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 issue to be determined is whether Respondent complied with coverage requirements of the workers' compensation law, Chapter 440, Florida Statutes. A determination of whether Respondent functioned as an employer is a preliminary issue to be resolved.
Findings Of Fact Petitioner is the agency of state government currently responsible for enforcing the requirement of Section 440.107, Florida Statutes, that employers secure the payment of compensation for their employees. Respondent works in the fence construction industry and employs four people. Petitioner's investigator identified three people preparing a worksite for the erection of a privacy fence at 3000 Majestic Oaks Lane South in Jacksonville, Florida. The investigator then contacted Respondent and confirmed that the three identified individuals in addition to Respondent, were employed by Respondent for a total of four employees. The investigator determined none of the employees had workers’ compensation exemptions nor had Respondent secured the payment of workers’ compensation to his employees. On April 27, 2005, the investigator served a SWO on Respondent. The SWO required Respondent to cease all business operations in Florida. At the same time, the investigator served a Request for Business Records for Penalty Calculation on Respondent, requesting payroll records from Respondent for the period April 27, 2002, through April 27, 2005 (the audit period for penalty calculation). Respondent provided no records to the investigator. On May 23, 2005, the investigator determined 520 days had passed between the beginning of the audit period and September 30, 2003, and the penalty for noncompliance during this period was $52,000.00. The investigator also determined that during the period October 1, 2003, through the end of the audit period, the statewide average weekly wage paid by employers was $651.38; Respondent had four (4) employees; the imputed weekly payroll for Respondent’s employees was $320,848.00; using approved manual rates Respondent should have paid $97,969.40 in workers’ compensation premium; and the penalty for noncompliance during this period was calculated to be $146,954.12. On May 26, 2005, Investigator Bowman served the Amended Order of Penalty Assessment on Respondent. The Amended Order assessed Respondent with a penalty for the entire audit period in the amount of $198,954.12. The investigator obtained records created by Respondent demonstrating Respondent placed a bid on a job on June 1, 2005, and Respondent completed the job on July 1, 2005. On July 19, 2005, the investigator served a Corrected Amended Order of Penalty Assessment on Respondent, which assessed a penalty in the amount of $3,000.00 for violating the terms of the SWO. Respondent violated the SWO on two separate days, the day of the bid and the day the work was completed. No competent substantial evidence was presented regarding intervening business operations.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order affirming the Stop Work Order and Order of Penalty Assessment, Amended Order of Penalty Assessment, and Corrected Amended Order of Penalty Assessment, requiring Respondent to pay a penalty in the amount of $200,594.12 to Petitioner, and requiring Respondent to cease all business operations in Florida. DONE AND ENTERED this 15th day of September, 2005, in Tallahassee, Leon County, Florida. S DON W. 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 15th day of September, 2005. COPIES FURNISHED: John M. Iriye, Esquire Department of Financial Services Division of Workers Compensation 200 East Gaines Street Tallahassee, Florida 32399-422 Martin D. Snyder 10367 Allene Road Jacksonville, Florida 32219 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Carols G. Muniz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue in this case is whether Respondent violated the provisions of chapter 440, Florida Statutes, by failing to secure the payment of workers’ compensation, as alleged in the Stop-Work Order and 3rd Amended Order of Penalty Assessment, and, if so, what penalty is appropriate.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation (Department), is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation for their employees and corporate officers. Respondent, Po’ Boys, Inc. (Po’ Boys), is a Florida corporation engaged in business operations as a restaurant in the State of Florida from January 31, 2010, through January 30, 2013. Respondent employed more than four non-exempt employees during the periods January 31 through February 24, 2010; June 8 through September 3, 2010; and July 11, 2012, through January 30, 2013. Respondent was an "employer" as defined in chapter 440, Florida Statutes, throughout the penalty period. All of the individuals listed on the Penalty Worksheet of the 2nd Amended Order of Penalty Assessment were "employees" (as that term is defined in section 440.02(l5)(a), Florida Statutes) of Respondent during the periods of noncompliance listed on the penalty worksheets. None of the employees listed on the Penalty Worksheet can be classified as independent contractors, as defined in section 440.02, Florida Statutes. Mr. Jonas Hall is a workers’ compensation compliance officer who has worked for Petitioner for about four years. He has been involved with between 200 and 300 cases. On the morning of January 30, 2013, Mr. Hall received a “referral” report that Po’ Boys was not securing the payment of workers’ compensation for its employees. Po’ Boys operates three “traditional” restaurants in Tallahassee, which provide wait-service to their customers. Mr. Hall checked the Florida Department of State’s “Sunbiz” website, which gave him information on Po’ Boys’ legal structure, corporate officers, and principal location. He also checked workers’ compensation information for Po’ Boys, Inc., by accessing the Coverage and Compliance Automated System (CCAS) maintained by the Department. It indicated that Po’ Boys’ last coverage, which had become effective on February 6, 2012, had ended on July 11, 2012. He determined that active workers’ compensation exemptions were on file for four individuals, including Mr. Carmen Calabrese and Mr. Jon Sweede, co-owners of Po’ Boys. Information in the CCAS is submitted by insurance companies and the National Council on Compensation Insurance (NCCI). Mr. Hall drove to the College Avenue location of Po’ Boys to conduct a site visit, but it did not appear open because there were no vehicles present and the lights were off. Mr. Hall proceeded to the West Pensacola Street location. There were vehicles present and he saw an individual who appeared to be arranging chairs on the patio. Mr. Hall introduced himself and explained what he was doing there, and was then referred to Mr. Carmen Calabrese, the manager. It was about 10:00 a.m. Payroll records indicate that employees reported for work between 10:00 and 11:00 and that the restaurant was open to serve lunch and dinner. Mr. Calabrese took Mr. Hall to a “Broken Arm” poster which had a workers’ compensation sticker on the bottom. The sticker contained a workers’ compensation policy number and periods of coverage, as well as contact information for Zenith Insurance Company. Mr. Hall contacted Zenith Insurance Company, and they confirmed that coverage had not been in effect since July 11, 2012. In response to Mr. Hall’s questions, Mr. Calabrese indicated that Po’ Boys had between 50 and 60 employees working at its three locations. Mr. Calabrese told Mr. Hall that he had no knowledge that coverage was not in effect and that Mr. Hall would have to talk to Mr. Sweede, who handled the workers’ compensation for the business. Mr. Calabrese was a credible witness. Mr. Hall called Mr. Sweede, who in turn told Mr. Hall to contact Mr. Wade Shapiro, his insurance agent for providing workers’ compensation coverage. Mr. Sweede then called Mr. Shapiro as soon as he completed his telephone call with Mr. Hall. When Mr. Hall later telephoned Mr. Shapiro, Mr. Shapiro confirmed that Po’ Boys had no policy in effect, but said that he was in the process of obtaining coverage for them. Mr. Hall contacted his supervisor, Ms. Michelle Newcomer, who provided him with a Stop-Work Order Number. Mr. Hall served the Stop-Work Order and Order of Penalty Assessment on Mr. Calabrese, along with a Request for Production of Business Records for Penalty Assessment Calculation, at about 11:15 a.m. Although some records indicated that the Stop-Work Order was served at 10:30, other records and the testimony of the witnesses