The Issue Whether Thompson Enterprises of Jacksonville, LLC (Respondent), violated the provisions of chapter 440, Florida Statutes,1/ by failing to secure the payment of workers' compensation, as alleged in the Stop-Work Order and 2nd Amended Order of Penalty Assessment; and, if so, what is the appropriate penalty.
Findings Of Fact The Department is the state agency responsible for enforcing workers' compensation coverage requirements applicable to employers under Florida law. Respondent is a Florida limited-liability company organized on October 25, 2011. The managing members listed on Respondent’s State of Florida Articles of Organization are Thomas Thompson, Michael Thompson, and Vicky Thompson. In May 2016, Department Compliance Investigator Ann Johnson was assigned to conduct a job site visit on Respondent’s business because its name appeared on the Department’s Bureau of Compliance’s “lead list.” The “lead list” is one of the Department’s databases listing employers that are potentially out of compliance with Florida's workers' compensation insurance requirements. Prior to the job site visit, Investigator Johnson reviewed the Division of Corporations website, www.sunbiz.org, and confirmed Respondent's address, managing members' names, and that Respondent was a current, active Florida company. Respondent’s website advertised towing, wrecker, mechanic, and body shop services. On May 6, 2016, Investigator Johnson visited Respondent's principal address located at 7600 Bailey Body Road, Jacksonville, Florida 32216. She noted a large commercial sign near Respondent’s address that advertised towing and wrecker services. During her visit, Investigator Johnson spoke with Vicky Thompson and Michael Thompson, both of whom advised that they were owners of Respondent. The Thompsons informed Investigator Johnson that Respondent had six employees, including the three listed as managers on Respondent’s Articles of Organization. When Investigator Johnson asked for proof of workers’ compensation coverage, Michael Thompson admitted that Respondent had no such coverage. Under Florida law, employers in the non-construction industry, such as Respondent, must secure workers' compensation insurance if "four or more employees are employed by the same employer." §§ 440.02(17)(b) and 440.107, Fla. Stat. On the same day as her site visit, Investigator Johnson confirmed Respondent’s lack of insurance with a search of the Department's internal database, Coverage and Compliance Automated System. At the time, Respondent had no active exemptions from the requirements of obtaining workers’ compensation for its three managing members. Based on her investigation, Investigator Johnson served Respondent with the Stop-Work Order and a Request for Production on May 6, 2016. Upon serving the documents, Investigator Johnson explained the effect and purpose of the documents and how Respondent could come into compliance. Respondent came into compliance that same day by paying a $1,000 down payment, reducing Respondent's workforce to three employees, applying for exemptions for its three managing members, and executing an agreed Order of conditional release with the Department. Respondent subsequently complied with the Department’s Request for Production. In June 2016, the Department assigned Penalty Auditor Eunika Jackson to review records obtained from Respondent and calculate the penalty to be assessed against Respondent. In accordance with applicable law, the Department's audit spanned the preceding two-year period, starting from the date of the Stop-Work Order. See § 440.107(7)(d)1., Fla. Stat. The audit period in this case was from May 7, 2014, through May 6, 2016. Based on information obtained during the investigation, Auditor Jackson assigned classification codes 7219, 8380, and 8810 to those identified as employees working for Respondent during the audit period. Classification codes are four-digit codes assigned to various occupations by the National Council on Compensation Insurance ("NCCI") to assist in the calculation of workers' compensation insurance premiums. Classification code 8810 applies to clerical office employees, code 7219 applies to trucking and "towing companies," and code 8380 applies to automobile service or repair centers. According to Respondent, it was out of compliance with the coverage requirements of chapter 440 for only "368 days" during the two-year audit period. Respondent's records, however, do not support this contention. Respondent provided a detailed "Employee Earnings Summary" for each employee stating the employee’s name, pay rate, and pay period. Respondent's payroll records reflect that Respondent employed "four or more employees" during the audit period. Throughout the two-year audit period, Respondent employed four or more employees with the following duties: Anna Lee, mechanic/bodywork; Cedric Blake, mechanic/bodywork; David Raynor, mechanic/bodywork; James Budner, mechanic/bodywork; Jason Leighty, mechanic; Kevin Croker, Jr., porter/detailer; Nicholas Conway, bodywork; Ralph Tenity, bodywork; Rebecca Thompson, secretary/office help; Stephen Collins, shop helper/porter; Todd Gatshore, tow truck driver/shop helper; and Williams Reeves, tow truck driver/shop helper. Evidence further demonstrated that, during the audit period, managing member Michael Thompson worked as a wrecker truckdriver, and worked with the Sheriff's Office to clear traffic accidents. He was assigned class code 7219 — tow truck driver. Managing member Vicky Thompson was given the clerical class code 8810 because she was observed working in the office during Investigator Johnson's site visit. Managing member Thomas Thompson was assigned the clerical class code 8810 based upon the fact that he occasionally does office work for the business. The corresponding approved manual rates for classification codes 8810, 7219, and 8380 were correctly applied to each employee for the related periods of non-compliance to determine the final penalty. In accordance with the Request for Production, Respondent provided the Department payroll summary reports, tax reports, and unemployment tax reports. The payroll summary reports and records provided by Respondent listed the payroll and duties for each employee. The gross payroll amounts for each employee reflected in the penalty in this case were derived from those documents. Upon receiving those reports and records, the Department correctly determined the gross payroll for Respondent's employees. On June 13, 2016, the Department served the Amended Order of Penalty Assessment on Respondent, assessing a penalty of $33,788.90. A portion of the first penalty was based on imputed payroll for Respondent’s three managing members. After service of the Amended Order of Penalty Assessment, Respondent provided additional records showing the payroll of its three managing members, and the 2nd Amended Order of Penalty Assessment was calculated after removing the imputed payroll. On August 22, 2016, the Department served the 2nd Amended Order of Penalty Assessment on Respondent, assessing a penalty of $33,112.44, which was correctly calculated in accordance with section 440.107(7)(d)1. and Florida Administrative Code Rule 69L-6.027(1). In sum, the clear and convincing evidence demonstrated that Respondent was a tow truck company engaged in the wrecker/tow truck and body shop mechanic industries in Florida during the periods of noncompliance; that Respondent failed to secure the payment of workers' compensation for its employees in violation of Florida's Workers' Compensation Law; and that the Department correctly utilized the methodology specified in section 440.107(7)(d)1. and rule 69L-6.027(1) to determine the appropriate penalty of $33,112.44.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order, consistent with this Recommended Order, upholding the Stop-Work Order and imposing the penalty set forth in the 2nd Amended Order of Penalty Assessment against Thompson Enterprises of Jacksonville, LLC. DONE AND ENTERED this 27th day of April, 2017, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of April, 2017.
