Findings Of Fact 12. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on November 17, 2011, the Amended Order of Penalty Assessment issued on December 5, 2011, and the 2"! Amended Order of Penalty Assessment issued on February 20, 2012, attached as exhibits and fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Jeff Atwater, Chief Financial Officer of the State of Florida, or his designee, having considered the. record in this case, including the request for administrative hearing received from J & S CONCRETE, INC., the Stop-Work Order and Order of Penalty Assessment, the Amended Order of Penalty Assessment, and the 2™ Amended Order of Penalty Assessment, and being otherwise fully advised in the premises, hereby finds that: 1. On November 17, 2011, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-313-D7 to J & S CONCRETE, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein J & S CONCRETE, INC. was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 2. On November 17, 2011, the Stop-Work Order and Order of Penalty Assessment was served by personal service on J & S CONCRETE, INC. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On November 23, 2011, J & S CONCRETE, INC. timely filed a request for administrative hearing (hereinafter “Petition”) with the Department. A copy of the petition is attached hereto as “Exhibit B” and incorporated herein by reference. 4. On December 5, 2011, the Department issued an Amended Order of Penalty Assessment to J & S CONCRETE, INC. The Amended Order of Penalty Assessment assessed a total penalty of $45,720.65 against J & S CONCRETE, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein J & S CONCRETE, INC. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of _ Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 5. On December 7, 2011, the Department served by personal service the Amended Order of Penalty Assessment to J & S CONCRETE, INC. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and incorporated herein by reference. 6. On January 20, 2012, the Department referred the matter to the Division of Administrative Hearings for assignment to an Administrative Law Judge. 7. On February 20, 2012, the Department issued a 2"! Amended Order of Penalty Assessment to J & S CONCRETE, INC. The 2™ Amended Order of Penalty assessed a total penalty of $6,416.73 against J & S CONCRETE, INC. The 2"? Amended Order of Penalty Assessment included a Notice of Rights wherein J & S CONCRETE, INC. was advised that any request for an administrative proceeding to challenge or contest the 2"? Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the 2" Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 8. On May 24, 2012, J & S CONCRETE, INC. entered into a Settlement Agreement. Under the Settlement Agreement, J & S CONCRETE, INC. must pay a total penalty of $6,413.73, or enter into a Periodic Payment Agreement within thirty (30) days of the execution of the Settlement Agreement. The Agreement also provides that the petition be dismissed with prejudice upon the execution of the Settlement Agreement. A copy of the Settlement Agreement is attached hereto as “Exhibit D” and incorporated herein by reference. 9. On May 24, 2012, Administrative Law Judge Lynne A. Quimby-Pennock issued an Order Closing File and Relinquishing Jurisdiction as a result of the executed Settlement Agreement. A copy. of the Order is attached hereto as “Exhibit E” and incorporated herein by reference. 10. On May 29, 2012, the 2"! Amended Order of Penalty was served via certified mail on Michael J. Rich, Esq., counsel for J & S CONCRETE, INC. A copy of the 2" Amended Order of Penalty is attached hereto as “Exhibit F” and incorporated herein by reference. 11. As of the date of this Final Order, J & S CONCRETE, INC. has failed to comply with the conditions of the Settlement Agreement. The Department has received no payment from J & S CONCRETE, INC. in this matter, nor has J & S CONCRETE, INC. entered into a Periodic Payment Agreement at this time.
Findings Of Fact The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment, the Amended Order of Penalty Assessment, the 24 Amended Order of Penalty Assessment, and the 3rd Amended Order of Penalty Assessment, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Jeff Atwater, Chief Financial Officer of the State of Florida, or his designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment, the Amended Orders of Penalty Assessment, the Request for Administrative Hearing, the withdrawal of Petition, and the Order Relinquishing Jurisdiction and Closing File, and being otherwise fully advised in the premises, hereby finds that: 1. On March 14, 2011, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-083-1A to TRACY B. HINOTE, D/B/A T.H. PLASTERING. 2. On March 14, 2011, the Stop-Work Order and Order of Penalty Assessment was personally served on TRACY B. HINOTE, D/B/A T.H. PLASTERING. A copy of the Stop- Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On March 28, 2011, the Department issued an Amended Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-083-1A to TRACY B. HINOTE, D/B/A T.H. PLASTERING. The Amended Order of Penalty Assessment assessed a total penalty of $7,590.78 against TRACY B. HINOTE, D/B/A T.H. PLASTERING. . 4. On April 6, 2011, the Amended Order of Penalty Assessment was personally served on TRACY B. HINOTE, D/B/A T.H. PLASTERING. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On April 28, 2011, the Department issued a 2" Amended Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-083-1A to TRACY B. HINOTE, D/B/A T.H. PLASTERING. The 2" Amended Order of Penalty Assessment assessed a total penalty of $6,050.69 against TRACY B. HINOTE, D/B/A T.H. PLASTERING. 6. On May 3, 2011, the 2"4 Amended Order of Penalty Assessment was personally served on TRACY B. HINOTE, D/B/A T.H. PLASTERING. A copy of the 2" Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and incorporated herein by reference. 7. On April 25, 2011, the Division received from TRACY B. HINOTE, D/B/A T.H. PLASTERING a request for an administrative hearing. The request for administrative hearing is attached hereto as “Exhibit D” and incorporated herein by reference. 8. On June 28, 2011, the Department issued a 3rd Amended Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-083-1A to TRACY B. HINOTE, D/B/A T.H. PLASTERING. The 3rd Amended Order of Penalty Assessment assessed a total penalty of $2,618.57 against TRACY B. HINOTE, D/B/A T.H. PLASTERING. 9. On June 29, 2011, the 3rd Amended Order of Penalty Assessment was served by overnight mail delivery on TRACY B. HINOTE, D/B/A T.H. PLASTERING. A copy of the 3rd Amended Order of Penalty Assessment is attached hereto as “Exhibit E” and incorporated herein by reference. 10. On October 17, 2011, the Petition was forwarded to the Division of Administrative Hearings and assigned DOAH Case No. 11-5327. 11. On November 23, 2011, the Division received from TRACY B. HINOTE, D/B/A T.H. PLASTERING a withdrawal of the request for administrative hearing. The withdrawal of request for administrative hearing is attached hereto as “Exhibit F” and incorporated herein by reference. 12. On December 8, 2011, an Order Relinquishing Jurisdiction and Closing File was entered in Division of Administrative Hearings Case. No. 11-5327. A copy of the Order Relinquishing Jurisdiction and Closing File is attached hereto as “Exhibit G” and incorporated herein by reference.
