The Issue The issues are whether Petitioner has proved that Respondent failed to secure workers' compensation insurance, as required by section 440.10, Florida Statutes, and, if so, the amount of the penalty, pursuant to section 440.107.
Findings Of Fact On September 18, 2013, the owner and Jesus Rodriguez, representing Respondent, signed a permit application for reroofing of a single-family residence located at 4311 Southwest 15th Street, Miami. An official of the Miami-Dade County Department of Regulatory and Economic Resources approved the plans on September 27, 2013. The record does not disclose when work commenced. However, at about 9:00 a.m. on September 25, 2013, an investigator of the Division of Workers' Compensation was randomly canvassing the area, noticed roofing work at the subject address, and conducted an inspection. The investigator observed three persons on the roof engaged in roofing work. When the investigator asked the three workers for whom they worked, one of them replied, "Oval Construction," and added that it was owned by Pedro Alfaro and Jesus R. Rodriguez (Mr. J. Rodriguez). When asked for a phone number for the owners, the worker gave the investigator a cell number for Mr. Alfaro. Prior to calling Mr. Alfaro, while still at the work site, the investigator researched Oval Construction and learned that it was an active corporation with two corporate officers: Mr. Alfaro and Mr. J. Rodriguez. The investigator learned that the corporation showed no workers' compensation exemptions for the officers or any workers' compensation coverage. While still at the worksite, the investigator then called Mr. Alfaro and asked him if Oval Construction had workers' compensation insurance. Mr. Alfaro said that Mr. J. Rodriguez handled such matters, so the investigator told Mr. Alfaro to have Mr. J. Rodriguez call the investigator immediately. Mr. J. Rodriguez did so and informed the investigator that the three workers worked for him, but not under Oval Construction; they worked for Respondent, and Respondent had workers' compensation insurance. Mr. J. Rodriguez stated that he did not have the insurance information at the moment, but would call back with the information. In the meantime, the investigator researched Respondent and learned that it was an active corporation with two officers: Mr. J. Rodriguez and Mr. Alberto Rodriguez (Mr. A. Rodriguez), who were not related. (Mr. J. Rodriguez is deceased.) Both officers had current workers' compensation exemptions, and the database indicated that Respondent leased its employees from South East Personnel Leasing Company. The investigator contacted South East Personnel Leasing and learned that the leasing contract had terminated on July 24, 2013, and Respondent had no current workers' compensation coverage through South East Personnel Leasing. At this point, the investigator called Mr. J. Rodriguez, who repeated that the workers were employed by Respondent, not Oval Construction. Subsequently, the investigator tried unsuccessfully several times to speak to Mr. J. Rodriguez. A few days after the inspection, Mr. A. Rodriguez called the investigator and arranged for a meeting between the investigator and Mr. J. Rodriguez for October 1, 2013. On October 1, 2013, the investigator and Mr. J. Rodriguez met, and the investigator served on him, in the name of Respondent, a Request for Production of Business Records for Penalty Assessment Calculation for the three-year period ending on September 25, 2013. Respondent never produced any business records to Petitioner. On October 2, 2013, Mr. J. Rodriguez caused the transfer of the building permit for the roofing work from Respondent to Blue Panther Roofing. On October 1, 2013, Mr. J. Rodriguez signed a Hold Harmless agreement holding Miami-Dade County harmless and assuming responsibility for any work already performed under the building permit issued to Respondent. Mr. A. Rodriguez testified that he knew nothing about the subject job. But Mr. J. Rodriguez was the qualifying general contractor of Respondent, was an officer of Respondent, and owned 20% of Respondent. In fact, Mr. J. Rodriguez was the only licensed or certified contractor employed by Respondent and was the sole person who could obtain building permits for work to be performed by Respondent. Mr. A. Rodriguez's lack of knowledge of the subject job is therefore not dispositive because Mr. J. Rodriguez had the authority to, and did, apply for the building permit in the name of Respondent, and he had the authority to, and did, obligate Respondent to do the subject reroofing work. During the above-described three-year