Findings Of Fact Respondent James Seay, who had worked as a teacher in Suwannee County for many years, was out sick first with a stomach virus and then with recurring head pain for the entire school week of March 4-8, 1991. He visited physicians on March 5, 7 and 8, and took three prescribed medicines. Mr. Seay telephoned the morning of March 4, 1992, and told Sonja Suber, a secretary who was "the designated person at the school," (T.48) responsible for obtaining substitute teachers and maintaining sick leave records, that he was ill and would not be in that day. The parties agree that respondent was on sick leave through March 8, 1991. On the evening of March 4, 1991, he telephoned Nancy Roberts, director of elementary education for the Suwanee County School District and principal of Douglass Center. When Mr.Seay told her he would not be in the following day, she cancelled an observation she had scheduled for his benefit. The next day or the day after Sonya Suber telephoned respondent to relay Ms. Roberts' advice that a meeting scheduled for March 11, 1991, had been cancelled. On Saturday, March 9, 1991, Mr. Seay telephoned Ms. Suber and said "that he would be coming Monday to the school but he would not report to the classroom." T. 29. He had earlier expressed to Ms. Roberts discomfort "with the students that were assigned" (T. 46) to him. On Monday, March 11, 1991, at 7:53 o'clock in the morning, he appeared as promised and signed in at Suwanee County School District's Douglass Center. After greeting Sonya Suber, he went to the teachers' lounge. He did not give any indication that he was unwell or make any request for leave. Ms. Roberts saw Mr. Seay reading a newspaper in the lounge. She asked him to accompany her to her office, where she "let him know that he was a teacher assigned to the Alternative Program at the Douglass Center and what his responsibilities were . . . working with the students there." T.50. Respondent handed Ms. Roberts one of his attorney's cards, and told her "that there was nothing [she] could do to make him go in that classroom and that he was not going to that classroom," (T.50) and asked her "to stop harassing him." Id. After Mr. Seay's return to the teachers' lounge, Ms. Roberts gave an account of events to Mr. Charles F. Blalock, Jr., petitioner here. Petitioner's Exhibit No. 2. The following morning Mr. Seay signed in at the Douglass Center at ten before eight, Petitioner's Exhibit No. 1, but he again went to the teachers' lounge rather than to his assigned classroom. Again he told nobody he was ill, and asked nobody for sick leave. Ms. Roberts twice asked him to go to his classroom. When she told him his failure to teach the class he had been assigned "could be construed as insubordination on his part," (T.53) he asked her to clarify what she meant by insubordination and, with her permission, made a tape recording of her answer. Petitioner's Exhibit No. 3. He refused to go to his classroom. On Wednesday, March 13, 1991, Mr. Blalock wrote a letter to Mr. Seay advising him that he was suspended with pay, and that, as superintendent, he would recommend suspension without pay and ultimately dismissal at the next regular meeting of the School Board. Petitioner's Exhibit No. 4. When Ms. Roberts telephoned Thursday morning with word that Mr. Seay was at Douglass Center, Mr. Blalock went himself to speak to Mr. Seay. Twice he personally directed Mr. Seay to go to his classroom and get to work. Confronted with Mr. Seay's silent refusal, Mr. Blalock handed him the letter of suspension, dated the day before. When the School Board met, heard what had transpired, and listened to a presentation by Mr. Seay's lawyer, it decided that Mr. Seay should have a physical examination and be examined by a psychiatrist. At the school board meeting, nobody suggested that respondent was on sick leave at any time after March 8, 1991. In keeping with the collectively bargained agreement between the School Board and teachers like Mr. Seay under continuing contract with the School Board, Petitioner's Exhibit No. 6, petitioner demanded that respondent go for medical and psychiatric examinations, by letter dated April 10, 1991. Petitioner's Exhibit No. 7. A second, follow-up letter reiterating the demand, dated April 29, 1991, Petitioner's Exhibit No. 9, reached Mr. Seay by registered mail. As of the time of the hearing, Mr. Seay had not complied with the Board's demand that he submit to a physical examination and be examined by a psychiatrist.
Recommendation It is, therefore, RECOMMENDED: That petitioner terminate respondent's employment. DONE and ENTERED this 3rd day of December, 1992, at Tallahassee, Florida. ROBERT T. BENTON, II, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of December, 1992. APPENDIX FOR NO. 91-6046 Petitioner's proposed findings of fact Nos. 1-11 and 13-20 have been adopted, in substance, insofar as material. Petitioner's proposed finding of fact No. 12 pertains to immaterial matters. With respect to petitioner's proposed finding of fact No. 21, respondent apparently also took the position that he had been on sick leave in the unemployment compensation case. Petitioner's proposed findings of fact Nos. 22 and 23 pertain to subordinate matters. Respondent's proposed findings of fact Nos. 1-3, 5-8 and 19 have been adopted in substance, insofar as material. Respondent's proposed findings of fact Nos. 4, 9-12, 21 and 24 pertain to subordinate matters. Respondent's proposed findings of fact Nos. 13 and 15 are immaterial since respondent never requested sick leave. Respondent's proposed findings of fact Nos. 14, 16, 17 and 18 have been rejected as unsupported by the weight of the evidence. With respect to respondent's proposed finding of fact No. 20, Ms. Roberts' testimony in that regard is unrebutted. With respect to respondent's proposed finding of fact No. 22, there is no disagreement. Respondent's proposed finding of fact No. 23 pertains to an immaterial matter. COPIES FURNISHED: Honorable Betty Castor Commissioner of Education The Capitol Tallahassee, FL 32399-0400 Charles Blalock, Superintendent Suwanee County School Board 224 W. Parshley Street Live Oak, FL 32060 J. Victor Africano, Esquire Post Office Box 1450 Live Oak, FL 32060 Linsey Moore, Esquire 50 East 2nd Street Jacksonville, FL 32206
The Issue The issue is whether Respondent failed to comply with provisions of the Workers? Compensation Law and implementing rules, and if so, what is the appropriate penalty.
Findings Of Fact Petitioner is responsible for administering the Workers? Compensation Law in a manner which facilitates the self–execution of the system and the process of ensuring a prompt and cost-effective delivery of payments. Respondent National Union Fire Insurance Company of Pittsburgh, Pennsylvania, is a workers? compensation insurance carrier authorized to insure under the Workers? Compensation law. Chartis is a third-party administrator or servicing agent for Respondent. Respondent is substantially affected by Petitioner?s amended Notice of Imposition of Penalties. Under the authority of section 440.525, Petitioner reviewed Respondent?s workers? compensation benefit disbursement and claims handling practices in an audit performed March 14, 2011, through March 18, 2011. The audit addressed the timeliness and accuracy of workers? compensation payments, as well as other claims handling practices concerning certain claims files, for a five-year audit period from March 18, 2006, through March 18, 2011. Respondent paid $5,000.00 in penalties that were assessed for improper case management techniques in Petitioner?s original Notice of Imposition of Penalties. The parties had no disagreement as to this portion of the fine assessed. At issue is the remaining fine amount of $9,200.00 assessed for improper benefit disbursement practices, as set forth in the Petitioner?s Amended Notice of Imposition of Penalties, dated September 20, 2011, which incorporates the amended final audit report. This penalty reflected Petitioner?s determination that there were 152 late payments out of a total of 807 indemnity payments due to injured workers. The Respondent agreed that the number of indemnity payments reviewed during the audit totaled 807, but disputed the number of late indemnity payments. Respondent agreed that 25 payments related to workers? compensation claims files other than the file of R.D. were correctly identified as late by Petitioner. Respondent disputed the number of late payments made to R.D. There was testimony that Respondent had notification of R.D.?s permanent total disability on February 22, 1989. Other testimony stated that R.D. was accepted as permanently and totally disabled as of February 23, 1989. Any discrepancy between these dates was not at issue in the Department?s calculation of the biweekly payment schedule, as discussed below. R.D. is entitled to biweekly indemnity payments for permanent total disability, as well as supplemental permanent total benefits. No evidence was presented at hearing as to whether R.D.?s disability was immediate and continuous for eight calendar days or more after his injury, or in the alternative, if R.D.?s first 7 days of disability after his injury were nonconsecutive or delayed. Joint Exhibit J-6, the indemnity pay out ledger, provided information from Respondent?s records regarding payments made to R.D. It shows the amount of payment and “Trans Date” or transaction date for each payment. As a customary business practice, checks were mailed out one day after the transaction date, so the actual date of each payment is one day after the “Trans Date” shown. In addition, the records contain a column entitled “Service Date From-To” which associates a specific compensation period with the payment in that row. The “Service Date From-To” column is blank for all of the payments to R.D. beginning in 1988 until September of 1998. This column contains dates that Respondent considered to be the compensation period applicable to each payment from September of 1998 through the audit period. The indemnity pay out ledger also indicates that after Respondent was notified of R.D.?s permanent total disability in 