined that Howard?s Famous Restaurant fell within class code 9082. The salaries of Respondent?s six employees, as employees of a class code 9082 restaurant, were imputed as though they worked full-time for the full three-year period from March 9, 2009, to March 8, 2012, pursuant to section 440.107(7)(e). The total imputed gross payroll amounted to $1,130,921.64. The penalty for Respondent?s failure to maintain workers? compensation insurance for its employees is calculated as 1.5 times the amount Respondent would have paid in premium for the preceding three-year period. The National Council on Compensation Insurance periodically issues a schedule of workers? compensation rates per $100 in salary, which varies based on the Scopes Manual classification of the business. The workers? compensation insurance premium was calculated by multiplying one percent of the imputed gross payroll ($11,309.21) by the approved manual rate for each quarter (which varied from $2.20 to $2.65, depending on the quarterly rate), which resulted in a calculated premium of $26,562.06. The penalty was determined by multiplying the calculated premium by 1.5, resulting in the final penalty of $39,843.18. On March 28, 2012, Petitioner issued an Amended Order of Penalty Assessment assessing a monetary penalty amount of $39,843.18 against Respondent. Respondent subsequently provided Petitioner with additional payroll records regarding the six employees. The records had been in the possession of Respondent?s accountant. The records, which included Respondent?s bank statements and payroll records for the six employees, were determined to be adequate to calculate the actual employee salaries for the preceding three-year period. Ms. Murcia revised her penalty worksheet to reflect that payroll was now based on records, rather than being imputed.2/ Respondent?s total payroll for the three-year period in question was determined to be $154,079.82. 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 $3,624.33, with a resulting penalty of $5,436.64. On April 24, 2012, Petitioner issued a 2nd Amended Order of Penalty Assessment reducing Respondent's penalty from $39,843.18 to $5,436.64.
Recommendation Based on the findings of fact and conclusions of law, it is RECOMMENDED that the Department of Financial Services, Division of Workers? Compensation, enter a final order assessing a penalty of $5,436.64 against Respondent, That?s Right Enterprises, LLC, for its failure to secure and maintain required workers? compensation insurance for its employees. DONE AND ENTERED this 31st day of August, 2012, 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 31st day of August, 2012.
The Issue The issues in this case are whether Respondent, Axiom Construction Design Corporation (Axiom), failed to provide workers' compensation coverage, and, if so, what penalty should be imposed.
Findings Of Fact The Department is the state agency responsible for enforcing the various requirements of chapter 440, Florida Statutes. Section 440.107(3) mandates, in relevant part, that employers in Florida must secure workers’ compensation insurance coverage for their employees. At all times relevant, Axiom was a small Florida corporation engaged in the construction industry, principally installing drywall. Axiom’s principal office is located at 1067 Walt Williams Road, Lakeland, Florida. Mr. Pratt is Axiom’s owner, sole corporate officer, and registered agent. On July 23, 2014, Randall Durham conducted a job site workers’ compensation compliance investigation (Compliance Investigation). Mr. Durham spoke with Mr. Pratt at a job site at 109 Cattleman Road, the new Sarasota mall. Mr. Pratt and Al Lappohn were working the job site at the new mall. Mr. Pratt had a workers’ compensation policy in place with Southeast Personnel Leasing. Mr. Lappohn did not have an exemption from workers’ compensation coverage, and he was not covered by Axiom’s Southeast Personnel Leasing policy. On July 23, 2014, Mr. Pratt, as Axiom’s representative, was hand-served a Stop-Work Order1/ and a Request for Production of Business Records for Penalty Assessment Calculation (Request). This Request encompassed all of Axiom’s payroll documents, account documents, disbursements, workers’ compensation coverage policies, and professional employer organization records from January 4, 2013, through July 23, 2014. Mr. Pratt provided the certificates of liabilities, payroll and tax records for 2013, and additional business records to the Department. These records were given to Mr. Knopke to calculate the penalty. In reviewing the records, Mr. Knopke determined that Mr. Pratt, Mr. Lappohn and Frank Cutts were employees of Axiom, and that Axiom did not provide workers’ compensation coverage for them. Mr. Cutts worked for Axiom at a Family Dollar Store build-out in Orlando in early 2014. Mr. Cutts swept up after the drywall was installed in the store, and was paid $125. Axiom conceded it owed the workers’ compensation penalty based on the work Mr. Lappohn and Mr. Cutts performed. The business records provided that during the audit period Mr. Pratt had dual employment, payment being paid outside of leasing. Dual employment is when a business has a leasing policy and there is extraneous payroll that is paid outside of the leasing policy. Payments received outside of a leasing policy are considered unsecured payroll for the purposes of calculating a penalty against an employer. Mr. Knopke included Mr. Pratt’s outside distributions in the penalty calculation. The “Scopes Manual” is published by the National Council on Compensation Insurance, Inc. (NCCI), the nation’s most authoritative data collecting and disseminating organization for workers’ compensation. The manual contains certain codes related to the construction industry and trades considered to be within that industry. The installation of drywall, wallboard, sheetrock, plasterboard or cement board is considered to be “construction” under the relevant codes in the manual. The manual, with its codes and classifications, is relied upon in the insurance industry and has been adopted by the Department in Florida Administrative Code Rule 69L-6.021. Mr. Knopke, using the manual, determined the appropriate classification code for Respondent’s employees was 5445. Mr. Knopke applied the correct rates and used the methodology found in section 440.107(7)(d)1., and Florida Administrative Code Rules 69L-6.027 and 69L-6.028 to calculate the penalty assessment. Based upon the testimony and exhibits, the 3rd Amended Penalty Assessment in the amount of $20,221.62 is accurate and correct.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, issue a final order upholding the 3rd Amended Order of Penalty Assessment, and assess a penalty in the amount of $20,221.62. DONE AND ENTERED this 2nd day of June, 2015, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of June, 2015.