period, according to Petitioner Exhibit 6, page 20, Respondent had workers' compensation insurance from October 4, 2010, through January 1, 2013. Additionally, according to Petitioner Exhibit 6, page 23, Respondent had workers' compensation insurance through South East Personnel Leasing from October 18, 2012, through February 20, 2013, and March 7, 2013, through July 24, 2013. This is borne out by the testimony of the investigator. (Tr., pp. 99-101.) Respondent thus did not have workers' compensation coverage for a total of 85 days during the three years at issue, during which time Respondent actively performed construction work in Florida. The three periods of noncoverage during the three years at issue are September 26 through October 3, 2010, for a total of 8 days; February 21, 2013, through March 6, 2013, for a total of 14 days; and July 25, 2013, through September 25, 2013, for a total of 63 days. A conflict in the evidence prevented Petitioner from proving by clear and convincing evidence a fourth period of noncoverage: October 4 through 17, 2012. Additionally, Mr. J. Rodriguez was listed as secretary of Respondent and exempt from workers' compensation insurance from March 1, 2013, through March 1, 2015, so he would be counted as an employee during the noncoverage periods of September 26, through October 3, 2010, and February 21, 2013, through February 28, 2013. Mr. A. Rodriguez was listed as president of Respondent and exempt from workers' compensation insurance from October 22, 2012, through October 22, 2014, so he would be counted as an employee during the noncoverage period of September 26, 2010, through October 3, 2010. Mr. A. Rodriguez's wife, Yubanis Ibarra, was also a corporate officer and was not exempt during one week of one noncoverage period: September 26 to October 3, 2010. On October 30, 2013, Petitioner issued an Amended Order of Penalty Assessment assessing a penalty of $15,594.34 pursuant to section 440.107(7)(d). The Amended Order of Penalty Assessment is supported by a Penalty Calculation Worksheet, which based the penalty on the three employees found on the job on the day of the inspection as employees during all periods of noncoverage and the three above-identified corporate officers during their respective periods of nonexemption that occurred while they served as officers. Subject to two exceptions, the Amended Order of Penalty Assessment correctly calculates the gross payroll based on the statewide average weekly wage multiplied by 1.5, applies the correct manual rates to the gross payroll, determines the correct evaded premium, and determines the correct penalty based on the premium multiplied by 1.5. The first exception is that Petitioner failed to prove by clear and convincing evidence a lack of coverage for the above-described 13 days in October 2012. This failure of proof noted in the preceding paragraph concerns four employees who generated total penalties of $2510.88, so the corrected total penalty would be $13,084.46. The second exception concerns the proof of the duration of employment of the three employees working on the roof at the time of the inspection on September 25, 2013. Petitioner has proved by clear and convincing evidence their employment only during the noncoverage period of July 24, 2013, through September 25, 2013, as discussed in the Conclusions of Law. For the two other noncoverage periods--three, if the period noted in paragraph 15 already had not been rejected--the penalty of $3220.05 has not been established, leaving a net penalty of $9864.41.
Recommendation It is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order finding Respondent guilty of not securing workers' compensation and imposing a penalty of $9864.41. DONE AND ENTERED this 13th day of November, 2015, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 13th day of November, 2015. COPIES FURNISHED: Leon Melnicoff, Qualified Representative Thomas Nemecek, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed) Mariem Josefina Paez, Esquire The Law Offices of Mariem J. Paez, PLLC 300 Sevilla Avenue, Suite 304 Coral Gables, Florida 33134 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