1989, over 250 payments were made to R.D. until September of 1998. On average, this was about 28 payments per year or slightly more often than biweekly. Counsel for Petitioner elicited deposition testimony from Ms. Margorit Constantine, Complex Claim Director for Chartis, that Respondent?s records indicated that the initial permanent total disability payment covered 2-22-1989 through 3-7-1989, but this information was evidently not relied upon by Petitioner. Ms. Sharna Amos, Workers? Compensation Specialist at the Division, testified that the Division determines the specific biweekly time period applicable to a permanent total claim based upon the date the first payment went to the injured worker, even if this first payment is a retroactive payment covering an earlier time period. However, Petitioner presented no evidence that the biweekly payment schedule established by Ms. Amos for purposes of the audit of R.D.?s file coincided in any way with a biweekly schedule based upon the date the first installment of compensation for total disability was paid to him. In fact, as Ms. Amos testified, the biweekly payment schedule created for the audit was based upon dates being used by the Respondent for biweekly payments during the fall of 1998, the first payments for which the Respondent identified service dates. Ms. Amos testified at hearing that she established the biweekly payment schedule for the audit of R.D.'s file as follows: Um, based on the information that was provided to me, um, the pay history that was given to me, um, the first one with the, um, service dates of 9/2 to 9/15, August, all of the other payments were lump sum because they had gotten a new computer or something. Uh, so I started from that time period and ran the bi -– oh, sorry, on the right -– on this left side, I ran the biweekly periods from 9/2/1998 until -– I ran them all the way through, um, 7/9/2011. It was not made clear at hearing why Petitioner considered over 250 nearly biweekly payments that had been paid to R.D. for over nine years prior to September 1998 to be “lump sum” simply because the Respondent was unable to provide the service dates it associated with them. Petitioner has no rules defining “lump sum” in this context, and it is not clear what significance such a determination would have in the calculation of a payment schedule. Ms. Amos did testify that typically with permanent total disability claims the employee is “accepted permanent total” retroactively back to a given date and the biweekly payments are established after a lump sum payment covering the intervening period is made. However, no evidence was presented that R.D. was retroactively accepted as permanently totally disabled in 1998 and the first installment was made to him at that time as a lump sum payment; to the contrary, the evidence indicated he was accepted as permanently totally disabled in 1989. It appears rather that Ms. Amos established the biweekly period for purposes of the audit based on the service dates being used by Respondent in September of 1998 simply because these were the first “service dates” available. However, there was no evidence to show that the service dates being used by Respondent in September of 1998 bore any relationship to the first installment of compensation for total disability paid to R.D. In fact, the evidence would suggest no such connection. The payments made to R.D. prior to September were generally biweekly, but somewhat irregular. The payments made after September of 1998 were generally biweekly, but somewhat irregular. Consistent with Respondent?s interpretation of the statute, Respondent presented deposition testimony that while they generally tried to make biweekly payments, they made no attempt to strictly make the payments on the anniversary of the first installment, but would occasionally start new biweekly periods for various reasons. It is ironic that after basing the audit payment schedule on Respondent?s service dates in September of 1998 rather than on the date of the first installment as required by the statute, that Petitioner went on to categorically reject all of Respondent?s subsequent service dates as inconsistent with statutory requirements. It was similarly unclear as to why Petitioner concluded that Respondent?s acquisition of a new computer would have any effect on the determination of the applicable biweekly payment schedule, because payment data from before that time was available. As Ms. Constantine testified, some data on the indemnity pay out ledger was information entered earlier from check copies and “green cards” that were manual records. The Division used the biweekly payment schedule established by Ms. Amos to determine which payments were late. Had the Division begun its biweekly payment schedule on another date, it would have created a different schedule of due dates, and would then have determined that an entirely different number of payments to R.D. were late. As noted, Respondent paid its biweekly payments in a different manner. No evidence was presented that Respondent?s occasionally-adjusted biweekly periods for total disability payments were consistent with the date that the first installment of compensation had been paid to R.D., or what that date was. Respondent did not adhere to a fixed biweekly schedule, but did generally adhere to biweekly payments. Adjustments in payment due dates were made from time to time. For example, evidence indicated that adjustments were made at the beginning of a new calendar year or when errors were discovered, in which case a new biweekly pattern of payments would begin after the adjustment, without regard to the dates of any previous biweekly payments. This method, while not intrinsically unreasonable, is not consistent with the statute. It is reasonable that missing data, calendar changes, advance payments, or other irregularities in the payment of indemnity might create confusion in the construction of the proper payment schedule, or in the reconstruction of the proper payment schedule for purposes of an audit. The correct and consistent way to deal with such factors is not always addressed by statute. The Department has adopted no administrative rules on this subject. The statute?s requirement of a fixed biweekly schedule that cannot thereafter be changed is not followed by many who regularly administer these payments. Ms. Amos testified in deposition that many of her audits involve carriers who are making biweekly payments covering time periods that are misaligned with the proper schedule as determined by the Department, and that she is frequently asked to go back in time to identify for the carrier the date when the problem started. At another point, Ms. Amos noted that in dealing with payments at the end of a calendar year, “a lot of adjusters in the industry . . . would pay the injured workers 12/22/2006 to 12/31/2006 and then restart the clock, just pay those few days and then restart the clock in January, starting their next payment at January 1.” Mr. Bottjer, holder of workers? compensation and all lines adjusting licenses, and Compliance Reviewer for Chartis, testified in deposition that prior to the audit he was unaware that it was the Department?s position that a biweekly period could not be adjusted after a carrier “goofed” and had caught the injured worker up (and stated that he still does not agree that this is required by the statute). Ms. Constantine testified in deposition that she had never seen a bulletin, gone to a conference, or had any information indicating to her that biweekly payments could not be altered. R.D. was consistently overpaid in his permanent total disability and supplemental benefits, based upon errors unrelated to the issue in this hearing. Additionally, various adjustment payments were made to R.D. from time to time which included penalties and interest. R.D. has received all of the indemnity payments to which he was entitled during the period of the audit and has not been harmed by any late payments at issue here. Petitioner proved by clear and convincing evidence that 25 payments related to workers? compensation claims files other than the file of R.D. were paid late, as stipulated. This constitutes about 3.1 per cent of the 807 indemnity payments that were the subject of the audit. Petitioner proved by clear and convincing evidence the dates on which R.D. was paid his biweekly total disability payments during the audit period. Petitioner failed to prove by clear and convincing evidence the date that the first installment of compensation for total disability was paid to R.D. or the dates by which R.D.?s biweekly total disability payments needed to be paid to him. Petitioner failed to prove by clear and convincing evidence that Respondent was late in paying R.D. his total disability payments. Mr. Bottjer, Respondent?s witness, testified that he believed that “as many as 14” payments to R.D. might have been late. Mr. Bottjer based this conclusion on due dates that appear to bear no relation to the date of payment of the first installment of payments for total disability. Even if 14 additional late payments were added to the 25 late payments that were stipulated, the total number of late payments would be 39, or about 4.8 per cent of the 807 indemnity payments that were audited. Based upon the number of late payments proved by clear and convincing evidence, the timely payment performance standard during the period of the audit was in excess of 95 percent.
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 finding that Respondent paid 25 payments late during the audit period and imposing no fines for improper benefit disbursement practices. DONE AND ENTERED this 8th day of February, 2012, 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 8th day of February, 2012.
The Issue The issues to determine in this matter are whether Respondent Alpha and Omega Builders of Jacksonville, Inc., failed to secure workers’ compensation coverage for its employees; and, if so, whether Petitioner Department of Financial Services, Division of Workers’ Compensation (Department), correctly calculated the penalty assessment it imposed against Respondent.