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 Whether Fantastic Construction of Daytona, Inc. (“Respondent”), failed to secure the payment of workers’ compensation coverage for its employees; and, if so, whether the Department of Financial Services, Division of Workers’ Compensation (“Petitioner” or “Department”), correctly calculated the penalty to be assessed against Respondent.
Findings Of Fact The Department is the state agency charged with enforcing the requirement of chapter 440, Florida Statutes, that employers in Florida secure workers’ compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondent is a corporation engaged in the construction industry with headquarters in Daytona Beach, Florida. On November 19, 2015, the Department’s compliance investigator, Scott Mohan, observed five individuals framing a single-family house at 173 Botefuhr Avenue in Daytona, Florida. Mr. Mohan interviewed the individuals he observed working at the jobsite and found they were working for Respondent on lease from Convergence Leasing (“Convergence”). Mr. Mohan contacted Convergence and found that all of the workers on the jobsite were employees of Convergence, except Scott Barenfanger. Mr. Mohan also confirmed that the workers’ compensation policy for Convergence employees was in effect. Mr. Mohan reviewed information in the Coverage and Compliance Automated System, or CCAS, for Respondent. CCAS indicated Respondent’s workers were covered for workers’ compensation by Convergence and that Respondent’s contract with Convergence was active. Mr. Mohan also confirmed, through CCAS, that Foster Coleman, Respondent’s president, had previously obtained an exemption from the workers’ compensation requirement, but that his exemption expired on July 18, 2015. Mr. Mohan then contacted Mr. Coleman via telephone and informed him that one of the workers on the jobsite was not on the active employee roster for Convergence, thus Respondent was not in compliance with the requirement to obtain workers’ compensation insurance for its employees. Mr. Coleman reported to the jobsite in response to Mr. Mohan’s phone call. Mr. Coleman admitted that Mr. Barenfanger was not on the Convergence employee leasing roster. Mr. Coleman subsequently obtained an application from Convergence for Mr. Barenfanger and delivered it to his residence. Mr. Mohan served Mr. Coleman at the jobsite with a Stop-Work Order and a Request for Production of Business Records for Penalty Assessment Calculation (“BRR”). In response to the BRR, Respondent provided to the Department business bank statements, check stubs, copies of checks, certificates of liability insurance for various suppliers and subcontractors, and an employee leasing roster for most of the audit period from November 20, 2013, to November 19, 2015.1/ Respondent did not produce any check stubs for November and December 2013. Mr. Coleman testified, credibly, that his bookkeeper during that time period did not keep accurate records. Mr. Coleman did produce his business bank statements and other records for that time period. Based on the review of initial records received, the Department calculated a penalty of $17,119.80 and issued an Amended Order of Penalty Assessment in that amount on February 18, 2016. On March 17, 2016, Respondent supplied the Department with additional records. Altogether, Respondent submitted over 400 pages of records to the Department. The majority of the records are copies of check stubs for checks issued on Respondent’s business bank account. The check stubs are in numerical order from 1349 to 1879, and none are missing. The check stubs were hand written by Mr. Coleman, who is 78 years old. Some of his writing on the check stubs is difficult to discern. On April 4, 2016, following review of additional records received, the Department issued a Second Amended Order of Penalty Assessment in the amount of $9,629.36. The Department assigned penalty auditor Sarah Beal to calculate the penalty assessed against Respondent. Identification of Employees Ms. Beal reviewed the business records produced by Respondent and identified Respondent’s uninsured employees first by filtering out payments made to compliant individuals and businesses, and payments made for non-labor costs. However, the evidence demonstrated that the Department included on its penalty calculation worksheet (“worksheet”) payments made to individuals who were not Respondent’s employees. Neal Noonan is an automobile mechanic. Mr. Noonan was neither an employee of, nor a subcontractor for, Respondent for any work performed by Respondent during the audit period. Mr. Noonan performed repairs on Mr. Coleman’s personal vehicles during the audit period. Checks issued to Mr. Noonan during the audit period were for work performed on Mr. Coleman’s personal vehicles. The Department’s worksheet included a “David Locte” with a period of noncompliance from June 19, 2014, through December 31, 2014. The basis for including Mr. Locte as an employee was a check stub written on December 10, 2014, to a business name that is almost indiscernible, but closely resembles “Liete & Locke” in the amount of $100. The memo reflects that the check was written for “architect plans.” Mr. Coleman recognized the worksheet entry of David Locte as pertaining to David Leete, an architect in Daytona. Mr. Leete has provided architectural services to Respondent off and on for roughly five years. Mr. Leete signs and seals plans for, among others, a draftsman named Dan Langley. Mr. Langley provides drawings and plans for Respondent’s projects. When Respondent submits plans to a local governing body which requires architectural drawings to accompany permit applications, Mr. Leete reviews and signs the plans. Mr. Leete was neither an employee of, nor a subcontractor for, Respondent during the audit period. The single payment made to Mr. Leete by Respondent during the audit period was for professional