Findings Of Fact The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on April 1, 2011, and the Amended Order of Penalty Assessment issued on April 19, 2011, 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, and the Amended Order of Penalty Assessment, and being otherwise fully advised in the premises, hereby finds that: 1. On April 1, 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. 11-110-1A to LYNDA AGUAYO, DBA, LA FRAMING CONTRACTOR, INC., A DISSOLVED FLORIDA CORPORATION AND LA FRAMING CONTRACTOR, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein LYNDA AGUAYO, DBA, LA FRAMING CONTRACTOR, INC., A DISSOLVED FLORIDA CORPORATION AND LA FRAMING CONTRACTOR, 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 Section 120.569 and 120.57, Florida Statutes. 2. On April 1, 2011, the Stop-Work Order and Order of Penalty Assessment was personally served on LYNDA AGUAYO, DBA, LA FRAMING CONTRACTOR, INC., A DISSOLVED FLORIDA CORPORATION AND LA FRAMING CONTRACTOR, 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 19, 2011, the Department issued an Amended Order of Penalty Assessment in Division of Workers’ Compensation Case No. 11-110-1A to LYNDA AGUAYO, DBA, LA FRAMING CONTRACTOR, INC., A DISSOLVED FLORIDA CORPORATION AND LA FRAMING CONTRACTOR, INC. The Amended Order of Penalty Assessment assessed a total penalty of $12,985.36 against LYNDA AGUAYO, DBA, LA FRAMING CONTRACTOR, INC., A DISSOLVED FLORIDA CORPORATION AND LA FRAMING CONTRACTOR, INC. 4. On April 29, 2011, the Amended Order of Penalty Assessment was. personally served on LYNDA AGUAYO, DBA, LA FRAMING CONTRACTOR, INC., A DISSOLVED FLORIDA CORPORATION AND LA FRAMING CONTRACTOR, INC. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. LYNDA AGUAYO, DBA, LA FRAMING CONTRACTOR, INC., A DISSOLVED FLORIDA CORPORATION AND LA FRAMING CONTRACTOR, INC failed to answer the Stop-Work Order and Order of Penalty Assessment and the Amended Order of Penalty Assessment or request a proceeding in accordance with Sections 120.569 and 120.57, Florida Statutes.
The Issue The issues in this case are whether Respondent failed to provide workers' compensation coverage, and, if so, what penalty should be imposed.
Findings Of Fact The Department is the state agency responsible for enforcing section 440.107. That section mandates, in relevant part, that employers in Florida secure workers' compensation insurance coverage for their employees. § 440.107(3), Fla. Stat. At all times relevant, All Florida was a Florida corporation engaged in the business of well drilling for water, a construction business, with its principal office located at 2250 Havana Avenue, Fort Myers, Florida. On August 3, 2010, Amy Thielen (Ms. Thielen), a compliance investigator for the Department, conducted an on-site investigation at a work site located at 129 Montrose Street, Fort Myers, Florida. Ms. Thielen observed a parked truck with the All Florida logo on it at this work site and an individual working nearby. After identifying herself to the individual, the individual identified himself as Edward Perez (Mr. Perez), an employee of and working for All Florida at that time. Ms. Thielen then consulted the Department's Coverage and Compliance Automated System (CCAS) database to determine if All Florida had workers' compensation coverage. The insurance companies report any workers' compensation coverage to the Department through this CCAS database, which is kept current. The CCAS showed that All Florida had two periods in which its workers' compensation coverage lapsed: March 3, 2009, through October 24, 2009, and a second period when the workers' compensation policy was cancelled from January 9, 2010, to August 3, 2010. Ms. Thielen contacted All Florida's last workers' compensation carrier and was informed that there was no workers' compensation policy in place. There was no workers' compensation coverage in effect on August 3, 2010, when Ms. Thielen confirmed that Mr. Perez was working for All Florida. Ms. Thielen testified that any construction company could obtain an exemption from having workers' compensation coverage through an application to the Department. All Florida did not have an exemption for any corporate officers.2/ Ms. Thielen checked the Department of State, Division of Corporations', records and learned that Robert Henshaw (Mr. Henshaw) was the president and only officer of All Florida. Based on her investigation, Ms. Thielen determined that All Florida did not have the requisite workers' compensation coverage at that time. After consulting with her supervisor, Ms. Thielen issued a Stop-Work Order to All Florida on August 11, 2010. A stop-work order is an enforcement action issued against employers that forces the employer to cease all business operations in Florida until they obtain the requisite workers' compensation coverage and return to full compliance. At the time Ms. Thielen served All Florida with the Stop-Work Order, she also served a request for production of business records for penalty assessment calculation to All Florida. This document requests certain business records