that it was served at 11:15 were more credible. Mr. Sweede testified that he was unaware until January 30, 2013, that his workers’ compensation coverage was not in effect. He testified that the Electronic Funds Transfer payment “came back” in July, but that he had been unaware of this. He testified, “I must not have found the paperwork, must not have looked at the envelopes, take all the heat for that in this business.” Mr. Sweede testified that he later learned Mr. Shapiro was not only aware that Po’ Boys’ coverage was not in effect, but that he had already been working to get Po’ Boys new coverage before Mr. Sweede telephoned him on January 30, 2013, all without the knowledge or authorization of Mr. Sweede. Mr. Sweede entered into an agreement to obtain workers’ compensation coverage for Po’ Boys sometime on January 30, 2013. Several documents were required, at least one with a notary’s signature. Mr. Sweede signed a letter stating that there had been no workers’ compensation claims since his previous coverage had been canceled on July 11, 2012, joined the Florida United Businesses Association (FUBA), filled out an application for coverage, and made a down payment from the Po’ Boys bank account to the (FUBA sponsored) Florida Citrus, Business, and Industries Fund. Under the terms of the agreement, coverage was made effective retroactively to 12:01 a.m. on January 30, 2013. Mr. Sweede testified that Mr. Shapiro notified him, although he could not remember exactly how, that workers’ compensation coverage was obtained for Po’ Boys at around 11:00 a.m. on January 30, 2013, about 15 minutes before the Stop-Work Order was served. Mr. Sweede’s testimony as to how he came to be satisfied that his coverage at Zenith was actually not in effect, determined how and why it had been canceled, decided to obtain insurance elsewhere, and arranged for people in at least three different locations to prepare and execute all of the required documents in approximately 45 minutes, from about 10:15 a.m. until 11:00 a.m., was unclear. The transcript reflects the following exchange: Q: Okay. So this is another –- this is something else. Obviously when Wade Shapiro came by you brought this check, right, and then he also had you sign these documents? A: I really couldn’t tell you. I couldn’t tell you which way, you know, I mean, obviously, you know, like I said, I was stressed. I got him the check. Whether he ran the check up, brought this stuff back, I probably couldn’t –- I can’t remember which chronology it was. It was, you know, a pretty stressful morning. But I know it was all fast, fortunately. Although it does not contain a jurat or notarial certificate,1/ the application for insurance does contain the signature and stamp of a notary public beneath the signatures of Mr. Sweede and Mr. Shapiro. All signatures on the document are followed by a handwritten notation of “1-30-13” in the space provided for a date. The signature and seal provide credible evidence that the document was signed sometime on January 30, 2013. Regardless of the time when coverage became effective, there is clear and convincing evidence in this case that Petitioner had no information reasonably available to it indicating that Respondent had obtained workers’ compensation coverage in the last minutes before the Stop-Work Order was issued. Respondent concedes it did not have coverage at the time of Mr. Hall’s site inspection, and does not claim that when coverage was obtained, it notified Petitioner, or even attempted to do so. Mr. Hall wrote a “Narrative” in a Department database on the afternoon of January 30, 2013, describing the events of the morning. Although Respondent demonstrated that the description was “modified” several days later on on February 5, 2013, the Department put on no evidence to explain what was modified, or why. The testimony of witnesses that Mr. Hall served the Stop-Work Order at 11:15 a.m. was deemed more credible under all of the circumstances than the notation in the Narrative that it was served at 10:30 a.m. Respondent executed a Payment Agreement Schedule for Periodic Payment of Penalty and was issued an Order of Conditional Release from the Stop-Work Order on February 6, 2013. Po’ Boys failed to secure the payment of workers’ compensation for its employees from January 31 through February 24, 2010; June 8 through September 3, 2010; and July 11, 2012, through January 29, 2013. It obtained coverage sometime on January 30, 2013. Respondent would have paid an amount less than $11,565.68 in premiums for those periods during which it failed to secure the payment of workers’ compensation, because that figure should be reduced by the premium paid for coverage on January 30, 2013. Payroll records submitted by Po’ Boys indicate several employees were paid for varying hours after 11:15 a.m. on January 30, 2013. The parties stipulated that the Department has assigned the appropriate class code and manual rates to Respondent's employees from the NCCI SCOPES Manual.
Recommendation Upon consideration of the above 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, Po’ Boys, Inc., violated the requirement in chapter 440, Florida Statutes, that it secure workers' compensation coverage for its employees, and imposing upon it a total penalty assessment of $17,349.70, reduced by the amount attributable to lack of coverage on January 30, 2013. DONE AND ENTERED this 23rd day of May, 2013, in Tallahassee, Leon County, Florida. S F. SCOTT BOYD 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 23rd day of May, 2013.
The Issue The issues to be resolved in this proceeding concern whether the Respondent was an employer in the State of Florida, required to secure the payment of workers' compensation insurance coverage pursuant to the appropriate provisions of Chapter 440, Florida Statutes (2007); whether the Respondent secured such coverage, if required; and whether the proposed penalty, if any, is warranted.
Findings Of Fact The Department is an agency of the State of Florida charged with enforcing the various requirements of Chapter 440 Florida Statutes. This includes the requirement, in Section 440.107(3) Florida Statutes, that employers in the State of Florida, as defined by statute, secure the payment of workers' compensation coverage for all employees, as provided in Sections 440.10(1)(a), 440.38(1), and 440.107(2), Florida Statutes (2007). The Respondent is a closely held Florida corporation with a principal business address of record at 1815 West Detroit Boulevard, Pensacola, Florida 32534. The president of the Respondent Corporation is Richard Longoria. On October 29, 2008, an investigator for the Department, Michelle Newcomer, observed construction work being conducted at a site at 4111 Baisden Road in Pensacola, Florida. Ms. Newcomer stopped at that address and encountered Richard Longoria, the Respondent's president. In the course of their conversation, Mr. Longoria told Investigator Newcomer that he was sanding and caulking window frames in preparation for painting them. He also was engaged in painting shutters at that address. The so-called "Scopes Manual" is a manual published by the National Counsel on Compensation Insurance, Inc. (NCCI). In that manual are certain codes, related to the construction industry and trades considered to be within that industry. Painting is considered to be "construction" under the relevant codes in this manual. The manual, with its codes and classifications is relied upon in the insurance industry and has been adopted by the State of Florida, and the Department, in Florida Administrative Code Rule 69L-6.021. The preparation of surfaces for painting is contemplated as being included in the construction trade or industry in that manual, under the painting classification code. Mr. Longoria performs a significant amount of painting, but also does general construction, wallpapering, general maintenance and carpentry work. He has three different occupational licenses: maintenance, carpentry and painting/wallpapering. The trades or types of work Mr. Longoria had disclosed in the course of obtaining his construction industry exemption, which was effective April 13, 2006, through April 12, 2008, included paperhanging, wallpapering and carpentry. During his conversation with Investigator Newcomer, Mr. Longoria disclosed that he did not have workers' compensation coverage because he had an exemption from such coverage. He provided her with a workers' compensation Exemption card for the construction industry. Ms. Newcomer observed that the workers' compensation exemption held by