architectural services rendered. Mr. Langley was neither an employee of, nor a subcontractor for, Respondent during the audit period. Payments made to Mr. Langley during the audit period were for professional drafting services rendered. Among the names on the Department’s worksheet is R.W. Kicklighter. Mr. Kicklighter is an energy consultant whose office is located in the same building with Mr. Leete. Mr. Kicklighter prepares energy calculations, based on construction plans, to determine the capacity of heating and air-conditioning systems needed to serve the planned construction. Mr. Kicklighter was neither an employee of, nor a subcontractor for, Respondent during the audit period. Payments made to Mr. Kicklighter during the audit period were for professional services rendered. Respondent made a payment of $125 on September 15, 2014, to an entity known as Set Material. Set Material is a company that rents dumpsters for collection of concrete at demolition and reconstruction sites. Removal and disposal of the concrete from the jobsite is included within the rental price of the dumpster. The Department included on the worksheet an entry for “Let Malereal.” The evidence revealed the correct name is Set Material and no evidence was introduced regarding the existence of a person or entity known as Let Malereal. Set Material was neither an employee of, nor a subcontractor for, Respondent during the audit period. The single payment made to Set Material during the audit period was for dumpster rental. The Department’s worksheet contains an entry for “CTC” for the penalty period of January 1, 2014, through May 1, 2014. Respondent made a payment to “CTC” on April 11, 2014, in connection with a job referred to as “964 clubhouse.” The records show Respondent made payments to Gulfeagle Supply, Vern’s Insulation, John Wood, Bruce Bennett, and Ron Whaley in connection with the same job. At final hearing, Mr. Coleman had no recollection what CTC referred to. Mr. Coleman’s testimony was the only evidence introduced regarding identification of CTC. CTC could have been a vendor of equipment or supplies for the job, just as easily as an employee. The evidence is insufficient to support a finding that CTC was an employee of, or a subcontractor for, Respondent during the audit period. The check stub for check 1685 does not indicate to whom the $60 payment was made. The stub reads “yo for Doug.” The Department listed “Doug” as an employee on its worksheet and included the $60 as wages to “Doug” for purposes of calculating workers’ compensation premiums owed. At hearing, Mr. Coleman was unable to recall ever having employed anyone named Doug, and had no recollection regarding the January 7, 2015, payment. The evidence was insufficient to establish that “Doug” was either Respondent’s employee or subcontractor during the audit period. Ken’s Heating and Air was not an employee of, nor a subcontractor to, Respondent for any work undertaken by Respondent during the audit period. Ken’s Heating and Air conducted repairs on, and maintenance of, Mr. Coleman’s personal residence during the audit period. Checks issued to Ken’s Heating and Air during the audit period were payments for work performed at Mr. Coleman’s personal residence. Barry Smith is an electrical contractor. Mr. Smith was neither an employee of, nor subcontractor to, Respondent for any work performed by Respondent during the audit period. Mr. Smith did make repairs to the electrical system at Mr. Coleman’s personal residence during the audit period. Checks issued to Mr. Smith during the audit period were payments for work performed at Mr. Coleman’s personal residence. The remaining names listed on the Department’s penalty calculation worksheet were accurately included as Respondent’s employees.2/ Calculation of Payroll Mr. Coleman’s exemption certificate expired on July 18, 2015, approximately four months shy of the end of the audit period. Payments made by Respondent to Mr. Coleman during the time period for which he did not have a valid exemption (the penalty period) were deemed by the Department as wages paid to Mr. Coleman by Respondent. Respondent’s business records show seven checks written either to Mr. Coleman or to cash during that time period in the total amount of $3,116.52. The Department included that amount on the worksheet as wages paid to Mr. Coleman. Check 1873 was written to cash, but the check stub notes that the payment of $1,035.69 was made to Compliance Matters, Respondent’s payroll company. Check 1875 was written to cash, but the check stub notes that the payment of $500 was made to Daytona Landscaping. The evidence does not support a finding that checks 1873 and 1875 represented wages paid to Mr. Coleman. The correct amount attributable as wages paid to Mr. Coleman during the penalty period is $1,796.52. Respondent’s employees Tyler Eubler, Brian Karchalla, Keith Walsh, and John Strobel, were periodically paid by Respondent during the audit period in addition to their paychecks from Convergence. Mr. Coleman testified that the payments were advances on their wages. He explained that when working on a job out of town, the crew would arrive after Convergence had closed for the day, and Mr. Coleman would pay them cash and allow them to reimburse him from their paychecks the following day. Unfortunately for Respondent, the evidence did not support a finding that these employees reimbursed Mr. Coleman for the advances made. The Department correctly determined the payroll amount attributable to these employees. The Department attributed $945 in payroll to “James Sharer.” The Department offered no evidence regarding how they arrived at the name of James Sharer as Respondent’s employee or the basis for the payroll amount. James Shores worked off-and-on for Respondent. Mr. Coleman recognized the worksheet entry of “James Sharer” as a misspelling of Mr. Shores’ name. Respondent’s records show payments totaling $535 