from the employer for a three-year period in order for an audit to be performed to properly calculate the penalty assessment. All Florida produced the requested business records to the Department. Melissa Geissler (Ms. Geissler), a penalty calculator for the Department's Bureau of Compliance, calculated the penalty assessment based on All Florida's business records. Based on a review of the produced business records, the initial penalty assessment was $18,216.73. On September 8, 2010, Mr. Henshaw, acting on behalf of All Florida, executed a "payment agreement schedule for periodic payment of penalty" with the Department. Mr. Henshaw paid ten percent of the penalty assessment, put the remainder of the penalty assessment in a payment plan, and obtained the requisite worker's compensation coverage. The Department then issued an "Order of Conditional Release from Stop-Work Order," thus allowing All Florida to continue to operate while paying the remaining penalty assessment in specific increments. After the original penalty assessment order was issued, All Florida submitted additional business records, and the Department sought to and did revise the penalty assessment amount downward. As the case was already at the Division, the Department, with All Florida's consent, requested that a second amended order of penalty assessment be issued, reducing the penalty amount to $13,267.24. On October 20, 2010, the Division issued an Order allowing the second amended order of penalty assessment to be issued. In April 2011, after still more business records were delivered to the Department, the Department issued a third amended order of penalty assessment. This time the penalty assessment was reduced to $12,721.73. On August 24, 2011, the Department filed a motion to amend order of penalty assessment. There was insufficient time for All Florida to respond to the motion, and, at hearing, All Florida, through its president, Mr. Henshaw, voiced no objection to the reduction in the penalty assessment amount. Ms. Geissler's duties at the Department include reviewing financial documentation from employers, identifying payroll transactions, and verifying workers' compensation coverage. Ms. Geissler testified that she utilizes the CCAS database to confirm whether any employer has secured workers' compensation coverage. When she finds a payroll transaction that reflects such coverage, that transaction is not used in the penalty assessment calculation; otherwise, the transaction is used in calculating the coverage cost amount. Ms. Geissler also testified that she utilizes the penalty worksheet authorized in Florida Administrative Code Rule 69L-6.027 to aid in the penalty calculation process. Ms. Geissler conducted an audit of All Florida based on the business records it provided to the Department. Ms. Geissler determined the amount of workers' compensation premium that All Florida would have paid had it been in compliance with Florida law between August 12, 2007, and August 11, 2010 (excluding October 25, 2009, through January 8, 2010, when there was coverage). Ms. Geissler testified that, during this three-year period, All Florida was an active construction based employer. It was confirmed that there were four employees (including Mr. Henshaw) of All Florida. In order to calculate the appropriate penalty, Ms. Geissler took 1/100th of the gross payroll and multiplied that figure by the approved manual rate applicable to class code 6204 (the class code designated to specialist contractors engaged in drilling work as found in the approved Scopes Manual3/). The approved manual rates are determined by the National Council on Compensation Insurance, adopted by the Florida Office of Insurance Regulation, and represent the recent trends in workers' compensation loses associated with each individual class code. After reviewing all of the business records submitted by All Florida, and using the applicable formula, Ms. Geissler credibly testified that the final penalty assessment was $12,721.73. Ms. Geissler's calculations for the penalty assessment were performed in accordance with the requirements of section 440.107(7) and rule 69L-6.027. Mr. Henshaw did not provide any testimony during the proceeding, but rather made the statement that there was no point in fighting the allegation, "everything is correct."
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that All Florida failed to secure workers' compensation coverage and assessing a penalty of $12,721.73 against All Florida. DONE AND ENTERED this 5th day of October, 2011, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of October, 2011.