Mr. Longoria, as an officer of the Respondent, had actually expired some months previously, on April 12, 2008. Ms. Newcomer consulted the Department's automated database, called the Coverage and Compliance Automated System (CCAS). That system is routinely used and lists workers' compensation insurance policy information for each corporation, which insurance companies are required to provide to the Department, as well as the workers' compensation exemptions for corporate officers, if any. The database confirmed that Mr. Longoria's most recent exemption had expired on April 12, 2008. He thus did not have a current workers' compensation exemption on October 29, 2008, when he encountered Investigator Newcomer. That database also revealed that there was no record of a workers' compensation insurance policy in effect for the Respondent, and this was confirmed by Mr. Longoria's testimony during his deposition (in evidence). Corporate officers who qualify for a workers' compensation coverage exemption are not automatically exempt, but must submit a Notice of Election to Be Exempt. They submit a form, along with a $50 fee, to apply for an exemption. Upon receipt of a Notice of Election to Be Exempt, the Department makes a determination as to whether the applicant for the exemption meets the relevant eligibility requirements. The exemption request is then processed by the Department and a Notice of Granting the Exemption, or denial, or a Notice of Incompletion, and the necessity for more information, is sent to the applicant. A workers' compensation exemption has a duration of two years from its effective date. Its effective date is the date that is entered into the CCAS system. The only Notice of Election to Be Exempt the Department received from Mr. Longoria, as of the October 29, 2008, inspection date, was the application received on April 10, 2006. It became effective on April 13, 2006, and thus was effective until April 13, 2008. Before October 29, 2008, Mr. Longoria had three construction industry exemptions which were renewed. One exemption was as a sole proprietor and was effective from July 4, 1993, through July 4, 1995. He had another exemption extending from April 13, 2004, through April 13, 2006, and then an exemption from April 13, 2006, through April 12, 2008. Mr. Longoria stated to Ms. Newcomer, in their conversation on October 29, 2008, that he had not received notice of his April 13, 2006 exemption's expiration prior to the expiration date of April 13, 2008. Ms. Newcomer thereupon consulted the CCAS system to determine when the notification of expiration of the exemption had been sent to Mr. Longoria or the Respondent. That database revealed that a letter notifying him of the expiration of his exemption had been sent on January 29, 2008. The CCAS entry shows that the expiration notice had been mailed out to Mr. Longoria to his address of record, 1815 West Detroit Boulevard, Pensacola, Florida 32354. That is the same address which had been shown on Mr. Longoria's exemption certificate, effective on April 13, 2006. Mr. Longoria's wife was stricken with cancer. She is a veteran and sought treatment and therapy for her cancer at a Veteran's Administration facility in Tennessee. Consequently, Mr. and Mrs. Longoria moved to Tennessee in May 2006, soon after the effective date of his exemption. Mr. Longoria filed a mail-forwarding form with the United States Postal Service in Pensacola so that his mail would be forwarded to his residence and address in Tennessee. Mail was forwarded for approximately one year, but no mail originally sent to his Pensacola address was forwarded to his address in Tennessee after sometime in August 2007. Mr. Longoria did not notice this fact until April 2008. None of the later mail addressed to the Pensacola address was forwarded to Tennessee, even after he renewed his forwarding application with the postal service in April of 2008. In fact, he testified that "99 percent of whatever mail was sent to the Florida address between 2007 and April 2008 was never forwarded to [Mr. Longoria] in Tennessee." Mr. Longoria, however, did not file a change of address notification with the Department prior to submitting his new Notice of Election to be Exempt, which he filed on October 31, 2008. The Respondent did not change his mailing address with the Florida Department of State, Division of Corporations until April 9, 2008. On October 29, 2008, after the discussion between Mr. Longoria and Investigator Newcomer, concerning the matter of workers' compensation coverage, Ms. Newcomer issued a Stop Work Order and Order of Penalty Assessment, and served it on Mr. Longoria and the Respondent. These were issued because of the Respondent's failure to secure payment of workers' compensation in purported violation of Sections 440.10(1), 440.38(1) and 440.107(2), Florida Statutes. Upon issuance of the Stop Work Order, Mr. Longoria promptly complied. Investigator Newcomer also requested production of certain business records in order to perform the relevant penalty assessment calculations. Mr. Longoria promptly provided the necessary business records to the Department. The parties stipulated that work was being performed by the Respondent between the dates of April 12, 2008, and October 29, 2008. This was the period of time when the exemption was in an expired state. Based upon the Respondent's records, Investigator Newcomer calculated an amended penalty, for the period of noncompliance with the workers' compensation law (the period of expiration of the exemption) using the penalty calculation worksheet adopted in Florida Administrative Code Rule 69L-6.027. The total penalty based upon that formula resulted in an assessment of less than $1,000. The penalty assessed was therefore $1,000, pursuant to Section 440.107(7)(d), Florida Statutes, which provides that the penalty to be assessed will be based on the formula provided in the referenced provision of Section 440.107, Florida Statutes, and the above-cited rule, or a minimum of $1,000, whichever is greater. The parties stipulated that the penalty assessed is accurate, if it is ultimately determined that the penalty was properly and lawfully assessed. After being served with the Amended Order of Penalty Assessment on October 31, 2008, Mr. Longoria promptly paid the penalty in full, in the form of a cashier's check. He submitted a new Notice of Election to Be Exempt for himself, as a corporate officer of the Respondent, which exemption became effective on that same date. The Respondent was subsequently issued an Order of Release from the Stop Work Order and an Amended Order of Penalty Assessment, which allowed the Respondent to resume working. The expiration of the exemption, for the number of months referenced above, occurred because the Respondent, through Mr. Longoria, inadvertently failed to renew the exemption. Mr. Longoria had not been reminded of his expiration because he had not received the Notice of Impending Expiration from the Department. There is no dispute that Mr. Longoria and the Respondent corporation qualified for the exemption and were thus not required to secure the payment of workers' compensation, if the exemption had been effective at times pertinent hereto. This is because of the corporate business entity under which the Respondent and Mr. Longoria operated, with Mr. Longoria as the sole employee and sole corporate officer and owner.
Recommendation Having considered the foregoing findings of fact, conclusions of law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties it is, therefore, Recommended that a Final Order be entered by the Department of Financial Services, Division of Workers' Compensation, finding that the Respondent failed to properly secure workers' compensation insurance coverage for its employee in violation of Sections 440.10(1)(a) and 440.38(1), Florida Statutes, and that a penalty in the amount of $1,000 be assessed, as mandated by Section 440.107(7), Florida Statutes. DONE AND ENTERED this 28th day of May, 2009, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of May, 2009. COPIES FURNISHED: Tracey Beal, Agency Clerk Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Justin H. Faulkner, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Samuel W. Bearman, Esquire Law Office of Samuel W. Bearman, L.C. 820 North 12th Avenue Pensacola, Florida 32501
The Issue The issues in this enforcement proceeding are whether Respondent failed to comply with Sections 440.10, 440.05, and , Florida Statutes (2003),1 and, if so, whether Petitioner correctly assessed the penalty for said failure.