Findings Of Fact The Department is the state agency charged with enforcing the requirement of chapter 440 that employers in Florida secure workers’ compensation insurance coverage for their employees. See § 440.107(3), Fla. Stat. Respondent is a corporation located in Jacksonville, Florida, engaged in the roofing industry. Ms. Beckstrom, the Jacksonville supervisor for workers’ compensation compliance investigators, testified at the final hearing. Ms. Beckstrom largely read from the January 30, 2018, investigative report and narrative completed by Investigator Frank Odom, who did not testify at the final hearing.1/ Ms. Beckstrom did not perform the investigation of Respondent, but authorized Mr. Odom to do so. On January 30, 2018, Mr. Odom investigated the worksite at 5065 Soutel Drive, Jacksonville, Florida, which is the J. Fralin Funeral Home, a commercial business (the Soutel Drive site). Mr. Odom’s narrative stated, “[a]s I approached the site I observed 3 individuals on the roof installing shingles.” Much of the remaining portions of Mr. Odom’s narrative, which ultimately led to his determination that Respondent employed these three individuals without workers’ compensation insurance, is inadmissible hearsay. Although Ms. Beckstrom testified extensively on what Mr. Odom wrote in the investigative report and narrative, the undersigned cannot base findings of fact on inadmissible hearsay unless it explains or supplements other evidence. In contrast, Mr. Jessie, the owner of Respondent, testified at the final hearing that Mr. Odom contacted him the morning of January 30, 2018, by telephone. When Mr. Odom asked if Respondent had three individuals working on the Soutel Drive site, Mr. Jessie testified that he told Mr. Odom that these individuals were not supposed to be working.2/ Mr. Jessie stated that when he arrived at the Soutel Drive site after receiving the call from Mr. Odom, the three individuals had left. On cross-examination, Mr. Jessie did not recognize the names of Roberto Flores, Alex Alvarado, or Dagoberto Lopez, who Mr. Odom identified in the investigative report and narrative as the three individuals working on the roof at the Soutel Drive site. Mr. Jessie testified that he normally employs workers through an organization called Action Labor, who in turn secures the applicable workers’ compensation insurance for them. Mr. Jessie testified that he had arranged, through Action Labor, for three individuals to work on the Soutel Drive site, and that Action Labor had provided him a “ticket” for three individuals to work at the site. His testimony is credited. Although not crystal clear from his testimony, the undersigned understood Mr. Jessie to refer to Action Labor as an employee leasing company.3/ Mr. Jessie further testified that after meeting with Mr. Odom at the Soutel Drive site, he received a Stop-Work Order and Order of Penalty Assessment, as well as a Request for Production of Business Records for Penalty Assessment Calculation (Request for Production). The Request for Production requested several categories of business records from Respondent, for the time period of January 31, 2016, through January 30, 2018, to determine Respondent’s payroll during that time period (audit period). The Request for Production requested that Respondent provide all payroll documents, account documents, disbursements, workers’ compensation coverage, temporary labor service and day labor service records, subcontractors, and documentation of subcontractors’ workers’ compensation insurance coverage. At the final hearing, Ms. Murcia, the Department’s penalty auditor, testified that because Respondent had not timely provided sufficient records in response to the Request for Production, the Department issued the Amended Order. Ms. Murcia testified that the Department received some records requested pursuant to the Request for Production in February 2019 (which was well after the response deadline of 10 business days), but that they were incomplete and thus not sufficient to calculate a penalty. Because Respondent failed to provide sufficient records in response to the Request for Production, the Department calculated the Amended Order based on a completely imputed payroll. Ms. Murcia explained that the Department calculates a gross payroll for an employer (who provides insufficient records) at the statewide average weekly wage multiplied by 1.5 for each employee for the period requested for the calculation of the penalty. Based on this imputation calculation, the Amended Order imposed a penalty in the amount of $166,791.18. The evidence presented at the final hearing was insufficient to establish that the three individuals observed at the Soutel Drive site on January 30, 2018, were Respondent’s employees or subcontractors on that day or at any time during the audit period. The evidence presented at the final hearing established that Respondent failed to timely present sufficient records pursuant to the Request for Production.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, the undersigned recommends that the Department enter a final order dismissing the Stop-Work Order and Order of Penalty Assessment, and the Amended Order of Penalty Assessment, against Respondent. DONE AND ENTERED this 3rd day of April, 2019, in Tallahassee, Leon County, Florida. S ROBERT J. TELFER III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of April, 2019.
The Issue Whether the Florida Department of Financial Services, Division of Workers’ Compensation (Respondent) should enter a final order dismissing the Petition for Resolution of Reimbursement (Petition for Resolution) filed by Martin Memorial Health Systems (Petitioner). If the Petition for Resolution should not be dismissed, whether Guarantee Insurance Company (the Carrier) improperly disallowed reimbursement owed to Petitioner for services Petitioner rendered to an injured employee/claimant and the amount thereof.
Findings Of Fact Paragraphs 1–38 of the Agreed Facts and Conclusions of Law set forth in the Joint Pre-Hearing Statement and Filing of Exhibits are hereby incorporated by reference. The Notice of Deficiency issued by Respondent should not have been issued because the Petition for Reimbursement was complete when filed. Respondent has no basis to dismiss the Petition for Reimbursement. Petitioner provided medical services to an employee that had workers' compensation insurance coverage from the Carrier. The usual and customary charges for the services at issue in this proceeding totaled $61,111.09. The Carrier paid Petitioner the sum of $9,135.52 based on the Carrier’s determination that the charges should be based on inpatient treatment on a per diem basis. The greater weight of the evidence establishes that the services to the injured employee should be billed under the category “outpatient surgery” pursuant to the pre-admission authorization provided to Petitioner. Respondent has duly adopted rules that govern billing limitations. The parties agree that outpatient surgery, such as the services at issue in this proceeding should be reimbursed at 60 percent of the usual and customary charges. Petitioner is entitled to reimbursement from the Carrier in the amount of $36,666.65, which is 60 percent of $61,111.09. The Carrier should be credited with having paid the sum of $9,135.52, so the additional amount of the reimbursement due to Petitioner from the Carrier is $27,531.13 ($36,666.65 less $9,135.52) plus any applicable interest.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Financial Services enter a final order ordering the Carrier to reimburse Petitioner, Martin Memorial Hospital, in the additional amount of $27,531.13 plus any applicable interest. DONE AND ENTERED this 20th day of May, 2010, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 May, 2010. COPIES FURNISHED: Karen Kennedy Martin Memorial Health Systems Post Office Box 9010 Stuart, Florida 34995 Mari H. McCully, Esquire Department of Financial Services Division of Workers` Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Brian F. LaBovick, Esquire LaBovick & LaBovick, P.A. 5220 Hood Road, Second Floor Palm Beach Gardens, Florida 33418 Julie Jones, CP, FRP, Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue is whether Petitioner properly issued a Stop-Work Order and 3rd Amended Order of Penalty Assessment against Respondent for failing to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes.