Findings Of Fact 13. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on April 7, 2010, the Amended Order of Penalty Assessment issued on April 19, 2010, the 2" Amended Order of Penalty Assessment issued on June 2, 2010, and the 3K Amended Order of Penalty Assessment issued on September 1, 2010, attached as “Exhibit A”, “Exhibit B”, “Exhibit D”, and “Exhibit E”, 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 request for administrative hearing received from TOM HINDS, INC., the Stop- Work Order and Order of Penalty Assessment, the Amended Order of Penalty Assessment, the 2nd Amended Order of Penalty Assessment, and the 3" Amended Order of Penalty Assessment, and being otherwise fully advised in the premises, hereby finds that: 1. On April 7, 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. 10-169-D3 to TOM HINDS, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein TOM HINDS, 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 April 7, 2010, the Stop-Work Order and Order of Penalty Assessment was personally served on TOM HINDS, 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 19, 2010, the Department issued an Amended Order of Penalty Assessment to TOM HINDS, INC. The Amended Order of Penalty Assessment assessed a total penalty of $47,827.66 against TOM HINDS, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein TOM HINDS, 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. 4. On August 5, 2010, the Amended Order of Penalty Assessment was filed with the Division of Administrative Hearings. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On May 18, 2010, the Department received a request for administrative hearing (“Petition”) from TOM HINDS, INC. A copy of the Petition is attached hereto as “Exhibit C”. 6. On June 2, 2010, the Department issued a 2°4 Amended Order of Penalty Assessment to TOM HINDS, INC. The 2™ Amended Order of Penalty Assessment reduced the penalty assessed against TOM HINDS, INC. to $5,744.16. 7. On June 19, 2010, the 2"! Amended Order of Penalty Assessment was served by certified mail to TOM HINDS, INC. A copy of the 2nd Amended Order of Penalty Assessment is attached hereto as “Exhibit D” and incorporated herein by reference. 8. On August 5, 2010, the Petition from TOM HINDS, INC. was forwarded to the Division of Administrative Hearings and assigned DOAH Case No. 10-7165. 9. On September 1, 2010, the Department issued a 3° Amended Order of Penalty Assessment to TOM HINDS, INC. The 3 Amended Order of Penalty Assessment reduced the penalty assess against TOM HINDS, INC. to $5,733.10. 10. On September 3, 2010, the Department filed with the Division of Administrative Hearings a Motion to Amend Order of Penalty Assessment. A copy of the 3rd Amended Order of Penalty Assessment is attached hereto as “Exhibit E” and incorporated herein by reference. 1. On October 24, 2010, TOM HINDS, INC. informed the Department that TOM HINDS, INC. did not wish to proceed to an administrative hearing in DOAH Case No. 10-7165. 12. On October 27, 2010, the Department filed a Joint Motion to Relinquish Jurisdiction with the Division of Administrative Hearings. As a result, on November 18, 2010, Administrative Law Judge, R. Bruce McKibben, entered an Order Closing File, relinquishing jurisdiction of this matter to the Department. A copy of the Order Closing File is attached hereto as “Exhibit F”.
Findings Of Fact 12. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on February 22, 2011, the Amended Order of Penalty Assessment issued on March 24, 2011, and the 2nd Amended Order of Penalty Assessment, issued on March 8, 2012, attached as “Exhibit A,” “Exhibit B,” and Exhibit “D” 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 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 AMSTARR, INC., the Stop-Work Order and Order of Penalty Assessment, the Amended Order of Penalty Assessment, and the 2nd Amended Order of Penalty Assessment, and being otherwise fully advised in the premises, hereby finds that: 1. On February 22, 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. 11-060-1A to AMSTARR, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein AMSTARR, 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 February 22, 2011, the Stop-Work Order and Order of Penalty Assessment was served by personal service on AMSTARR, 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 March 24, 2011, the Department issued an Amended Order of Penalty Assessment to AMSTARR, INC. The Amended Order of Penalty Assessment assessed a total penalty of $80,945.25 against AMSTARR, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein AMSTARR, 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. 4, On October 27, 2011, the Amended Order of Penalty Assessment was served by personal service via a process server on AMSTARR, INC. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On November 28, 2011, AMSTARR, INC. timely filed a request for administrative hearing with the Department. The petition for administrative review was forwarded to the Division of Administrative Hearings on January 6, 2012, and the matter was assigned DOAH Case No. 12-0080. A copy of the petition is attached hereto as “Exhibit C” and incorporated herein by reference. 6. On March 8, 2012, the Department issued a 2nd Amended Order of Penalty Assessment to AMSTARR, INC. The Amended Order of Penalty Assessment assessed a total penalty of $2,256.78 against AMSTARR, INC. The 2nd Amended Order of Penalty Assessment included a Notice of Rights wherein AMSTARR, INC. was advised that any request for an administrative proceeding to challenge or contest the 2nd Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the 2nd 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. 7. On March 13, 2011, the 2nd Amended Order of Penalty Assessment was served by electronic mail on AMSTARR, INC. A copy of the 2nd Amended Order of Penalty Assessment is attached hereto as “Exhibit D” and incorporated herein by reference. 