Findings Of Fact Based upon observation of the demeanor and candor of each witness while testifying; documentary materials received in evidence; evidentiary rulings made pursuant to Section 120.57, Florida Statutes (2004); and stipulations of the parties, the following relevant and material facts, arrived at impartially based solely upon testimony and information presented at the final hearing, are objectively determined: At all times material, Petitioner, Department of Financial Services, Division of Workers' Compensation (Department), is the state agency responsible for enforcement of the statutory requirements that employers secure the payment of workers' compensation coverage requirements for the benefit of their employees in compliance with the dictates of Chapter 440, Florida Statutes. Employers who failed to comply with Chapter 440, Florida Statutes, are subject to enforcement provisions, including penalty assessment, of Chapter 440, Florida Statutes. At all times material, Respondent, St. James Automotive, Inc. (St. James), is a corporation domiciled in the State of Florida and engaged in automobile repair, with known business locations in Pine Island and St. James City, Florida. Both locations are owned by Richard Conrad (Mr. Conrad). On or about August 5, 2004, a Department investigator conducted an "on-site visit" at the St. James location on Pine Island Road, Pine Island, Florida. The purpose of the on-site visit was to determine whether or not St. James was in compliance with Chapter 440, Florida Statutes, regarding workers' compensation coverage for the workers found on-site. The investigator observed four individuals working on-site in automotive repair functions. One employee, when asked whether "the workers had workers' compensation coverage in place," referred the investigator to the "owner," who, at that time, was at the second business location at 2867 Oleander Street, St. James City, Florida. The investigator verified the owner's presence at the St. James City location by telephone and met him there. Upon his arrival at the St. James City location, the investigator initiated a workers' compensation coverage check on two databases. He first checked the Coverage and Compliance Automated System (CCAS) to ascertain whether St. James had in place workers' compensation coverage. The CCAS system contained current status and proof of workers' compensation coverage, if any, and record of any exemptions from workers' compensation coverage requirements filed by St. James' corporate officers. The CCAS check revealed no workers' compensation coverage filed by any corporate officers of St. James. The second system, the National Council on Compensation Insurance (NCCI), contained data on workers' compensation coverage in effect for workers (employees) in the State of Florida. NCCI similarly revealed no workers' compensation coverage in effect for St. James' Florida employees. The investigator discussed the situation and findings from both the CCAS and NCCI with Mr. Conrad who acknowledged and admitted: (1) St. James had no workers' compensation coverage in place; (2) St. James had made inquiry and arranged for an unnamed attorney to file exemptions from workers' compensation coverage on behalf of several St. James employees, but the attorney never filed exemptions; and (3) Mr. Conrad subsequently attempted to file the exemptions himself but was unsuccessful-- "because names of exemption applicants [employees] did not match the corporate information on file for St. James, Inc., at the Division of Corporations." When offered the opportunity by the Department's investigator to produce any proof of workers' compensation coverage or exemption from coverage, Mr. Conrad was unable to do so. At the conclusion of the August 5, 2004, on-site visit, and based upon a review of the CCAS and NCCI status reports and Mr. Conrad's inability to produce proof of workers' compensation coverage or exemptions, the investigator determined that St. James was not in compliance with requirements of Chapter 440, Florida Statutes. The investigator then issued a Stop Work Order on St. James' two business locations. The Stop Work Order contained an initial assessed penalty of $1,000, subject to increase to an amount equal to 1.5 times the amount of the premium the employer would have paid during the period for which coverage was not secured or whichever is greater. Mr. Conrad acknowledged his failure to conform to the requirements of Chapter 440, Florida Statutes, stating5: I guess you could say--I first of all, I am guilty, plain and simple. In other words, I did not conform. Subsequent to issuing the August 5, 2004, Stop Work Order, the Department made a written records' request to Mr. Conrad that he should provide payroll records listing all employees by name, social security number, and gross wages paid to each listed employee.6 Mr. Conrad provided the requested employee payroll records, listing himself and his wife, Cheryl L. Conrad, not as owners, stockholders or managers, but as employees. Pursuant to Section 440.107, Florida Statutes, the Department is required to link the amount of its enforcement penalty to the amount of payroll (total) paid to each employee. The persons listed on St. James' payroll records received remuneration for the performance of their work on behalf of St. James and are "employees" as defined in Subsection 440.02(15), Florida Statutes. Review of the payroll records by the Department's investigator revealed the listed employees for services performed on its behalf. The employee payroll records provided by St. James were used by the Department's investigator to reassess applicable penalty and subsequent issuance of the Amended Order of Penalty Assessment in the amount of $97,260.75.7 St. James' payroll records did not list the type of work (class code or type) each employee performed during the period in question. Accordingly, the Department's investigator properly based the penalty assessment on the highest-rated class code or type of work in which St. James was engaged, automotive repair. The highest-rated class code has the most expensive insurance premium rate associated with it, indicating the most complex activity or type of work associated with St. James' business of automotive repair. The Department's methodology and reliance on the NCCI Basic Manual for purpose of penalty calculation is standardized and customarily applied in circumstances and situations as presented herein.8 Mr. Conrad, in his petition for a Chapter 120, Florida Statutes, hearing alleged the 8380 (highest premium rate) class code applied to only three of his employees: himself, Brain Green, and William Yagmin. On the basis of this alleged penalty assessment error by the Department, Mr. Conrad seeks a reduction of the Amended Order of Penalty Assessment amount of $97,260.75. Mr. Conrad presented no evidence to substantiate his allegation that the Department's investigator assigned incorrect class codes to employees based upon the employee information Mr. Conrad provided in response to the Department's record request. To the contrary, had he enrolled in workers' compensation coverage or had he applied for exemption from coverage, Mr. Conrad would have known that his premium payment rates for coverage would have been based upon the employees' class codes he would have assigned each employee in his workers' compensation coverage application. In an attempt to defend his failure to comply with the workers' compensation coverage requirement of Chapter 440, Florida Statutes, Mr. Conrad asserted that the Department's investigator took his verbal verification that certain employees were clerical, but neglected to recognize his statement that he was also clerical, having been absent from the job-site for over three years. Mr. Conrad's excuses and avoidance testimony was not internally consistent with his earlier stated position of not conforming to the statutory requirements of Chapter 440, Florida Statutes. The above testimony was not supported by other credible evidence of record. This is critical to the credibility determination since Mr. Conrad seeks to avoid paying a significant penalty. For those reasons, his testimony lacks credibility. Mr. Conrad also attempted to shift blame testifying that--"My attorney did not file exemption forms with the Department," and my "personal attempts to file St. James' exemption form failed--[B]ecause the mailing instructions contained in the Department's form were not clear." In his final defensive effort of avoidance, Mr. Conrad testified that he offered to his employees, and they agreed to accept, unspecified "increases" in their respective salaries in lieu of St. James' providing workers' compensation coverage for them. This defense suffered from a lack of corroboration from those employees who allegedly agreed (and those who did not agree) and lack of documented evidence of such agreement. The intended inference that all his employees' reported salaries included some unspecified "salary increase" is not supported by employee identification or salary specificity and is thus unacceptable to support a finding of fact. St. James failed to produce credible evidence that the Department's Stop Work Order, the Penalty Assessment, and/or the Amended Penalty Assessment were improper. St. James failed to produce any credible evidence that the Department's use of the NCCI Basic Manual, as the basis for penalty assessment calculation based upon employee information provided by St. James, was improper and/or not based upon actual employee salary information provided by St. James. Prior to this proceeding, the Department and Mr. Conrad entered into a penalty payment agreement as authorized by Subsection 440.107(7)(a), Florida Statutes.9 The penalty payment agreement required fixed monthly payments be made by Mr. Conrad and afforded Mr. Conrad the ability to continue operation of his automotive repair business that was, by order, stopped on August 5, 2004.
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 Stop Work Order and the Amended Order of Penalty Assessment in the amount of $97,260.75, minus any and all periodic payments of the penalty remitted by St. James, pursuant to agreed upon conditional release from the Stop Work Order dated August 5, 2004. DONE AND ENTERED this 4th day of March, 2005, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE 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 4th day of March, 2005.