Findings Of Fact The Division is a component of the Department of Financial Services. It is responsible for enforcing the workers' compensation coverage requirements pursuant to section 440.107. At all times relevant to this proceeding, USA was a corporation registered to do business in Florida. Respondent is a company engaged in the construction industry and was active during the two-year audit period from August 27, 2013, through August 26, 2015. On August 26, 2015, Julio Cabrera ("investigator" or Cabrera"), compliance investigator for the Division, conducted a random construction compliance check at the residential job site, 741 Harbor Drive in Key Biscayne ("residential home"). Cabrera observed two men on Respondent's scaffold plastering the exterior wall of the residential home. Cabrera interviewed the two men working on the scaffold. The workers told the investigator that they were employed by Respondent. They also identified Garcia as the Respondent's owner and provided Garcia's contact information to Cabrera. After interviewing the two workers, Cabrera checked the Department's Coverage and Compliance Automated System for proof of workers' compensation coverage and for exemptions associated with USA. Cabrera's search revealed Garcia had an active exemption, but Respondent did not have a workers' compensation insurance policy or an employee leasing policy for its employees. Cabrera also confirmed that Respondent did not have any type of workers' compensation coverage for its employees by examining the National Council on Compensation Insurance database. Next, Cabrera placed a telephone call to Garcia and interviewed him. Garcia informed Cabrera that the two workers were USA's employees and that Respondent did not have workers' compensation insurance coverage for the workers.1/ After interviewing Garcia, the investigator returned to the two USA employees and requested their identification. Silvano Antonio Delgado Reyes provided his identification and the other USA male employee fled from the job site. That same day Cabrera issued Respondent a Stop-Work Order on behalf of the Division for Respondent's failure to secure the required workers' compensation insurance coverage. Petitioner also served Respondent a Request of Business Records for Penalty Assessment Calculation ("Request") asking for documentation to enable the Division to determine payroll for the audit period of August 27, 2013, through August 26, 2015. USA responded to the Request for records and provided the Division with verification of its business records on several different occasions. Ultimately, Respondent provided bank statements and corresponding check images for most of the two- year audit period. Christopher Richardson ("auditor" or "Richardson"), penalty auditor for the Division, was assigned to USA's investigation. Richardson reviewed the business records produced by Respondent and determined those persons employed by USA during the audit period without workers' compensation insurance. Richardson properly recalculated the penalty amount each time new records were provided by Respondent. USA did not provide sufficient records to determine payroll for February 1, 2014, through December 31, 2014, and August 1, 2015, through 25, 2015, and Richardson properly utilized the computation formula to determine the payroll for the aforementioned audit period without adequate records. Richardson concluded his audit by properly calculating the workers' compensation amount USA owed in workers' compensation insurance for the audit period using the Class Code 5022 for masonry work. Richardson applied the approved manual rates and methodology specified in section 440.107(7)(d) and concluded USA owed a penalty amount of $52,489.24. On March 28, 2016, the Division served Respondent the 3rd Amended Order of Penalty Assessment in the amount of $52,489.24 naming those persons employed by USA during the audit period. On June 30, 2015, Respondent challenged the Stop-Work Order and penalty assessment and requested a formal hearing.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, issue a final order affirming the Stop-Work Order and 3rd Amended Order of Penalty Assessment in the amount of $52,489.24. DONE AND ENTERED this 15th day of July, 2016, in Tallahassee, Leon County, Florida. S JUNE C. MCKINNEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 2016.
The Issue Whether Respondent, Randall Lee Southerland, conducted operations in the construction industry in the State of Florida without obtaining workers’ compensation coverage, meeting the requirements of Chapter 440, Florida Statutes (2007),1 in violation of Subsection 440.107(2), Florida Statutes. If so, what penalty should be assessed by Petitioner, Department of Financial Services, Division of Workers’ Compensation, pursuant to Section 440.107, Florida Statutes (2007), and Florida Administrative Code Chapter 69L.
Findings Of Fact Petitioner is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. § 440.107, Fla. Stat. Respondent is a sole proprietor, allegedly engaged in the construction industry, providing tile and grouting services and carpet removal to private residences in Florida. On November 30, 2007, Eric Duncan and Alison Pasternak, both of whom are workers’ compensation investigators for Petitioner, were conducting random compliance checks in Lee County. Investigator Duncan noticed two men working outside of a residence in Cape Coral, one using a power saw and the other mixing a substance in a bucket. Investigators Duncan and Pasternak decided to conduct a compliance check of these two men to ensure they were workers’ compensation coverage compliant. The two men identified themselves as Randall Lee Southerland and Tim Weaver. Weaver produced his Exemption Certificate for workers’ compensation coverage. No further action was taken in regards to that investigation. Southerland was observed mixing the substance, which was later determined to be tiling grout. Southerland did not have a workers’ compensation insurance policy, a coverage exemption certificate, nor was he employed via a leasing agency. After consulting with his supervisor, Investigator Duncan issued SWO No. 07-364-D7 to Respondent along with a Business Records Request for the time-period of December 1, 2004, through November 30, 2007. Respondent provided records to Petitioner shortly thereafter, and, subsequently, a penalty assessment was calculated. The calculations of Respondent’s gross payroll was necessary since it was alleged that he worked in the construction field of tiling. Respondent disputes this classification and argues that grouting is separate from the installation of tiles and is not a classification within the construction field. Therefore, neither a workers’ compensation insurance policy, nor an exception is required. The National Counsel on Compensation Insurance (NCCI) established a codification of construction employment activities; all of which have been adopted by Petitioner and are commonly referred to as “class codes.” The NCCI class code for tiling is “5348.” It is undisputed that Respondent was doing the grout- work for the newly installed tiles. It is further undisputed that the definition of tiling, per the NCCI class code “5348,” included the finishing, setting, and installation of tiles. It was also established that loose tiles, merely laying on the floor, are not finished, nor set, until the grout is laid. Pursuant to Section 440.107, Florida Statutes, the calculation of the penalty was completed on a penalty calculation worksheet. The worksheet was completed by examining the records received from Respondent and calculating the gross payroll that was paid to him. The penalty was later amended to reflect additional records provided through discovery, the evidence of the payment for the November 30, 2007, job consisting of a $500.00 check from the real estate agent. The Amended Order assessed a penalty of $1,168.68, which is the applicable amount of the premium evaded and includes the 50 percent penalty for the time period of December 1, 2004, through November 30, 2007.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order: Finding that Respondent failed to secure the payment of workers’ compensation coverage for the sole proprietor, Randall Lee Southerland, in violation of Subsections 440.10(1)(a) and 440.38(1), Florida Statutes; and Assessing a penalty against Respondent, in the amount of $1,168.68, which is equal to 1.5 times the evaded premium based on the payroll records provided by Respondent and the applicable approved manual rate and classification code. DONE AND ENTERED this 3rd day of June, 2008, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of June, 2008.
The Issue The issue in this case is whether Respondent failed to provide workers' compensation insurance coverage for employees, and, if so, what penalty should be assessed.