to Mr. Shores during the audit period. The correct amount of payroll attributable to Mr. Shores from Respondent during the audit period is $535. The Department included wages totaling $10,098.84 to Mr. Barenfanger during the period of noncompliance from November 20, 2013, to December 31, 2013. The Department imputed the average weekly wage to Mr. Barenfanger for that period because, in the Department’s estimation, Respondent did not produce records sufficient to establish payroll for those two months in 2013. See § 440.107(7)(e), Fla. Stat. The voluminous records produced by Respondent evidenced not a single payment made to Mr. Barenfanger between January 2014, and November 19, 2015. Even if Mr. Coleman had not testified that he did not know or employ Mr. Barenfanger before November 19, 2015, it would be ludicrous to find that he worked weekly for Respondent during the last two months of 2013. Mr. Coleman testified, credibly, that Mr. Barenfanger worked the jobsite for Respondent on November 18 and 19, 2015, but not prior to those dates. The evidence does not support a finding that the worksheet entry for Mr. Barenfanger in the amount of $10,098.84 accurately represents wages attributable to Mr. Barenfanger during the period of noncompliance. The Department’s worksheet includes an employee by the name of Ren W. Raly for the period of noncompliance from January 1, 2014, through May 1, 2014, and a Ronnie Whaley for the period of noncompliance from June 19, 2014 through December 31, 2014. Mr. Coleman testified that he never had an employee by the name of Raly and he assumed the first entry was a misspelling of Ronnie Whaley’s name. Mr. Coleman testified that Ronnie Whaley was a concrete finisher and brick layer who did work for Respondent. Mr. Coleman testified that he submitted to the Department a copy of Mr. Whaley’s “workers’ comp exempt,” but that they must not have accepted it. The records submitted to the Department by Respondent do not contain any exemption certificate for Ronnie Whaley. However, in the records submitted to the Department from Respondent is a certificate of liability insurance dated February 25, 2014, showing workers’ compensation and liability coverage issued to Direct HR Services, Inc., from Alliance Insurance Solutions, LLC. The certificate plainly states that coverage is provided for “all leased employees, but not subcontractors, of Ronald Whaley Masonry.” The certificate shows coverage in effect from February 1, 2013, through February 1, 2015. Petitioner did not challenge the reliability of the certificate or otherwise object to its admissibility.3/ In fact, the document was moved into evidence as Petitioner’s Exhibit P1. Petitioner offered no testimony regarding whether the certificate was insufficient proof of coverage for Mr. Whaley during the periods of noncompliance listed on the worksheet. The evidence does not support a finding that Mr. Whaley was an uninsured individual during the periods of noncompliance. Thus, the wages attributed to Mr. Whaley by the Department were incorrect. Ms. Beal assigned the class code 5645—Carpentry to the individuals correctly identified as Respondent’s uninsured employees because this code matched the description of the job being performed by the workers on the jobsite the day of the inspection. Ms. Beal correctly utilized the corresponding approved manual rates for the carpentry classification code and the related periods of noncompliance to determine the gross payroll to the individuals correctly included as Respondent’s uninsured employees. Calculation of Penalty For the employees correctly included as uninsured employees, Ms. Beal applied the correct approved manual rates and correctly utilized the methodology specified in section 440.107(7)(d)1. and Florida Administrative Code Rules 69L-6.027 and 69L-6.028 to determine the penalty to be imposed. For the individuals correctly included as uninsured employees, and for whom the correct payroll was calculated, the correct penalty amount is $2,590.06. The correct penalty for payments made to Mr. Coleman during the penalty period is $571.81. The correct penalty for payments made to James Shores is $170.24. The correct total penalty to be assessed against Respondent is $3,332.11. The Department demonstrated by clear and convincing evidence that Respondent was engaged in the construction industry in Florida during the audit period and that Respondent failed to carry workers’ compensation insurance for its employees at times during the audit period as required by Florida’s workers’ compensation law. The Department demonstrated by clear and convincing evidence that Respondent employed the employees named on the Second Amended Order of Penalty Assessment, with the exception of Ken’s Heating and Air, CTC, Don Langly, Ren W. Raly, R.W. Kicklighter, Dave Locte, Let Malereal, Ronnie Whaley, and “Doug.” The Department did not demonstrate by clear and convincing evidence that it correctly calculated the gross payroll attributable to Mr. Coleman and Mr. Shores. The Department demonstrated by clear and convincing evidence that Ms. Beal correctly utilized the methodology specified in section 440.107(7)(d)1. to determine the appropriate penalty for each of Respondent’s uninsured employees. The Department did not demonstrate by clear and convincing evidence that the correct penalty is $9,629.36. The evidence demonstrated that the correct penalty to be assessed against Respondent for failure to provide workers’ compensation insurance for its employees during the audit period is $3,332.11.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers’ Compensation, finding that Fantastic Construction of Daytona, Inc., violated the workers’ compensation insurance law and assessing a penalty of $3,332.11. DONE AND ENTERED this 18th day of August, 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 18th day of August, 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.