The Issue Whether Respondent, Gulf Coast Site Prep, Inc., failed to comply with the coverage requirements of the Workers’ Compensation Law, chapter 440, Florida Statutes, by not obtaining workers’ compensation insurance for its employees, and, if so, what penalty should be assessed against Respondent pursuant to section 440.107, Florida Statutes (2014).1/
Findings Of Fact The Department is the state agency responsible for enforcing the requirement of the Workers’ Compensation Law that employers secure the payment of workers’ compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. Respondent, Gulf Coast Site Prep., Inc., is a Florida for-profit corporation organized on March 3, 2008. Respondent’s registered business address is 952 TR Miller Road, Defuniak Springs, Florida. Ashley Adams is Respondent’s President and Registered Agent. On March 27, 2015, the Department’s investigator-in- training, Jill Scogland, and lead investigator, Sharon Kelson, conducted a random workers’ compensation compliance check at Lot 34 in the Driftwood Estates residential subdivision in Santa Rosa Beach, Florida. Ms. Scogland observed two men on site. David Wayne Gibson was operating a front-end loader spreading dirt on site. Colby Smith was shoveling dirt on site. While Ms. Scogland was inspecting the site, a third man, Ashley Adams, arrived driving a dump truck with a load of dirt. Mr. Adams identified himself as the owner of Gulf Coast, and stated that he had an exemption from the requirement for workers’ compensation insurance and that he thought Mr. Gibson did as well. Mr. Adams advised Ms. Scogland that he hired both Mr. Gibson and Mr. Smith to work at the site.2/ At hearing, Respondent challenged the evidence supporting a finding that Respondent hired Mr. Gibson.3/ Specifically, Respondent argues that Ms. Scogland’s testimony that Mr. Adams told her he hired Mr. Gibson is unreliable because Ms. Scogland did not include that information in her field notes. Respondent claims that Ms. Scogland’s status as investigator-in-training on the date of the inspection is indicative of her unreliability. To the contrary, Ms. Scogland’s testimony regarding both the persons and events on the date of the inspection was clear and unequivocal. While Ms. Scogland admitted her field notes were not as detailed on the date in question as they are for more recent inspections, she was confident that her investigation of the facts was thorough. The fact that Ms. Scogland did not write down what Mr. Adams said does not render her testimony unreliable. The undersigned finds Ms. Scogland’s testimony to be clear and convincing. Ms. Scogland reviewed the Department of State, Division of Corporations’ online information and identified Mr. Gibson as President and Registered Agent of David Wayne Gibson Tractor Service, Inc. According to Ms. Scogland, the online records indicated the corporation had been administratively dissolved in September 2013. Ms. Scogland next accessed the Department’s Coverage and Compliance Automated System (CCAS) and determined that Mr. Gibson had obtained a workers’ compensation coverage exemption for himself, but the exemption had expired on February 15, 2015. The information contained in CCAS is information on new policies, cancellations, etc., reported to the Department by insurance agencies as required by administrative rule. Next, Ms. Scogland accessed the Division of Corporations’ website, verified Gulf Coast as an active corporation, and identified Mr. Adams as the sole officer of Gulf Coast. Ms. Scogland then accessed CCAS and determined that, although Gulf Coast did not have workers’ compensation coverage, Mr. Adams had an active exemption effective from February 12, 2014 through February 12, 2016. Mr. Adams had a prior exemption that expired on April 14, 2013, but had no valid exemption in place between April 14, 2013 and February 12, 2014. After contacting her supervisor, Michelle Lloyd, Ms. Scogland served Mr. Adams, on behalf of Gulf Coast, with a site-specific Stop-Work Order for failure to ensure workers’ compensation coverage for its employees. Ms. Scogland also served Mr. Adams with a Request for Production of Business Records for Penalty Assessment Calculation. The request was for Gulf Coast’s payroll, account, and disbursement records, as well as records identifying its subcontractors, payments thereto, and workers’ compensation coverage thereof, from March 28, 2013 through March 27, 2015 (the penalty period).4/ Mr. Adams did not provide any records to the Department in response to the records request. The Department’s penalty auditor, Eunika Jackson, was assigned to calculate the penalty to be assessed against Gulf Coast for failure to secure workers’ compensation insurance during the penalty period. The penalty to be assessed against an employer for failure to secure workers’ compensation coverage is two times the amount the employer would have paid in workers’ compensation insurance premiums when applying approved manual rates to the employer’s payroll during the penalty period. § 440.107(7)(d), Fla. Stat. Ms. Jackson consulted the Scopes Manual, which is published by the National Council on Compensation Insurance (NCCI), and identified class code 6217--Excavation and Drivers-- as the appropriate construction class code for the work being performed at the worksite. Respondent contests the assignment of class code 6217 to Mr. Adams, who was driving a dump truck and delivering a load of dirt to the site. Respondent admits that Mr. Gibson’s operation of the front-end loader was properly classified as Excavation and Drivers. NCCI Scopes Manual provides the following with regard to classification code 6217: Includes burrowing, filling or backfilling. * * * Code 6217 is applied to specialist contractors engaged in general excavation including ditch digging, burrowing, filling or backfilling provided such operations are not otherwise classified in the manual. The operations involve the removal of earth, small boulders and rocks by power shovels, trench diggers or bulldozers and piling it at the jobsite for backfill. The material may also be removed by dump trucks for fill in some other area. Code 6217 includes excavation in connection with building foundations, swimming pools, landscape gardening and waterproofing operations. * * * This classification also is applied to specialist contractors engaged in grading land and landfilling, provided these operations are not otherwise classified in this manual. This classification includes ditch digging, burrowing, filling or backfilling, and operations such as scraping, cutting, piling or pushing the earth to rearrange the terrain. These operations utilize equipment such as bulldozers, motor graders and carryalls. [emphasis supplied]. Mr. Adams’ operation of the dump truck falls squarely within the definition of Excavation and Drivers. The material in the dump truck was fill for the site under excavation, a purpose which is directly addressed in the manual under code 6217. Under Respondent’s interpretation, fill removed from the site by a dump truck would be an excavation activity, but would no longer be excavation when the dump truck arrived at another site (or at another location on the same site) with the fill. That interpretation is illogical. No evidence was introduced to support a finding that typical operation of a dump truck in preconstruction was classified by a different code in the Scopes Manual. It is found that Ms. Jackson properly applied the Scopes Manual in assigning code 6217 to the work being performed by Mr. Adams on the site. Having no payroll records from Gulf Coast, Ms. Jackson had to impute the statewide average weekly wage as Respondent’s payroll for Mr. Adams and his subcontractor, Mr. Gibson. The average weekly wages were calculated based on the Workers’ Compensation and Employers Liability approved rate manual also published by NCCI and adopted by the Department by administrative rule. Ms. Jackson calculated a penalty of two times the workers’ compensation insurance premiums that would have applied to the purchase of insurance for Mr. Adams and Mr. Gibson during periods of non-compliance during the penalty. The period of non-compliance for Mr. Adams was April 15, 2013 to February 11, 2014, during which time his exemption had lapsed. The period of non-compliance for Mr. Gibson was February 16, 2015 to March 27, 2015, during which his exemption had expired. § 440.107(7)(e), Fla. Stat. Utilizing the penalty calculation worksheet adopted by Florida Administrative Code Rule 69L-6.027, Ms. Scogland calculated a penalty of $12,181.42. On May 20, 2015, the Department issued an Amended Order of Penalty Assessment against Gulf Coast in the amount of $12,181.42. The Department correctly calculated the penalty based on the statutory formulas and adopted rules governing workers’ compensation insurance.