Findings Of Fact Petitioner is the state agency responsible for, inter alia, monitoring businesses within the state to ensure that such businesses are providing the requisite workers' compensation insurance coverage for all employees. The Division's headquarters are located in Tallahassee, Florida, but its investigators are spread throughout the state in order to more effectively monitor businesses. Respondent is a construction company that has been operating in excess of 30 years. It is a small company and usually only has a few employees at any given time. The company is located in Charlotte Harbor, Florida. Workers' compensation coverage is required if a business entity has one or more employees and is engaged in the construction industry in Florida. Workers' compensation coverage may be secured via three non-mutually exclusive methods: 1) The purchase of a workers' compensation insurance policy; 2) Arranging for the payment of wages and workers' compensation coverage through an employee leasing company; or 3) Applying for and receiving a certificate of exemption from workers' compensation coverage, if certain statutorily-mandated criteria are met. On January 8, 2009, Ira Bender, investigator for the Division, was doing on-site inspections in Port Charlotte, Florida. Bender stopped at the site on Edgewater Drive where new construction was underway at a YMCA. Bender observed a man (later identified as Thomas Woodall) sweeping the floor. Bender questioned Woodall and was told that Woodall worked for Respondent. When asked about his workers' compensation insurance coverage, Woodall advised that his insurance was maintained through Frank Crum Leasing Company ("Crum"). Bender called Crum and found that although Woodall had been carried as an employee of Respondent in the past, he had been released from coverage. The reason for his release was that his employment had been terminated for lack of business. Bender called Respondent to inquire about workers' compensation coverage. He was told that Respondent did not realize Woodall had been dropped from the Crum insurance coverage and that he would be reinstated immediately. In fact, coverage was restarted on that same day. Based on his finding that an employee had been working without coverage, Bender called his supervisor and provided his findings. The supervisor authorized issuance of a SWO based on the findings. The SWO was served on Respondent via hand- delivery at 11:45 a.m., on January 8, 2009. The SWO was also posted at the work site. The Division then requested business records from Respondent in order to determine whether there were any violations. If there were violations, then the Division would ascertain the amount of penalty to assess. Respondent cooperated and submitted the business records, as requested. After review of the business records, the Division issued its first Amended Order of Penalty Assessment ("Order") on January 14, 2009. The process employed by the Division was to locate all uncovered employees, i.e., those working without workers' compensation insurance for any period of time. The employees were then assigned a class code from the National Council on Compensation Insurance (NCCI) publication. Each trade or type of employment is assigned a code which sets the rate to be applied to an individual depending on the type of work he/she is performing. The Division assigned codes to the employees, determined how much the employee had been paid during the period of non-coverage, assigned the rate to the gross pay, and calculated the insurance premium needed to cover the worker for the time in question. A penalty of 1.5 times the premium was then assigned. The Order assessed a total penalty of $21,165.98 against Respondent. Respondent objected to the amount and refused to sign it due to errors contained in the Penalty Worksheet attached to the Order. Signing the Order would have allowed Respondent to return to work, but he refused to sign because he knew it was not correct. Pursuant to discussions between the parties and "additional records received," the Division issued a second Order on January 16, 2009, assessing a penalty of $6,501.27. Respondent believed that the Division was still in error and provided yet additional information--some verbal--to the Division. A third Order was issued on January 21, 2009, reducing the penalty to $3,309.56. However, Respondent still believed the penalty worksheet contained errors. Again, Respondent refused to sign and provided additional information to the Division. The Division issued a fourth Order on January 28, 2009, assessing a penalty of $2,822.24. That Order had an error concerning the spelling of an employee's name, but the penalty amount was correct. Respondent would not sign the fourth Order, because he did not believe he had intentionally violated any statute or rule concerning workers' compensation coverage for his employees. A corrected (fifth amended) Order was ultimately issued on May 19, 2009.1 The fifth Order asserts the amount of penalty now in dispute, which is the same amount appearing in the fourth amended Order. Respondent signed the fifth Order and entered into a payment plan for payment of the penalty, paying a down payment of $1,000 and monthly payments of $30 until paid in full. Respondent takes great offense to the fact that the penalty assessments were not faxed to him more quickly. He maintains that he had every intention to resolve this matter as quickly as possible, but the Division delayed and dragged out the process. The penalty worksheet attached to the fifth Order listed nine "Employee Names" that are subject to the penalty assessment. Each will be discussed below. The first "employee" is listed as "Cash" and is assigned Class Code 5403. This "employee" represents checks found in Respondent's records with the payee listed as "cash- casual labor" totaling $2,178.00 in gross payroll. Code 5403 was assigned because that is the code used by Crum for Respondent's general business. The manual rate for Code 5403 is $24.74. A penalty of $808.26 was assessed for that employee. The second employee is Jacob Prewitt. Prewitt was assigned Class Code 5221, due to the word "driveway" appearing on a check issued to him. Driveway work falls under a lower approved manual rate ($10.37) than general construction. The gross payroll amount was $1,960, and the penalty assigned to Prewitt was $304.88. The third employee is Woodall, assigned a Class Code of 5606, with a manual rate of $3.84. That code is used for supervisors and is, again, not as dangerous an occupation as general construction. The gross payroll for this entry was $1,008, and the penalty assessed for Woodall was $58.07. Cash is the fourth employee and has been covered in the discussion in paragraph 16, above. Barry Lawrence is the fifth employee; he is assigned Class Code 5437 as a cabinet maker/installer with a manual rate of $13.01. Lawrence had a Verification Letter issued by the Division indicating he was exempt from workers' compensation coverage. However, that exemption was limited to cabinet- making. By installing the cabinets, Lawrence performed work outside his exemption status. The gross payroll for his work was $6,200, and the penalty assessed for Lawrence was $1,209.33. Respondent was completely unaware that the exemption letter did not cover installation and had, in fact, always allowed cabinet- makers to install the cabinets as well. Brunderman Builders is listed as the sixth employee. It is assigned Class Code 5403 with a manual rate of $14.39. The gross payroll for this entry was $550, resulting in a penalty assessment of $118.73. The seventh employee is Jorge Gonzolas, assigned Class Code 5403, the general contracting code. Gonzolas was the employee of a contractor who was subcontracting with Respondent. The contractor died unexpectedly, and Gonzolas was left without payment for the work he had performed. Respondent generously decided to pay Gonzolas for his work, thereby, effectively making Gonzolas a de facto employee. The amount paid Gonzolas was $599.00; the penalty assessed for Gonzolas was $129.30. Woodall is again listed as employee number eight, this time with Class Code 5610, reflecting casual labor he did on one date that his insurance was not in place. The payroll amount for this work was $37.50. The penalty assessed for Woodall was $4.02. The ninth employee was Julio Garcia, assigned Class Code 8742 for outside sales, with a manual rate of $.64. The payroll amount for Garcia was $1,300. His penalty assessment amount was $12.48. Garcia was another one of the deceased subcontractor's employees that Respondent volunteered to pay for work Garcia had performed. The total payroll at issue for Respondent was $14,477.50. The total premium for that amount of payroll would have been $1,881.48, and the penalty assessed was $2,822.84. This is a fairly insignificant portion of Respondent's $5.5 million annual payroll. Respondent did not intentionally attempt to avoid the payment of workers' compensation insurance for its employees. There is no pattern of avoidance or indication that non-payment was Respondent's goal. Rather, there are plausible and reasonable explanations about the unpaid premiums. For Woodall, Respondent believed he was still covered through the Crum policy. For Gonzolas and Garcia, Respondent was simply attempting to be a nice guy. For Prewitt, the employee's exemption had unknowingly lapsed. For Lawrence, Respondent relied upon a Verification Letter from the state, but misinterpreted its scope. The Division, on the other hand, only pursued Respondent based on an actual finding of non-coverage. But for Woodall's presence at a work site doing manual labor (sweeping the floor), the Division would not have looked at Respondent's records. There is no indication the Division acted other than in strict accordance to its governing rules.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Financial Services, Division of Workers' Compensation, upholding the assessment of a penalty of $2,822.24 against Respondent, Brunderman Building Company, Inc. DONE AND ENTERED this 9th day of October, 2009, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN 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 9th day of October, 2009.
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes (2016), by failing to secure the payment of workers' compensation coverage, as alleged in the Second Amended Order of Penalty Assessment; and, if so, what penalty is appropriate.