8. On March 26, 2012, AMSTARR, INC., entered into a Settlement Agreement with the Department. The Settlement Agreement stated that AMSTARR, INC. must accept service of the 2nd Amended Order of Penalty Assessment. The Settlement Agreement also stated that AMSTARR, INC. must pay the penalty in full, or pay a down-payment of $1,000.00 and enter into a Payment Agreement Schedule for Periodic Payment within thirty days of the execution of the Settlement Agreement. Additionally, AMSTARR, INC. agreed that upon execution of the Settlement Agreement his Petition shall be deemed dismissed with prejudice. A copy of the Executed Settlement Agreement is attached hereto as “Exhibit E” and incorporated herein by reference. 9. On March 26, 2012, the Department filed a Notice of Settlement with the Division of Administrative Hearings. A copy of the Notice of Settlement is attached hereto as “Exhibit F” and incorporated herein by reference. 10. On April 2, 2012, the Administrative Law Judge issued an Order Closing File and Relinquishing Jurisdiction. A copy of the Order Closing File and Relinquishing Jurisdiction is attached hereto as “Exhibit G” and incorporated herein by reference. ll. As of the date of this Final Order, AMSTARR, INC. has failed to comply with the conditions of the Settlement Agreement. AMSTARR, INC. has neither paid the penalty amount in full, nor has AMSTARR, INC. entered into a Payment Agreement Schedule for Periodic Payment.
Findings Of Fact 10. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on February 17, 2009, the Amended Order of Penalty Assessment issued on May 19, 2009, and the 2nd Amended Order of Penalty Assessment issued on June 5, 2009, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Findings Of Fact 11. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on March 12, 2009, and the Amended Order of Penalty Assessment issued March 30, 2009, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment and the Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-075-1A, and being otherwise fully advised in the premises, hereby finds that: 1. On March 12, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-075-1A to REGIONAL CONCRETE, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein REGIONAL 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. 2. On March 12, 2009, the Stop-Work Order and Order of Penalty Assessment was served by personal service on REGIONAL 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 March 30, 2009, the Department issued an Amended Order of Penalty Assessment to REGIONAL CONCRETE, IN C. in Case No. 09-075-1A. The Amended Order of Penalty Assessment assessed a total penalty of $122,034.51 against REGIONAL CONCRETE, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein REGIONAL 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. 4. On April 1, 2009, the Amended Order of Penalty Assessment was served by certified mail on REGIONAL CONCRETE, INC. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On April 20, 2009, REGIONAL CONCRETE, INC. filed a petition requesting a formal administrative hearing with the Department. The Department forwarded the petition to the Division of Administrative Hearings on June 8, 2009, and the matter was assigned DOAH Case No. 09-3046. 6. On July 24, 2009, the Department served its discovery requests on REGIONAL CONCRETE, INC., which included interrogatories, requests for admissions, and requests for production. Responses or objections to the discovery were required to be served on the Department within thirty days. REGIONAL CONCRETE, INC. failed to respond to the discovery requests within thirty days. 7. On August 28, 2009, the Department filed a Motion to Compel Discovery. The Honorable P. Michael Ruff, the Administrative Law Judge, entered an Order on Motion to Compel on September 15, 2009, which required REGIONAL CONCRETE, INC. to serve responses to the requests for admission, interrogatories, and requests for production no later than September 18, 2009. 8. On September 25, 2009, the parties filed a Joint Response to Order Granting Continuance wherein the parties agreed REGIONAL CONCRETE, INC. would submit to the Department responses to the discovery requests by October 23, 2009. Since conferring on the Joint Response to Order Granting Continuance, the Department has made several unsuccessful attempts to reach REGIONAL CONCRETE, INC. 9. On November 3, 2009, the Department filed a Motion to Deem Matters Admitted and to Relinquish Jurisdiction Pursuant to Section 120.57(1)(i), Florida Statutes, with the Division of Administrative Hearings after REGIONAL CONCRETE, INC. failed to respond to the discovery request by. October 23, 2009. A hearing on the motion was held on November 20, 2009, during which several’ unsuccessful attempts were made to contact REGIONAL CONCRETE, INC. The Department also attempted to contact REGIONAL CONCRETE, INC. by telephone after the hearing on the motion, but was unsuccessful. After the hearing on the motion, the Honorable James H. Peterson, III, the Administrative Law Judge, entered an Order to Show Cause which ordered REGIONAL CONCRETE, INC. to show good cause within seven days as to why the Motion to Deem Matters Admitted and to Relinquish Jurisdiction Pursuant to Section 120.57(1)(@, Florida Statutes, should not be granted. A copy of the Order to Show Cause is attached hereto as “Exhibit C” and incorporated herein by reference. 10. On December 3, 2009, the Honorable James H. Peterson, II, entered an Order Closing File deeming the admissions contained in the discovery requests admitted. The Order Closing File further concluded that there were no disputed issues of material fact and relinquished jurisdiction of the matter to the Department for final disposition. A copy of the Order Closing File is attached hereto as “Exhibit D” and incorporated herein by reference.