Recommendation Having considered 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 upholding the Stop-Work Order and Amended Penalty Assessment against Respondent, Gulf Coast Site Prep., Inc., for its failure to secure and maintain required workers’ compensation insurance for its employees. DONE AND ENTERED this 14th day of January, 2016, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of January, 2016.
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 are as follows: (a) whether Respondent failed to secure the payment of workers’ compensation for its employees; and if so, (b) whether Petitioner assessed an appropriate penalty.
Findings Of Fact Petitioner is the state agency that is responsible for enforcing the requirements Chapter 440, Florida Statutes, requiring employers to secure the payment of workers’ compensation for their employees. At all times relevant here, Respondent has been an active Florida corporation. Respondent’s business involves the installation of acoustic ceiling tiles. Respondent’s work in this regard constitutes construction. On March 16, 2010, Carl Woodall, Petitioner’s workers’ compensation compliance investigator, conducted a random compliance check at a construction site. The site was located at 707 Jenks Avenue in Panama City, Florida. Upon his arrival in the construction site, Mr. Woodall observed two individuals, Robin and Todd Calhoun, installing acoustic ceiling tiles in a commercial office building. The individuals informed Mr. Woodall that they were working for Jackie Shores. The individuals provided Mr. Woodall with contact information for Mr. Shores. Mr. Woodall initially contacted Mr. Shores by phone. Later, Mr. Woodall and Mr. Shores spoke in person at the construction site. Mr. Shores informed Mr. Woodall that he was employed by Respondent as a job supervisor. Mr. Shores also identified Robin and Todd Calhoun as Respondent’s employees. Mr. Shores informed Mr. Woodall that Respondent used Southeast Employee Leasing for workers’ compensation coverage, but that Robin and Todd Calhoun had not been signed up for coverage. Mr. Woodall then contacted George Kaspers from Southeast Employee Leasing to verify whether Respondent had secured workers’ compensation for Robin and Todd Calhoun. Mr. Kaspers confirmed that the Calhouns were not covered and that they did not have pending employee applications. On March 16, 2010, Mr. Kaspers faxed Mr. Woodall a list of Respondent’s employees that were covered by workers’ compensation insurance. The list did not name the Calhouns. Mr. Woodall next searched Petitioner’s Coverage and Compliance Automated System (CCAS) for proof of a workers’ compensation policy or officer exemptions. CCAS is a database that lists workers’ compensation insurance policy information and all workers’ compensation exemptions. The database did not list a current policy for Respondent or any valid exemptions. Mr. Woodall also reviewed the website maintained by the Florida Department of State, Division of Corporations. The review showed that Respondent had been an active corporation since May 7, 2002. Based on his investigation, Mr. Woodall determined that Respondent had not secured workers’ compensation coverage for all of its employees as required by Chapter 440, Florida Statutes. On March 16, 2010, Petitioner issued, and served on Respondent, a Stop-Work Order and Order of Penalty Assessment, together with a Request for the Production of Business Records for Penalty Assessment Calculation. The business records request applied to the period of March 17, 2007, through March 16, 2010. The request sought production of payroll records, workers’ compensation policy documents, employee leasing documents, temporary labor service documents, and workers’ compensation exemption documents. Mr. Woodall did not initially request subcontractor payroll and workers’ compensation documentation from Respondent because he did not see any subcontractors on site. He did not want to burden Respondent with a request for more documents that were necessary to determine a proper penalty. However, after Respondent failed to produce the requested records within the required time-period, the case was assigned to Monica Moye, Respondent’s penalty calculator, to prepare a penalty based on Respondent’s imputed payroll. On April 8, 2010, Mr. Woodall personally served an Amended Order of Penalty Assessment on Respondent. The Order assessed a total penalty in the amount of $77,492.93 against Respondent for failure to secure workers’ compensation coverage for its employees. On April 5, 2010, and April 7, 2010, Respondent provided bank records with check images to Petitioner for the period of March 1, 2007, through March 31, 2010. Ms. Moye used these records to calculate a 2nd Amended Order of Penalty Assessment. The second order was based on payments to employees and subcontractors that were not covered by workers’ compensation insurance or an exemption there from. The second order assessed a penalty in the amount of $13,018.63. After service of the 2nd Amended Order of Penalty Assessment, Ms. Moye received additional information from Respondent regarding a subcontractor that was covered by its own workers’ compensation policy. After confirming the subcontractor's coverage, Ms. Moye removed all payments to that subcontractor from Respondent's penalty. Mr. Woodall subsequently issued a 3rd Amended Order of Penalty Assessment to Respondent, assessing a penalty in the amount of $7,105.35. Later, Ms. Moye received information from Respondent, indicating that two additional subcontractors had workers’ compensation coverage for their employees. This information resulted in the issuance of a 4th Amended Order of Penalty Assessment, assessing a penalty in the amount of $6,675.91. Classification codes are four digit codes assigned to occupation by the National Council on Compensation Insurance, Inc. (NCCI) to assist in the calculation of workers’ compensation insurance premiums. The codes are listed in the Scopes® Manual, which Petitioner has adopted by rule. After discovery was completed in this case, Petitioner determined that some of Respondent’s employees had been assigned an improper construction classification code of 5348 on the 4th Amended Order of Penalty Assessment. Code 5348 encompasses ceramic tile, indoor stone, and marble installation. The proper code for Respondent’s employees was 5020, which encompasses the installation of suspended acoustical ceilings. Based on information provided by Respondent during discovery, Petitioner also determined that one of Respondent’s clerical employees should be assigned classification code 8810 rather than construction code 5348. Additionally, Petitioner discovered that payments to two entities were payments for material rather than labor. Based on information learned during discovery, Petitioner prepared a 5th Amended Order of Penalty Assessment, assessing a total penalty in the amount of $8,621.46. To calculate the penalty of the 5th Amended Order of Penalty Assessment, Petitioner totaled the gross payroll paid to Respondent’s employees and subcontractors that were not covered by workers’ compensation for each period of non-compliance. Respondent conceded that all of the individuals and entities listed on the penalty worksheet performed services for Respondent during the time periods listed. Respondent also conceded that the gross payroll amounts were correctly calculated, that none of the individuals listed had secured an exemption, and that none of the payments to employees or subcontractors included in the penalty calculation were covered by a workers’ compensation policy. Approved manual rates are established by NCCI and adopted by Petitioner. The approved manual rates are calculated upon the risk assigned to the type of employment reflected by each classification code. Using the penalty calculation worksheet, Petitioner divided the gross payroll amount for each employee and subcontractor in each period of non-compliance by 100 and multiplied that figure by the approved manual rate for the classification code assigned to that employee or subcontractor. The product was the amount of workers’ compensation premium Respondent should have paid for each employee and subcontractor if Respondent had been compliant. The premium amounts were then multiplied by 1.5 to arrive at the penalty for each employee and subcontractor. The penalties for each employee and subcontractor for each period of non-compliance were then added together to come up with a total penalty of $8,621.48.
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, affirming, approving, and adopting the 5th Amended Order of Penalty Assessment. DONE AND ENTERED this 10th day of December, 2010, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD 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 December, 2010. COPIES FURNISHED: Jackie Shores M & M Coop Construction Co., Inc. 1401 Minnesota Avenue Lynn Haven, Florida 32444 Holly R. Werkema, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 Julie Jones, CP, FRP Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services’ The Capitol, Plaza Level 11 Tallahassee, Florida 32399 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue is whether the Stop-Work Order and the Third Amended Order of Penalty Assessment entered by Petitioner on July 25, 2013, and August 13, 2013, respectively, should be upheld.