The Issue The issue is whether Respondent complied with the requirements of the Workers' Compensation Law and, if not, what is the appropriate penalty?
Findings Of Fact The Division is charged with the regulation of workers' compensation insurance in the State of Florida. Respondent, River City Roofing Sheet Metal, Inc. (River City Roofing), is a Florida corporation located in Jacksonville, Florida, and is engaged in the construction industry. Michael Robinson is an insurance analyst/compliance investigator employed by the Division. His duties include making site visits at locations where work is being conducted and determining whether the employers in the state are in compliance with the requirements of the workers' compensation law and related rules. On August 17, 2010, Mr. Robinson visited a residential job site at 4206 Katanga Drive, Jacksonville, Florida, and observed five individuals reroofing the property at the site. Mr. Robinson called up to the workers and asked them to come down from the roof so that he could speak to them. One of the workers identified himself as David Hannans, and informed Mr. Robinson that he and the others were employees of River City Roofing. Mr. Robinson proceeded to get the names of the other workers. However, during this time, one of the men wandered away and left the worksite without speaking to Mr. Robinson. Mr. Robinson inquired about the name of the worker who left the worksite, and was informed his name was "Shorty." During his conversation with Mr. Hannans, Mr. Robinson also learned that the worksite supervisor, Gary Pittman, had been at the worksite but left to go to the store. Mr. Robinson confirmed with Mr. Hannans that the men at the worksite, including Mr. Hannans, were employees of River City Roofing. Mr. Robinson inquired about the owner of the business and learned the owner is Robert Olszanowski. Mr. Robinson then called Mr. Olszanowski. According to Mr. Robinson, Mr. Olszanowski verified that three of the men at the worksite were his employees, but claimed not to know the other two men. Mr. Robinson advised Mr. Olszanowski to contact Mr. Pittman to find out who the other two men were. During a follow-up telephone call with Mr. Olszanowski, Mr. Robinson was told that one of the individuals was a friend of Mr. Hannans and the other was a man from the neighborhood. According to Mr. Robinson, Mr. Olszanowski informed him that he was unaware of the other two men. Mr. Robinson then inquired about what type of workers' compensation coverage had been procured and learned that Mr. Olszanowski held an exemption and used Phoenix Resources, Inc., a staffing company, to cover his employees. Mr. Robinson contacted Phoenix Resources and was informed that River City Roofing was a client and as of August 17, 2010, had four individuals on the payroll: Gary Pittman, Miguel Hernandez Lopez, Ancelmo Perez Fernandez, and Simon Aguilar Sanchez. Mr. Robinson requested written confirmation of this and received an e-mail communication from Phoenix Resources which provided written confirmation. David Hannans and "Shorty" were not listed. Mr. Robinson inquired as to whether Phoenix Resources carried workers' compensation coverage on the listed individuals, and learned that those listed employees were covered under a policy procured from Business Personnel Solutions. Mr. Robinson contacted Business personnel Solutions and verified that there was a policy that covered those employees of Phoenix Resources. Mr. Robinson again contacted Phoenix Resources and inquired as to whether it had received any new applications from River City Roofing, and learned that it had not received any new applications. Mr. Robinson then consulted the Department of State, Division of Corporations website, to find information concerning the corporate status of River City Roofing. He verified from the website that River City Roofing is an active corporation and that Robert Olszanowski is the Chief Executive Officer. Mr. Robinson then consulted the Division's Coverage and Compliance Automated System (CCAS) database, which is routinely used by the Department and contains both the workers' compensation policy information for each employer that has a Florida policy, as well as all information concerning workers' compensation exemptions that have been applied for and issued to individuals by the Department. Mr. Robinson learned that Respondent previously had a policy that expired on August 25, 2008, and confirmed that Mr. Olszanowski held an exemption. Based upon his investigative findings, Mr. Robinson concluded that Mr. Hannans and "Shorty" were employees of River City Roofing who were not covered by a workers' compensation policy or a valid exemption in violation of chapter 440, Florida Statutes. On August 18, 2010, Mr. Robinson issued Stop-Work Order No. 10-253-D1 to Respondent and issued a Request for Production of Business Records for Penalty Assessment Calculation. Both were personally served by Mr. Robinson on Mr. Olszanowski. The Request for Production of Business Records requested records for the time period August 26, 2008 through August 18, 2010. Respondent did not produce business records as requested. Cathe Ferguson is a Penalty Calculator for the Division. She reviews business records such as payroll, bank statements, and copies of checks, and calculates the amount of penalty for non-compliance with workers' compensation laws. As required by Chapter 440, Ms. Ferguson imputed Respondent's payroll as a result of Respondent's failure to provide business records. Mr. Robinson then issued and served by certified mail an Amended Order of Penalty Assessment to Respondent in the amount of $116,240.82. Subsequent to this and subsequent to Respondent's request for an administrative hearing, Ms. Ferguson determined there was an internal error and amended the penalty amount downward. On February 7, 2011, Mr. Robinson issued a second Amended Order of Penalty Assessment in the amount of $71,028.94. In calculating the