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.
The Issue The issue for determination in this proceeding is whether Florida Administrative Code Rule 61D-6.011 is an invalid exercise of delegated legislative authority, in violation of section 120.52(8).
Findings Of Fact Petitioner, FHBPA, is a Florida not-for-profit corporation created to advance, foster, and promote the sport of thoroughbred horse racing in the State of Florida. FHBPA’s membership includes over 200 Florida-licensed horse trainers and over 5,000 Florida-licensed horse owners, and has associational standing to file and prosecute actions on behalf of its members. Respondent has not challenged FHBPA’s standing to bring this proceeding. Respondent, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (PMW), is the state agency charged with the regulation of pari-mutuel wagering in the State of Florida, pursuant to section 20.165 and chapter 550, Florida Statutes. The question to be decided in this proceeding is what the Legislature meant when it amended section 550.2415(7) in 2015, and whether rule 61D-6.011 carries out the legislative directive it contains. Before the 2015 legislative session, section 550.2415 stated, in pertinent part: (3)(a) Upon the finding of a violation of this section, the division may revoke or suspend the license or permit of the violator or deny a license or permit to the violator; impose a fine against the violator in an amount not exceeding $5,000; require the full or partial return or the purse, sweepstakes, and trophy of the race at issue; or impose against the violator any combination of such penalties. The finding of a violation of this section in no way prohibits a prosecution for criminal acts committed. * * * (7)(e) The division may, by rule, establish acceptable levels of permitted medications and shall select the appropriate biological specimens by which the administration of permitted medication is monitored. * * * The division shall adopt rules to implement this section. The rules may include a classification system for prohibited substances and a corresponding penalty schedule for violations. Except as specifically modified by statute or by rules of the division, the Uniform Classification Guidelines for Foreign Substances, revised February 14, 1995, as promulgated by the Association of Racing Commissioners International, Inc., is hereby adopted by reference as the uniform classification system for class IV and V medications. (Emphasis added). During the 2015 legislative session, the Legislature substantially amended section 550.2415. Ch. 15-88, § 1, Laws of Fla. Not all of the changes made are germane to the challenge at issue here, but the amendments to subsections (3) and (7) are critical: (3)(a) Upon the finding of a violation of this section, the division may revoke or suspend the license or permit of the violator or deny a license or permit to the violator; impose a fine against the violator in an amount not exceeding the purse or sweepstakes earned by the animal in the race at issue or $10,000, whichever is greater; require the full or partial return of the purse, sweepstakes, and trophy of the race at issue; or impose against the violator any combination of such penalties. The finding of a violation of this section does not prohibit a prosecution for criminal acts committed. * * * (7)(a) In order to protect the safety and welfare of racing animals and the integrity of the races in which the animals participate, the division shall adopt rules establishing the conditions of use and maximum concentrations of medications, drugs, and naturally occurring substances identified in the Controlled Therapeutic Medication Schedule, Version 2.1, revised April 17, 2014, adopted by the Association of Racing Commissioners International, Inc. Controlled therapeutic medications include only the specific medications and concentrations allowed in biological samples which have been approved by the Association of Racing Commissioners International, Inc., as controlled therapeutic medications. * * * (c) The division rules must include a classification system for drugs and substances and a corresponding penalty schedule for violations which incorporates the Uniform Classification Guidelines for Foreign Substances, Version 8.0, revised December 2014, by the Association of Racing Commissioners International, Inc. The division shall adopt laboratory screening limits approved by the Association of Racing Commissioners