Findings Of Fact The Department is the state agency tasked with the responsibility of enforcing the requirement of section 440.107(3), Florida Statutes, that employers in Florida secure the payment of workers' compensation for their employees. Respondent, Mad Dog Marketing Group, Inc., is a corporation organized under chapter 607, Florida Statutes, and was registered with the Florida Department of State, Division of Corporations, throughout the period of July 26, 2010, to July 25, 2013. At all times relevant to this proceeding, Respondent was engaged in the operation of a hardware store business with three locations in Florida. On July 25, 2013, based upon an anonymous referral, Tracey Gilbert, the Department's compliance investigator, commenced a workers' compensation compliance investigation of Respondent by visiting the job site, an appliance parts store at 730 West Brandon Boulevard, Brandon, Florida, and interviewing Sharon Belcher. According to Ms. Gilbert, Ms. Belcher informed her that she had 11 employees at the time of the site visit and that she did not have workers' compensation coverage for them. Ms. Belcher showed Ms. Gilbert an application for workers' compensation insurance and said she had not taken action with it since the company wanted a $10,000 premium. She also showed Ms. Gilbert some OSHA and workplace posters, but not the typical "broken arm poster" that describes workers' compensation coverage for a place of business. Ms. Belcher then gave Ms. Gilbert a list of Respondent's 11 current employees. On her laptop computer, Ms. Gilbert consulted the Department's Coverage and Compliance Automated System (CCAS) database to determine whether Respondent had secured workers' compensation coverage or an exemption from the requirements for coverage for its employees. CCAS is the database Ms. Gilbert routinely consults during the course of her investigations. She determined from CCAS that Respondent neither had workers' compensation coverage for her employees nor had received an exemption from such coverage from the Department. Ms. Belcher's recollection of her meeting with Ms. Gilbert differs from Ms. Gilbert's. Ms. Belcher recalled that she had applied for insurance with ADP on July 11, 2013, received the "broken arm poster," and believed she was covered at the time Ms. Belcher conducted her investigation. She offered an exhibit showing photographs of posters (but not the "broken arm poster") on the office bulletin board. She also offered an exhibit she testified was the UPS label from the tube containing the "broken arm poster." No photograph of the "broken arm poster" was produced as an exhibit. Ms. Gilbert did not contact ADP to verify whether Respondent had coverage on the date of her site visit to the Brandon store. Ms. Gilbert issued a Stop-Work Order to Respondent and a concurrent Request for Production of Business Records for Penalty Assessment Calculation at 11:20 a.m. on July 25, 2013. Ms. Belcher first submitted an application for workers' compensation coverage on July 11, 2013, but coverage was not bound on that date. Ms. Belcher submitted the paperwork to bind her insurance coverage on the afternoon of July 25, 2013, according to Mark Cristillo, an employee of ADP Insurance. Mr. Cristillo testified that he had made several attempts during the month of July 2013 to obtain the signed documents from Ms. Belcher, including an attempt as late as July 23, 2013, at 11:45 a.m. Ms. Belcher told Mr. Cristillo at that time that she had not reviewed the quote package. At 11:20 a.m., the time Ms. Gilbert's issued the Stop-Work Order on July 25, 2013, Ms. Belcher had not bound her insurance coverage. When she submitted the payment with the signed documents to ADP later that afternoon, the coverage was bound effective 12:01 a.m. on July 25, 2013. The records produced by Ms. Belcher were given to Chad Mason, one of the Department's penalty auditors, to calculate the penalty. He reviewed the records and determined the amount of gross payroll paid to Respondent's employees during the three- year penalty period preceding the investigation during which Respondent was not in compliance with the workers' compensation coverage requirements. Using Respondent's bi-weekly payroll chart, Respondent's Florida Department of Revenue UCT-6 reports, and the classification codes for each employee, Mr. Mason calculated a Third Amended Order of Penalty Assessment of $42,251.43, based upon what Respondent would have paid in workers' compensation premiums had it been in compliance with Florida's Workers' Compensation Law. The order was issued on October 24, 2013. Mr. Mason determined that the appropriate codes for Respondent's employees were 8010 and 8810, which are hardware store employees and general clerical employees, respectively. These codes were derived from the Scopes Manual, which lists all of the various jobs that may be performed in the context of workers' compensation. The manual is produced by NCCI, the National Council on Compensation Insurance, Inc., the nation's most authoritative data collecting and disseminating organization for workers' compensation. The parties stipulated prior to hearing that all of the individuals listed on the penalty worksheet of the Amended Order of Penalty Assessment were "employees" in the state of Florida of Respondent during the periods of non-compliance listed on the penalty worksheets. However, Respondent claimed that some of the employees were out-of-state and not subject to Florida law. Ms. Belcher testified that, as of July 25, 2013, three of its employees, Fred Hasselman, Douglas Strickland, and Josh Hyers, were employees of the Tennessee store and not subject to a Florida penalty. Mr. Hyers was a Florida employee prior to July 1, according to Ms. Belcher. However, all three of the employees were listed on the Florida Department of Revenue's UCT-6 form for the time period of the non-compliance. The UCT-6 form lists those employees who are subject to Florida's Unemployment Compensation Law. Mr. Mason reasonably relied upon the UCT-6 filings for the relevant time period to calculate Respondent's gross payroll in Florida. No evidence was produced to show them listed as Tennessee employees on that state's comparable tax form or any official document from outside Florida. The logical assumption is that they are Florida employees under the law. Accepting all the employees disclosed by Respondent as Florida employees led Mr. Mason to make his calculations of the penalty assessment using the appropriate codes from the Scopes Manual for hardware store and general clerical workers, 8010 and 8810. All the named employees on the Third Amended Order of Penalty Assessment were paid by Respondent in the amounts indicated on the penalty worksheet that accompanies that assessment during the penalty period of July 26, 2010, through July 25, 2013. Even though small discrepancies came up at the hearing regarding the classifications of some of Respondent's employees, the parties had stipulated to the accuracy of the classifications of those employees so those numbers will be accepted for purposes of this decision. Based upon the testimony at the hearing and the pre-hearing stipulations of the parties, the penalty assessment in the amount of $42,251.43 is accurate. Mr. Mason correctly applied the methodology for determining the amount of coverage required, determining that the appropriate premium for the three- year period would have been $28,167.50. When multiplied by the factor used to calculate the penalty, 1.5 times the premium, the total amount due is $42,251.43. The Department has proven by clear and convincing evidence that at the time the Stop-Work Order was issued and served on Respondent on the morning of July 25, 2013, Respondent had not secured workers' compensation coverage for its employees as required by chapter 440. On two occasions, August 2 and August 21, 2013, Ms. Gilbert returned to Respondent's Brandon location after the Stop-Work Order had been issued. The first was to serve the Amended Order of Penalty Assessment and the second was to serve the Second Amended Order of Penalty Assessment. On both occasions, the business was open in violation of the Stop-Work Order. A business under a Stop-Work Order may elect to enter into a payment plan after a ten percent down payment to keep the business open while a challenge to DOAH is under way. Respondent had not entered into such a plan. Therefore, the Department seeks $1,000 penalty for each of the days Ms. Gilbert visited the Brandon store and saw it open for business. This total additional penalty of $2,000 could have been greater had the Department further investigated whether the business remained open on other days after the Stop-Work Order had been imposed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue a final order upholding the Stop-Work Order and Third Amended Order of Penalty Assessment, and assess a penalty in the amount of $42,251.43. It is further RECOMMENDED that the Department fine Respondent an additional $1,000 per day for the two days Respondent did not comply with the Stop-Work Order, resulting in a total penalty of $44,251.43. DONE AND ENTERED this 20th day of December, 2013, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN 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 20th day of December, 2013. COPIES FURNISHED: Trevor S. Suter, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 Kristian Eiler Dunn, Esquire Dickens and Dunn, P.L. 517 East College Avenue Tallahassee, Florida 32301 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390
The Issue The issues are whether Respondent conducted business operations in Florida without obtaining workers’ compensation coverage that met the requirements of Chapter 440, Florida Statutes (2009), for its employees, and if so, what penalty should be assessed.