Findings Of Fact The Department is the state agency responsible for enforcing the requirement of chapter 440 that employers in Florida secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. Respondent sells roof coating and provides installation services in the Bradenton, Florida, area. The Investigation On April 20, 2015, the Department received a public referral that Respondent was operating without a roofing license or workers' compensation coverage. The case was assigned by the Department to Compliance Investigator Germaine Green ("Green"). Green first checked the Florida Department of State, Division of Corporations, Sunbiz website to verify Respondent's status as an active corporation. Green then checked the Department's Coverage and Compliance Automated System ("CCAS") to see whether Respondent had a workers' compensation policy or any exemptions. An exemption is a method in which a corporate officer can exempt himself from the requirements of chapter 440. See § 440.05, Fla. Stat. CCAS is the Department's internal database that contains workers' compensation insurance policy information and exemption information. Insurance providers are required to report coverage and cancellation information, which is then input into CCAS. Green's CCAS search revealed that Respondent had no coverage or exemptions during the relevant period. Because Green was not aware of any specific job site at which Respondent was working, she issued a Business Records Request ("BRR") No. 1 to Respondent seeking records for an audit period of January 1, 2015, through April 29, 2015, to determine compliance. Respondent provided payroll records and bank statements. Respondent's president, Felecia Bly ("Bly"), contacted Green and described the nature of the business as a roof coating business that sells a sealant that coats roofs to seal leaks and extend their longevity. Bly explained that Respondent used commissioned salesmen to review the county assessor's website to determine the square footage of a residence. The salesman then contacted property owners to determine whether they experienced leaks and offered the product and installation. The salesmen did not go on the roofs. Respondent considered its salesmen independent contractors to whom they issued IRS Forms 1099. Respondent used subcontractors to perform the installations. According to Respondent, these workers had their own businesses or exemptions. Respondent also used the services of part-time workers for a short period that addressed and sent post cards marketing Respondent's business. Based on her conversation with Bly, Green determined that the business should be categorized as "roofing," which is classified as National Council on Compensation Insurance ("NCCI") class code 5551 and is considered a type of construction activity under Florida Administrative Code Rule 69L-6.021(2)(cc). Green also determined Respondent was non-compliant with the obligation to secure workers' compensation coverage for its workers. The corporate officers did not have exemptions, and several individuals, identified as sales and roofing subcontractors, did not have their own businesses or exemptions and, therefore, were employees. Petitioner did not issue a Stop-work Order because Respondent came into compliance on June 22, 2015, by securing exemptions for the corporate officers. Petitioner issued a BRR No. 5 for additional records from July 1, 2013, through June 21, 2015, to make a penalty calculation for the two-year period of non-compliance. Penalty Calculation The Department assigned Penalty Auditor Christopher Richardson ("Richardson") to calculate the penalty assessed against Respondent. Richardson reviewed the business records produced by Respondent and properly identified the amount of gross payroll paid to Respondent's workers on which workers' compensation premiums had not been paid. Richardson researched Respondent's corporate officers and Respondent's subcontractors to determine those periods when they were not compliant with chapter 440 during the audit period. Richardson determined that Respondent was not compliant for the period of June 22, 2013, through June 21, 2015. Respondent's compliant subcontractors (those with their own workers' compensation insurance or exemptions) were not included in the penalty. The business records ultimately produced by Respondent were sufficient for Richardson to calculate a penalty for the entire audit period. The initial OPA was in the amount of $257,321.16. After receiving and reviewing additional records supplied by Respondent, an Amended OPA was issued in the amount of $51,089.52. After a deposition of Bly's assistant, Sueann Rafalski ("Rafalski"), who provided additional details regarding those individuals and businesses identified in the Amended OPA, a 2nd Amended OPA was issued on July 18, 2016, in the amount of $43,542.16. During the hearing, Respondent disputed a few items that the Department subsequently voluntarily removed in the 3rd Amended OPA. The Department's Motion for Leave to Amend Order of Penalty Assessment was granted on September 29, 2016. Respondent disputed the inclusion of referral fees to Hicks and Campbell, a customer reimbursement payment to Robert Nyilas, payment to House Medic for work done on the Bly's home, and a loan repayment to the Bly's son, Brian Bly. The Department correctly removed any penalties associated with Hicks, Campbell, Robert Nyilas, House Medic, and Brian Bly. The Department also removed $14,200.00 from the penalty that Respondent disputed as repayments toward a $150,000.00 loan from its corporate officers. Respondent continues to dispute the penalty calculation for all others identified in the 3rd Amended OPA, except for the inclusion of the payment to Unexpected Blessings. For the penalty assessment calculation, Richardson consulted the classification codes listed in the Scopes® Manual, which has been adopted by the Department of Financial Services through rules 69L-6.021 and 69L-6.031. Classification codes are assigned to various occupations to assist the calculation of workers' compensation insurance premiums. Richardson assigned the class codes based on information provided by Bly. Richardson then utilized the corresponding approved manual rates for those classification codes and the related periods of non-compliance. Richardson applied the correct approved manual rates and correctly utilized the methodology specified in section 440.107(7)(d)l. and rules 69L-6.027 and 69L-6.028 to determine the penalty. Penalty for the Blys Respondent admits that during the audit period, the business did not carry workers' compensation insurance coverage, and its corporate officers, Glenn and Felecia Bly ("the Blys"), did not have workers' compensation exemptions. Because neither Mr. nor Mrs. Bly was engaged in the application of the roofing materials, the Department correctly assigned class code 8742, for sales and marketing, to them. However, the Department miscalculated the gross income of the Blys. Respondent provided check stubs and its accountant's itemization of payments to the Blys, which constituted repayment of loans from Respondent to the Blys. No evidence to the contrary was presented to indicate these sums were anything other than loan repayments. The Department erroneously included these sums in its calculation of gross payroll to the Blys. Although the Department made a $14,000.00 deduction from gross income for the Blys during this period as "loan repayments," no explanation was provided regarding how this sum was ascertained and why the Department disregarded the information of Respondent's accountant showing repayments during the relevant period in the amount of $19,200.00. The Department obviously accepted the testimony of Bly that, in fact, a portion of what the Department previously concluded was gross income to the Blys, was rather repayments for loans made to Respondent. Accordingly, in the absence of any evidence by the Department of how it parceled out which portion of money paid to the Blys constituted wages and which portion was loan repayments, the Department failed to demonstrate clearly and conclusively that the penalty associated with payments to the Blys is accurate.2/ Penalty for Postcard Mailers Three women, Meghan Saulino, Kimberly Kalley, and Stacy Boettner, were identified by Bly as independent contractors she hired to address and mail postcards for Respondent. According to Bly and Rafalski, these workers were college students who did the work at home, on their own time, and were paid by the job. This arrangement did not last long because the women did not like the work, and the task was transferred to Minuteman, a printing and copying business. These women are included in the Second Amended OPA and are assigned class code 8742 for sales and marketing. Respondent contends they should not be included because they were not employees. No evidence was presented to refute that these three women were merely casual workers whose duties (addressing and mailing postcards) were not in the course of the trade, business, profession, or occupation of Respondent (selling and installing roof coating). Accordingly, the amount included in the penalty for their work, $78.18, should be excluded from the 3rd Amended OPA. Penalty for Commissioned Salesmen Respondent contends that its commissioned sales people are all independent contractors who performed jobs for others. These salespeople included Kevin Kalley, Robert Patton, Gino Barone, Scott De Alessandro, Scott Black, and Tim Paige. However, no evidence was presented of the independent contractor agreements for these individuals, certificates of exemption for them for the penalty period, or evidence that these individuals owned their own businesses. As such, the Department was correct in including the amounts received by the salespeople as gross income for purposes of the penalty calculations. Penalty for Roof Coating Installers Respondent similarly argues that its roof coating installers were independent contractors. The roof coating installers included Bill Boettner, owner of Unexpected Blessings who did not have an exemption during the penalty period, and his business, Unexpected Blessings. Again, no evidence was presented of certificates of exemption for the penalty period or evidence that Unexpected Blessings had coverage. As such, the Department was correct in including the amounts received by the roof coating installers as gross income for purposes of the penalty calculations. Penalty for Other Independent Contractors Respondent argues that Rafalski and Bobby McGranahan ("McGranahan") should not be included in the penalty calculation because they were independent contractors not directly associated with Respondent's business. Rafalski was hired by Bly to help with personal errands and to respond to the audit which serves as a basis for this action. McGranahan is alleged to have run errands for the roof coating installers and acted as a handyman for Respondent before becoming a salesperson for Respondent. It is undisputed that Rafalski and McGranahan performed duties directly related to Respondent's business. Although Rafalski testified at her deposition that she considered herself an independent contractor, it was clear she worked on-site and was the individual most familiar with Respondent's business operations and internal accounting practices. McGranahan's duties, of shopping for supplies for the roofing installers, and then selling for Respondent, were directly related to Respondent's business. No evidence was presented demonstrating that either Rafalski or McGranahan owned their own business or had an exemption. Accordingly, they were properly included in the Department's 3rd Amended OPA.
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 assessing a penalty against Respondent in the amount of $34,552.20. DONE AND ENTERED this 12th day of October, 2016, in Tallahassee, Leon County, Florida. S MARY LI CREASY 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 12th day of October, 2016.
The Issue The issues in this case are whether Respondent, Customs Logistics Services, Inc., failed to secure the payment of workers' compensation coverage for its employees in violation of chapter 440, Florida Statutes, and if so, the penalty that should be imposed.