The Issue Whether Petitioner, Department of Financial Services, Division of Workers’ Compensation (“Petitioner” or “Department”) properly issued a Stop-Work Order and Penalty Assessment against Respondent, Barber Custom Builders, Inc. (“Respondent” or “Barber”) for failing to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes.
Findings Of Fact On January 31, 2014, the parties filed a Joint Pre- hearing Stipulation, by which the parties stipulated to the facts set forth in the following paragraphs 2 through 12. Those facts are accepted and adopted by the undersigned. The Department is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees and corporate officers. Respondent, a Florida corporation, was engaged in business operations in the construction industry in the State of Florida from June 6, 2010 through June 5, 2013. Respondent received a Stop-Work Order and Order of Penalty Assessment from the Department on June 5, 2013. The Department had a legal basis to issue and serve Stop-Work Order 13-273-1A on Respondent. Respondent contests the validity of the Department’s Stop-Work Order as a charging document. Respondent received a Request for Production of Business Records for Penalty Assessment Calculation from the Department on June 5, 2013. Respondent received an Amended Order of Penalty Assessment from the Department on June 17, 2013. Respondent executed a Payment Agreement Schedule for Periodic Payment of Penalty and was issued an Order of Conditional Release from Stop-Work Order on August 6, 2013. Respondent received a 2nd Amended Order of Penalty Assessment from the Department on September 25, 2013. Respondent employed more than four non-exempt employees during the periods of June 10, 2010 through June 30, 2010; July 2, 2010 through December 31, 2010; January 14, 2011 through December 29, 2011; January 30, 2012 through December 16, 2012; and January 4, 201[3] through June 5, 2013. Respondent was an “employer” as defined in chapter 440. All of the individuals listed on the Penalty Worksheet of the [2nd Amended Order of Penalty Assessment], except Buffie Barber and Linda Barber, were “employees” in the State of Florida (as that term is defined in section 440.02(15)(a), Florida Statutes), of Respondent during the periods of non- compliance listed on the penalty worksheets. In addition to the foregoing, in their March 12, 2014, Joint Stipulations and Status Report, the parties stipulated to the facts set forth in the following paragraphs 14 and 15. Those facts are accepted and adopted by the undersigned. Based on business records received from Respondent, the Department has recalculated the assessed penalty. The penalty has been reduced from $36,387.03 to $2,272.31. The 3rd Amended Order of Penalty Assessment is calculated correctly, if the manual rates were properly adopted by rule. A review of the stipulated 3rd Amended Order of Penalty Assessment reveals assessed penalties for employees engaged in work described as class code 5403 (carpentry - NOC) and class code 8810 (clerical office employees - NOC). Given the stipulations of the parties, further findings are unnecessary.
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 assessing a penalty of $2,272.31 against Respondent, Barber Custom Builders, Inc., for its failure to secure and maintain required workers’ compensation insurance for its employees. DONE AND ENTERED this 30th day of April, 2014, 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 30th day of April, 2014.
Findings Of Fact Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints relating to the real estate licensing laws. Respondent Homer C. King, Jr. (King), is the sole qualifier for King's Properties located at 1109 North Federal Highway, Suite 3, Hollywood, Florida. Respondent King is now, and was at all times material hereto, a licensed real estate broker in Florida having been issued license Number 00047643. On or about April 6, 1987, Respondent in Circuit Court, Broward County, Florida entered a plea of guilty, to one count of unemployment compensation fraud, a felony. Respondent was placed on probation for two years and ordered to make restitution in the amount of $1,223.00 to the Department of Labor, Division of Employment Security, Bureau of Unemployment Compensation (Department). Respondent has paid restitution to the Department and has complied fully with all the terms of his probation. During his period of probation, Respondent was at all times cooperative with the Department and the Petitioner's Investigator (testimony of Yvette Montgomery, Respondent King's Probation and Parole Officer and James J. Smith, Investigator for the Department of Professional Regulation). During times material hereto, Respondent failed to notify the Petitioner of the above-referenced plea. When Respondent Homer C. King, Jr. was arraigned on the charges of unemployment compensation fraud, he made the court aware that he was told by a representative from the unemployment compensation office that he was entitled to a certain amount of compensation from that office; in reliance on the representation that he was entitled to such compensation, Respondent completed the necessary forms to obtain the amounts he had been advised by the unemployment counselor that he was entitled to. An investigation conducted subsequent to Respondent's receipt of the money reveals that Respondent King had been overpaid. He was required to make restitution of the overpayment to the unemployment compensation office. Respondent King agreed to make restitution and did so in a timely manner.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Petitioner, Division of Real Estate, enter a Final Order imposing a $250 fine against Respondent made payable to Petitioner within 30 days of entry of the Final Order. Petitioner enter a Final Order issuing a written reprimand to Respondent based on the above-referenced acts and/or conduct. RECOMMENDED this 3rd day of August, 1988, in Tallahassee, Florida. The above recommended penalty falls within the Division of Real Estate's rule guidelines. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 1988. COPIES FURNISHED: Arthur R. Shell, Jr., Esquire Department of Professional Regulation, Division of Real Estate - Legal Section 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Homer C. King, Jr. t/a King Properties 1109 North Federal Highway #3 Hollywood, Florida 33020 Darlene F. Keller, Executive Director Department of Professional Regulation Division of Real Estate - Legal Section 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 William O'Neil, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750