penalty for failure to comply with chapter 440, Ms. Ferguson first sought to determine the amount of premium that Respondent would have paid had Respondent obtained the proper workers' compensation insurance in place for the period of August 26, 2008 through August 17, 2010. In determining the premium that Respondent avoided by not obtaining workers' compensation insurance coverage for all of its employees, Ms. Ferguson utilized a penalty worksheet. Ms. Ferguson identified the individual employees of Respondent not covered by a workers' compensation policy or an exemption and listed them on the penalty worksheet. For each individual listed on the penalty worksheet, Ms. Ferguson assigned a class code reflecting the work done by each employee as observed by Mr. Robinson (i.e., the class code for roofing). The amount of the penalty was imputed using the Average Weekly Wage as determined by the Agency for Workforce Innovation, across the entire period of non-compliance. Ms. Ferguson imputed the penalty because Respondent did not produce business records from which the Division could have calculated the gross payroll from the employees in question. Ms. Ferguson then took 1/100th of the payroll and multiplied that figure by the approved manual rate applicable to the applicable class code, as adopted by the Office of Insurance Regulation. Ms. Ferguson then took the previously obtained product and multiplied it by 1.5 to determine the penalty for the period of August 26, 2008 through August 17, 2010, the time period requested in the business records request. Based upon her calculations, Ms. Ferguson determined the appropriate penalty to be assessed against Respondent to be $71,028.94. Respondent disputed portions of the penalty worksheet attached to the Amended Order of Penalty Assessment, which gave rise to this proceeding. Specifically, Respondent wrote the word "Dispute" next to David Hannans and "Shorty's" names for all time periods on the penalty worksheet except for the time period July 1, 2010 through August 17, 2010, next to which Respondent wrote "not disputed". Thus, in its request for hearing, Respondent did not dispute that Hannans and "Shorty" were employees of Respondent; rather, Respondent disputed that they were employees during most of the periods of time listed on the penalty worksheet.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is, RECOMMENDED: That the Division of Workers' Compensation enter a Final Order upholding the Second Amended Order of Penalty Assessment, assigning a penalty of $71,028.94, and the Stop-Work Order issued to Respondent on August 8, 2010. DONE AND ENTERED this 29th day of March, 2011, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS 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 29th day of March, 2011. COPIES FURNISHED: Jamila Georgette Gooden, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Robert L. Olszanowski River City Roofing Sheet Metal, Inc. 10650 Haverford Road, Suite 2 Jacksonville, Florida 32218 Honorable Jeff Atwater Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 P. J. Jameson, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact 8. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on February 16, 2010 and the Amended Order of Penalty Assessment issued on May 6, 2010, which are attached as “Exhibit A” and “Exhibit B,” respectively, and fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment and the Amended Order. of Penalty Assessment served’ in Division of Workers’ Compensation Case No. 10-060-D3, and being otherwise fully advised in the premises, hereby finds that: 1. On February 16, 2010, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 10-060-D3 to INITECH RESTORATION, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein INITECH RESTORATION, INC.. was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 2. On March 29, 2010, the Stop-Work Order and Order of Penalty Assessment was served by certified mail on INITECH RESTORATION, INC. A copy of the Stop-Work Order . and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On April 2, 2010, INITECH RESTORATION, INC. filed a petition requesting an administrative hearing with the Department. The petition was forwarded to the Division of Administrative Hearings on May 10, 2010, and the matter was assigned DOAH Case No. 10- 2484. 4. On May 6, 2010, the Department issued an Amended Order of Penalty Assessment to INITECH RESTORATION, INC. in Case No. 10-060-D3. The Amended Order ‘of Penalty Assessment assessed a total penalty of $50,756.24 against INITECH RESTORATION, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein INITECH RESTORATION, INC. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28- 106.2015, Florida Administrative Code. 5. On May 10, 2010, the Amended Order of Penalty Assessment was served through the Division of Administrative Hearings in Case No. 10-2484. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 6. On June 4, 2010, an Order Canceling Hearing and Placing Case in Abeyance was entered by the Administrative Law Judge, sua sponte. The Order directed the parties to advise of the status of the case by August 9, 2010. 7. On August 5, 2010, the Department filed its Response to the Order, however INITECH RESTORATION, INC. failed to comply with the Order. After receiving no response to the Order, the Administrative Law Judge entered an Order Closing File which relinquished jurisdiction of the matter to the Department for final disposition. A copy of the Order Closing File is attached hereto as “Exhibit C” and incorporated herein by reference.
Findings Of Fact 12. The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on December 30 2008, and the Seventh Amended Order of Penalty Assessment issued on August 31, 2009, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes (2016),1/ by failing to secure the payment of workers’ compensation coverage, as alleged in the Third Amended Order of Penalty Assessment; and, if so, what penalty is appropriate.