Findings Of Fact The Parties Petitioner is the state agency charged with enforcing the requirement in chapter 440 that employers in Florida secure workers' compensation coverage for their employees. At all times relevant to this proceeding, Respondent was a corporation registered to do business in Florida. Respondent is a family-owned-and-operated customs brokerage service with its principal office located at 6940 Northwest 12th Street, Miami, Florida 33126. At the time of the inspection giving rise to this proceeding, Respondent employed seven or eight employees.2/ The Compliance Inspection On September 29, 2014, Petitioner's compliance inspector, Hector Fluriach, conducted an onsite inspection at Respondent's principal office to determine whether Respondent was in compliance with the workers' compensation coverage requirements established in chapter 440. At that time, Respondent's co-owners, Astrid Escalona and Carlos Henoa, told Fluriach that Respondent employed six employees and two corporate officers, and also paid two family members who did not work at the principal office. Upon inquiry, Escalona and Henoa informed Fluriach that Respondent did not have workers' compensation insurance coverage for its employees. Using Petitioner's Coverage and Compliance Automated System ("CCAS") and the National Council for Compensation Insurance ("NCCI") insurance coverage verification system, Fluriach confirmed that Respondent had not obtained workers' compensation insurance coverage for its employees, and that it was not in compliance with chapter 440 during certain periods within the two years preceding the inspection. Under the NCCI basic occupational classification system and Scopes Manual, six of Respondent's employees are classified as clerical (Code 8810), and one is classified as a driver (Code 7380). None of Respondent's employees is classified as employed within the construction industry. As a private entity employing four or more employees in a non-construction industry occupation, Respondent was required under chapter 440 to provide workers' compensation coverage for its employees. Respondent's corporate officers were eligible under section 440.05 to elect to be exempt from the workers' compensation coverage requirements of chapter 440; however, none had elected to be exempt. Fluriach issued Stop-Work Order No. 14-329-D5 ("Stop- Work Order"), personally served it on Respondent, and explained it to Escalona. The Stop-Work Order included an Order of Penalty Assessment, ordering assessment of a penalty against Respondent in an amount equal to two times the amount Respondent would have paid in workers' compensation coverage premiums when applying the approved manual rates to Respondent's payroll during the periods for which it had failed to secure workers' compensation coverage during the preceding two years (for convenience, hereafter referred to as the "look-back period"). Fluriach also served a business records request, requesting Respondent to provide specified business records3/ for Petitioner's use in determining the penalty. In a series of submittals, Respondent provided the requested business records to Petitioner. The evidence showed that during the two-year look- back period, Respondent did not have workers' compensation coverage for its employees during a substantial portion of the period in which it employed four or more employees, and none of its corporate officers were exempt from the workers' compensation coverage requirement. As such, Respondent violated chapter 440 and, therefore, is subject to penalty under that statute. Petitioner's Computation of Penalty Amount To calculate the applicable penalty, Petitioner must determine, from a review of the employer's business records, the employer's gross payroll for the two-year look-back period. For days during the look-back period for which records are not provided, Petitioner imputes the gross payroll based on the average weekly wage for the state of Florida. Here, the look-back period for purposes of calculating the applicable penalty commenced on September 30, 2012, and ended on September 29, 2014, the day on which the compliance inspection was conducted. Respondent's business records revealed that Respondent had fewer than four employees between January 1 and March 31, 2013, so Respondent was not required to have workers' compensation coverage for that period. Thus, Petitioner did not assess a penalty against Respondent for that period. For the rest of the look-back period, Respondent employed four or more employees, so was required to obtain workers' compensation coverage for those employees for that portion of the period. Respondent provided business records sufficient for Petitioner to determine Respondent's gross payroll for all but September 30, 2012. For that day, Petitioner imputed Respondent's gross payroll using Florida's statewide average weekly wage. On the basis of Respondent's business records submittals, Petitioner's auditor, Eric Ruzzo, recalculated the penalty to be assessed against Respondent. Petitioner issued an Amended Order of Penalty Assessment on October 17, 2014, imposing a total penalty of $5,617.04. On November 7, 2014, following receipt of additional records, Petitioner issued a Second Amended Order of Penalty Assessment, reducing the penalty to $3,982.52. Finally, after receiving more records, Petitioner issued a Third Amended Order of Penalty Assessment on January 12, 2015, further reducing the penalty to $3,205.70. Each of these penalty assessments was served on Respondent. Petitioner seeks to impose a $3,205.70 penalty against Respondent in this proceeding. In calculating the penalty, Ruzzo examined three-month (i.e., quarterly) periods within the two-year look-back period. Ruzzo identified the occupational class code applicable to each of Respondent's employees. As stated above, all but one of Respondent's employees were classified as clerical, and one of Respondent's employees was classified as a driver. For each employee, Ruzzo determined the gross payroll paid to that employee for the specific quarter in which Respondent was non-compliant during the look-back period, divided the employee's gross payroll by 100 pursuant to Petitioner's calculation methodology, then multiplied that amount by the numeric rate set by NCCI for that employee's specific occupational class code. This calculation yielded the workers' compensation coverage premium for that specific employee for the specific quarter for which Respondent was non- compliant during the look-back period. The premium amount then was multiplied by two, as required by statute, to yield the penalty to be imposed for failure to provide workers' compensation coverage for that specific employee. As previously noted, Respondent did not provide gross payroll records covering September 30, 2012; thus, for that day, Ruzzo imputed the gross payroll for each of Respondent's employees using the statewide average weekly wage as defined in section 440.12(2)4/ multiplied by two. Ruzzo then performed the same computations to yield the penalty amount to be imposed for Respondent's failure to provide workers' compensation on September 30, 2012. Ruzzo then added each penalty amount determined for each employee using actual gross payroll and imputed payroll, to yield the total penalty amount of $5,286.70. Because Respondent had not previously been issued a stop-work order, pursuant to section 440.107(7)(d)1., Petitioner applied a credit toward the penalty in the amount of the initial premium Respondent paid for workers' compensation coverage. Here, the premium payment amount for which Respondent received credit was $2,081.00. This was subtracted from the calculated penalty of $5,286.70, yielding a total penalty of $3,205.70. Respondent's Defense At the final hearing, Escalona testified that she and the other co-owners of Respondent always have attempted to fully comply with every law applicable to Respondent's business, and have never had compliance problems. She testified that neither she nor the other co-owners of Respondent realized that Respondent was required to have workers' compensation coverage for its employees, and they did not intentionally violate the law. Petitioner apparently mailed a memorandum regarding verifying workers' compensation coverage requirements to businesses in the area before it conducted compliance inspections. The memorandum was dated October 8, 2014, and Escalona testified Respondent received it on October 13, 2014, approximately two weeks after the compliance inspection that Fluriach conducted. Escalona asserted that had Respondent received the memorandum before the compliance inspection was conducted, she would have called Petitioner to determine if Respondent needed to obtain workers' compensation coverage, would have asked how to obtain it, and would have obtained coverage for its employees and exemptions for its corporate officers. Escalona testified that the $3,205.70 penalty is a substantial amount that Respondent, a small family-owned business, cannot afford to pay. Findings of Ultimate Fact Petitioner has shown, by clear and convincing evidence, that Respondent violated chapter 440, as charged in the Stop-Work Order, by failing to secure workers' compensation coverage for its employees. Petitioner has shown, by clear and convincing evidence, that the $3,205.70 penalty proposed to be assessed against Respondent pursuant to the Third Amended Penalty Assessment is the correct amount of the penalty to be assessed in this proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: The Department of Financial Services, Division of Workers' Compensation, enter a final order determining that Respondent, Customs Logistics Services, Inc., violated the requirement in chapter 440 to secure workers' compensation coverage and imposing a total penalty of $3,205.70. DONE AND ENTERED this 11th day of August, 2015, in Tallahassee, Leon County, Florida S CATHY M. SELLERS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of August, 2015.