Findings Of Fact Petitioner is the state agency that is responsible for enforcing Chapter 440, Florida Statutes, which requires employers to secure the payment of workers’ compensation for the benefit of their employees. Respondent is a Louisville, Kentucky-based corporation that is engaged in the construction, maintenance, and painting of elevated water tanks. Respondent has a second fabrication facility located in Newnan, Georgia. Respondent’s work constitutes construction. On March 4, 2010, Petitioner’s investigator, Lawrence F. Eaton, observed Respondent’s employees working on a water tower in Pace, Florida. While visiting the worksite, one of Respondent’s employees stated that he did not have any information regarding if and how the men were covered by workers’ compensation. The employee gave Mr. Eaton a telephone number for Respondent. Next, Mr. Eaton consulted the Kentucky Secretary of State website to find information concerning the corporate status of Respondent. The website indicated that Respondent was incorporated in 1892 and that it had three corporate officers. Mr. Eaton then consulted Petitioner’s Coverage and Compliance Automated System (CCAS) database. CCAS contains workers’ compensation policy information for each employer that has a Florida policy and information relative to workers’ compensation exemptions that have been applied for and issued to individuals by Petitioner. Mr. Eaton was unable to find any indication on CCAS that Respondent had secured workers’ compensation coverage by purchasing a Florida policy. CCAS also provided no evidence that Respondent had entered into an arrangement with an employee leasing company to provide workers’ compensation coverage to its employees. Additionally, CCAS did not show that Respondent had obtained exemptions for its corporate officers. Mr. Eaton subsequently spoke with one of Respondent’s representatives. Mr. Eaton was informed that Respondent was self-insured for workers’ compensation in Kentucky. Mr. Eaton also learned that Respondent had another workers’ compensation policy. Respondent’s representative indicated that she would send Mr. Eaton the policy paperwork. When he received the paperwork from Petitioner, Mr. Eaton determined that the insurance coverage did not comply with the requirements of Florida’s workers’ compensation law. The paperwork included an excess policy of workers’ compensation and a Georgia workers’ compensation policy. On March 5, 2010, Mr. Eaton issued a Stop-Work Order and Order of Penalty Assessment against Respondent. Specifically, the Stop-Work Order states that Respondent was not in compliance with Chapter 440, Florida Statutes, because Respondent failed to obtain workers’ compensation coverage for its employees. On March 5, 2010, Mr. Eaton issued a Request for Production of Business Records for Penalty Assessment Calculation to Respondent. On March 8, 2010, Respondent provided Mr. Eaton with additional workers’ compensation policy information. The information included the declarations page for Chartis Company Policy No. WC 005-73-7942. The Chartis policy is a Workers’ Compensation and Employers Liability Policy. In Item 3A, the policy lists the states that are covered, in Part One of the policy, pursuant to each state’s workers’ compensation law. Georgia is named as a covered state in Item 3A. In Item 3C, the Chartis policy lists the states that are covered, in Part Three of the policy, as "other states insurance." Florida is listed only in Item 3C. Item 4 of the Chartis policy states that "[t]he premium of this policy will be determined by our Manuals of Rules, Classifications, Rates and Rating Plans. All information required below is subject to verification and change by audit." In response to the request for business records, Respondent provided Petitioner with payroll information for work it had performed in Florida between September 2007 and February 2010. After receiving this information, Respondent’s Penalty Calculator, Robert McAullife, calculated a penalty. Because Respondent had not provided all of the requested business records, Mr. McAullife imputed Respondent’s payroll for a portion of the relevant time period. In calculating the penalty, Mr. McAullife first sought to determine the amount of premium that Respondent would have paid had it been properly insured for the relevant three-year period. Mr. McAullife assigned a class code for each of Respondent’s employees, reflecting the work they performed. Mr. McAullife then took 1/100th of the payroll and multiplied that figure by the approved manual rate applicable to each class code. Mr. McAullife then took the previously obtained product and multiplied it by 1.5 to find a penalty in the amount of $122,242.23. This penalty is based on Respondent having $382,146.90 in Florida payroll that would have required $81,494.66 in workers’ compensation premium. There are no errors in Mr. McAullife’s penalty calculation. Mr. Eaton issued an Amended Order of Penalty Assessment on March 23, 2010. On March 24, 2010, Respondent and Petitioner entered into a Payment Agreement Schedule for Periodic Payment of Penalty that required ten percent of the penalty to be paid in advance and the remainder to be paid in 60 interest-free monthly payments. Respondent also produced a policy that provided coverage in compliance with Florida law with an effective date of March 12, 2010. As a result, Petitioner issued an Order of Conditional Release, permitting Respondent to return to work. During the hearing, Respondent presented evidence that it is a registered self-insured company in Kentucky for the first $500,000.00 of workers’ compensation. Additionally, Respondent has excess insurance for any workers’ compensation claims that exceed the $500,000.00 threshold. Because it is self-insured in Kentucky, Respondent must purchase letters of credit on an annual basis. Respondent paid the following for its recent letters of credit: (a) 2007, $26,755.54; (b) 2008, $32,438.48; (c) 2009, $33,626.38; and (d) 2010 to date, $8,931.39. The State of Kentucky assesses qualified self-insureds a six and one half percent tax based on an annual simulated premium. The amount of the simulated premium represents what a qualified self-insured would pay for a "first dollar" policy of workers’ compensation insurance. Respondent’s recent simulated premiums are as follows: (a) 2007, $453.440.00; (b) 2008, $480,637.00; (c) 2009, $623,940.00; and (d) 2010, $1,006,243.00. Respondent also maintains a "high dollar" deductible policy of insurance that provides workers’ compensation coverage for its Georgia employees. Respondent’s Georgia policy, Chartis Company Policy No. WC 005-73-7942, which includes Florida as part of "all other states" in Item 3C of the declarations page, also requires the payment of premiums. Respondent recently paid the following premiums for this insurance: (a) 2007, $124,736.78; (b) 2008, $125,950.08; and (c) 2009, $64,465.28. The premiums paid by Respondent for the Chartis Company Policy No. WC 005-73-7942 are not based on Florida rates. From 2007 to 2010, Respondent provided workers’ compensation benefits for at least four different workers that were injured while performing work for Respondent in Florida. The workers’ compensation benefits paid by Respondent on these claims totaled $147,958.25.
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 Caldwell Tanks, Inc., failed to comply with Chapter 440, Florida Statutes, and imposing a penalty in the amount of $122,224.22. DONE AND ENTERED this 8th day of December, 2010, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD 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 8th day of December, 2010. COPIES FURNISHED: Claude M. Harden, III, Esquire Carr Allison 305 South Gadsden Street Tallahassee, Florida 32301 Jamila Georgette Gooden, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 Julie Jones, Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0390 Honorable Alex Sink Chief Financial Officer The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0390