Findings Of Fact Parties. The Department is responsible for enforcing the requirements of chapter 440, which mandate employers in Florida secure the payment of workers’ compensation insurance to cover their employees in case of workplace injuries. § 440.107, Fla. Stat. ASAP Flooring is owned and operated by Mr. Reinartsen; it has been an active corporation since 2006. ASAP Flooring provides flooring, painting and drywall services for construction projects. Ms. Brigantty is a Department compliance investigator. Her job is to ensure compliance by employers in her district with the workers’ compensation insurance regulations. Her job duties include conducting investigations triggered either through a report to the Department of non-compliance or through random inspections of workplaces and jobsites. As part of her investigative duties she conducts employer and employee interviews, collects financial documentation, and researches various data banks for corporate and workers’ compensation status. Department’s Investigation and Assessment. On October 24, 2016, Ms. Brigantty was driving around Pinellas County as part of her work duties. She stopped to conduct a random check at a residential construction site located at 3583 Douglas Place, Palm Harbor, Florida 34683 (“Jobsite”). At the Jobsite, Ms. Brigantty observed two men -- later identified as Eric Reinartsen and Wallace Humbert -- preparing and installing floors. After identifying herself as a compliance officer and interviewing them, she discovered Mr. Reinartsen was the owner of ASAP Flooring, and Mr. Humbert was an ASAP Flooring employee. Mr. Reinartsen admitted ASAP Flooring did not have workers’ compensation. At the time, he believed ASAP Flooring was exempt from the workers’ compensation insurance requirements due to his role as a corporate officer and because it only had one employee. During the initial interview, Ms. Brigantty learned Mr. Humbert had worked for ASAP Flooring for four or five months and was paid a flat fee per job. After meeting with Mr. Reinartsen, Ms. Brigantty checked the Florida Department of State, Division of Corporations website to confirm Respondent’s status as an active corporation, and that Mr. Reinartsen was its only officer. Mr. Brigantty then used the Department’s database, Coverage and Compliance Automated System (“CCAS”), which contained information on employers and their workers’ compensation status and any exemptions. According to CCAS, at the time of Ms. Brigantty’s inspection, ASAP Flooring had no workers’ compensation insurance. CCAS also reflected Respondent had an exemption from the workers’ compensation insurance requirements for Mr. Reinartsen because he was its sole corporate officer, but there was no exemption for Mr. Humbert or for any other employees. On October 24, 2016, after confirming ASAP Flooring had at least one employee, but had not secured workers’ compensation insurance, the Department issued a SWO and had it personally served on Mr. Reinartsen at the Jobsite.3/ At this time, the Department also served Mr. Reinartsen with a Request for Production of Business Records for Penalty Assessment Calculations. In response, Respondent provided bank statements, check images, check stubs, tax information and e-mails to the Department. These documents showed that during the previous two-year period (“look-back period”), October 24, 2014, to October 24, 2016, Respondent had a number of employees, but did not have workers’ compensation coverage for them. At the hearing, Respondent did not dispute ASAP Flooring was required to have workers’ compensation insurance, the status of the people identified as employees, or the fact that it did not have adequate workers’ compensation coverage.4/ Penalty Calculation. To calculate the penalty assessed against Respondent, the Department’s Auditor utilized the information she gleaned from documents submitted by Respondent and through Mr. Reinartsen’s deposition testimony taken in these proceedings. She then applied the formulas and rules set forth in the Florida Administrative Code to the information and utilized a Penalty Calculation Worksheet (the “worksheet”) to compute the final penalty assessment amount. The worksheet for the Third OPA is attached as Appendix “A” to this Recommended Order (“Appx. A”). Through her review of ASAP Flooring’s business records and Mr. Reinartsen’s deposition testimony, the Auditor confirmed (1) the individuals who were direct employees or construction subcontractors during those periods of non-compliance (Appx. A, column “Employer’s Payroll”); (2) the periods of non-compliance (Appx. A, column “b”); (3) the gross payroll for those individuals during these periods of non-compliance (Appx. A, column “c”); and (4) the services provided by those individuals. The Auditor used the services to determine the classification codes created by the National Council on Compensation Insurance (“NCCI”), and listed in the NCCI’s Scopes Manual, which has been adopted by the Department through Florida Administrative Code Rule 69L-6.021(1). These classification codes are four-digit codes assigned to various occupations by the NCCI to assist in the calculation of workers’ compensation insurance premiums. To derive the gross pay figures in the worksheet (Appx. A, column “c”) the Auditor explained she utilized payment information in the ASAP Flooring’s business records. Although Respondent initially asserted some of these payments were actually for both labor and materials, these distinctions were not detailed in the business records created at the time of service or payment. Regardless, pursuant to rule 69L-6.035(i) and (j), the Auditor excluded the cost of materials from the payroll calculations. Specifically, she applied an “80:20” ration rule for those payments Respondent claimed were partly labor and partly materials: considering 80 percent of the total payment as “labor” for penalty calculation purposes; and excluding 20 percent for penalty calculation purposes as “materials.” Using the gross payroll (Appx. A, column “c”) and the appropriate NCCI manual rate (Appx. A, column “e”), the Auditor calculated the premium rate (Appx. A, column “f”) for each individual or entity (Appx. A, column “Employer’s Payroll”). She then multiplied the premium rate by two to reach a penalty amount (Appx. A, column “g”). This calculation method to determine a final penalty is authorized by section 440.107(7)(d)1., and rule 69L-6.027. Ultimately, based on the amounts indicated in the worksheet, the Department issued a Third Amended OPA calculating the penalty as $15,577.84. The Department applied a 25 percent reduction, yielding a remaining penalty of $11,683.38. According to the evidence, in November 2016, Respondent paid $1,000 to the Department as a “down payment” toward any ultimate assessment. Applying this $1,000 as a credit to the penalty in the Third OPA results in Respondent owing $10,683.38. Respondent’s Defenses. At the final hearing, Mr. Reinartsen did not dispute any of the figures in the worksheet or the penalty amount. Rather, he raised three arguments unrelated to ASAP Flooring’s failure to secure workers’ compensation insurance for its employees. First, Respondent asserted Ms. Brigantty was not properly outfitted to enter a construction site and therefore, he argued, she was violating rules set forth by the Occupational Safety and Health Agency (“OSHA”). Ms. Brigantty admitted she was not wearing a hard hat, and did not think she was wearing steel-toed boots with hard soles when she entered the Jobsite. Second, Respondent argued Ms. Brigantty did not issue a SWO to another contractor at a neighboring construction site who was putting in pavers, identified only as “Luis.” Mr. Reinartsen could not provide the name of the other contractor’s company, a last name, or any other identifying information; nor did Respondent provide evidence that “Luis” was in a similar situation: non-compliant with and non-exempt from chapter 440. Ms. Brigantty did not remember going to the neighboring site or speaking to anyone else during her stop at the Jobsite. Finally, Respondent argued the penalty is substantial and payment in full (as opposed to a payment plan spread out over a number of years) would put him and his small family-owned company out of business. Ultimate Findings. The Department demonstrated, by clear and convincing evidence, Respondent violated chapter 440 as charged in the SWO by failing to secure workers’ compensation coverage for its employees. The Department demonstrated, by clear and convincing evidence, the penalty for this violation is $11,683.38.
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, ASAP Flooring, violated the requirement in chapter 440 to secure workers’ compensation coverage and imposing a total penalty of $11,683.38, less the $1,000 down payment, the balance to be paid in $100 a month increments. DONE AND ENTERED this 12th day of February, 2018, in Tallahassee, Leon County, Florida. S HETAL DESAI 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 February, 2018.
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, 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, Shriji Krupa, Inc., is a Florida corporation engaged in business operations as a gas station (self-service and convenience-retail) in the State of Florida. Mr. Hemant Parikh, one of Respondent's corporate officers, testified that, on November 20, 2012, Respondent was inspected by Petitioner's Compliance Investigator, Mike Fuller. Mr. Fuller advised Mr. Parikh that Respondent needed to close the store. According to Mr. Hemant Parikh, at the time of inspection, Respondent had two corporate officers and four additional employees. Mr. Parikh explained that, at the time of inspection, Respondent had two store locations with three employees working at each locale. Mr. Shrikant Parikh, another corporate officer, testified that, at the time of inspection, Respondent was operating under the mistaken belief that its corporate officers were exempt from workers' compensation coverage. Pursuant to the record evidence, on November 28, 2012, Mr. Fuller served a Stop-Work Order and Order of Penalty Assessment on Respondent. Pursuant to the Stop-Work Order, Respondent was ordered to cease all business operations for all worksites in the state based on the following: Failure to secure the payment of workers' compensation in violation of sections 440.10(1), 440.38(1), and 440.107(2) F.S., by: failing to obtain coverage that meets the requirements of Chapter 440, F.S., and the Insurance Code. After receiving the Stop-Work Order, on that same date, Respondent obtained workers' compensation coverage with an effective date of November 29, 2012. Respondent has maintained appropriate coverage to date. Following the Stop-Work Order, Respondent submitted various records for Petitioner's review.2/ Petitioner's sole witness was Ms. Lynne Murcia. Ms. Murcia works in Petitioner's Bureau of Compliance wherein she calculates penalties for those employers found in violation of the workers' compensation laws. Ms. Murcia performs approximately 200 penalty calculations per year. Ms. Murcia first became involved with Respondent in January 2013, when she received an assignment to perform a penalty calculation. Ms. Murcia reviewed all records previously submitted by Respondent. From the records received, Ms. Murcia was able to determine that Respondent employed four or more employees on a regular basis. Ms. Murcia explained that "employees" include corporate officers that have not elected to be exempt from workers' compensation. After conducting a search within the Florida Division of Corporations, Ms. Murcia was able to determine that no exemptions existed for Respondent's corporate officers. Ms. Murcia further conducted a proof of coverage search via Petitioner's Coverage and Compliance Automated System ("CCAS"), which is a database that contains all insurance coverage and exemptions for each employer throughout the State of Florida. The search revealed that Respondent possessed appropriate coverage from November 29, 2012, to the present; however, no prior coverage was indicated. Ms. Murcia conducted a penalty assessment for the non- compliance period of November 29, 2009, through November 28, 2012. From the records submitted by Respondent, Ms. Murcia correctly identified Respondent's employees and gross wages paid during the penalty period. All of the individuals listed on the Penalty Worksheet of the 3rd Amended Order of Penalty Assessment, dated August 27, 2014, were "employees" (as that term is defined in section 440.02(15)(a), Florida Statutes) of Respondent during the period of noncompliance listed on the penalty worksheet. From a description of the Respondent's business operations, Ms. Murcia determined Respondent's classification code. She explained that classification codes are established by the National Council of Compensation Insurance ("NCCI"). A classification code is a four-digit code number that is assigned to a specific group of tasks, duties, and responsibilities for a specific grouping of business. Ms. Murcia further testified that the classification codes are associated with a manual rate which is the actual dollar amount of risk associated with a particular code.3/ The manual rates are also established by NCCI. Class Code 8061, used on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment, and as defined by the NCCI Scopes Manual, is the correct occupational classification for Respondent. From the assigned classification code number, 8061, Ms. Murcia calculated the appropriate manual rate for the penalty period. The manual rates used on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment are the correct manual rates. The total penalty of $21,205.19 is the correct penalty for the employees listed on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment.
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 Shriji Krupa, Inc., violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage, and imposing a total penalty assessment of $21,205.19. DONE AND ENTERED this 30th day of October, 2014, in Tallahassee, Leon County, Florida. S TODD P. RESAVAGE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of October, 2014.