International, Inc., for drugs and medications that are not included as controlled therapeutic medications, the presence of which in a sample may result in a violation of this section. (Emphasis added). The title page of the ARCI Document states, “Uniform Classification Guidelines for Foreign Substances and Recommended Penalties and Model Rule.” Each of the remaining pages of the ARCI Document, including those pages that encompass the ARCI Recommended Penalties, identifies the ARCI Document as the “Uniform Classification Guidelines for Foreign Substances.” The Notes Regarding Classification Guidelines, found at page ii, states that “Where the use of a drug is specifically permitted by a jurisdiction, then the jurisdiction’s rule supersedes these penalty guidelines.” (Emphasis added). Rules 61D-6.011 and 61D-6.008 were amended in 2016, in response to the amendments to section 550.2415. Rule 61D-6.008 addresses permitted medications allowed for horses, and rule 61D- addresses the penalties to be imposed for drug violations. Relevant portions of rule 61D-6.011 provide: The penalties in this rule shall be imposed when the stewards or the Division finds that the following substances have been identified by the state laboratory in a urine sample or blood sample collected from a horse participating in a pari-mutuel event: (a) Any medication listed in subsection 61D-6.008(2), F.A.C. [1.-3. provide penalty ranges for first, second, and third offenses] The penalty for any medication or drug which is not described in subsection (1) above shall be based upon the classification of the medication or drug found in the Uniform Classification Guidelines for Foreign Substances, revised December 2014, as promulgated by the Association of Racing Commissioners International, Inc., which is hereby incorporated and adopted herein by reference, https://flrules.org/Gateway/ reference.asp?No=Ref-06400, www.myfloridalicense.com/dbpr/pmw or by contacting the Department of Business and Professional Regulation, 2601 Blair Stone Road, Tallahassee, Florida 32399. The penalty schedule shall be as follows: Class I substances: First violation of this chapter Second violation of this chapter Third or subsequent violation of this chapter Class II substances: First violation of this chapter $3,000 to $5,000 fine and suspension of license 90 days to one year, or revocation of license; $4,000 to $5,000 fine and suspension of license of no less than one year, or revocation of license. $5,000 to $10,000 fine and revocation of license. $250 to $1,000 fine and suspension of license zero to 180 days; Second violation of this chapter Third or subsequent violation of this chapter Class III substances: First violation of this chapter Second violation of this chapter Third or subsequent violation of this chapter Class IV or V substances: First violation of this chapter Second violation of this chapter $500 to $1,000 fine and suspension of license of no less than 180 days, or revocation of license; $1,000 to $5,000 fine and suspension of license of no less than one year, or revocation of license $300 to $500 fine; $500 to $750 fine and suspension of license zero to 30 days, or revocation of license; $750 to $1,000 fine and suspension of license zero to 180 days, or revocation of license. $100 to $250 fine; $250 to $500 fine and suspension of license zero to 10 days; Third violation of this chapter $500 to $1,000 fine and suspension of license zero to 60 days. The Division may consider mitigation or aggravation to deviate from these penalty guidelines. * * * Absent mitigating circumstances, the stewards or the Division shall order the return of any purse, prize, or award from any pari-mutuel event for redistribution when a positive test for a drug or medication described in paragraphs (1)(a), (1)(b), (2)(a), or (2)(b) is reported by the state laboratory and confirmed through the hearing process. The stewards or the Division may order the return of any purse, prize, or award for redistribution when the positive test of a drug or medication reported by the state laboratory is not described in paragraphs (1)(a), (1)(b), (2)(a), or (2)(b) of this rule. In the event the stewards or Division orders the return of the purse, prize, or award for redistribution as described in this subsection, the reason(s) for the redistribution shall be provided in writing. (Emphasis added). Rule 61D-6.011 varies from the penalty provisions in the ARCI Recommended Penalties in several respects. First, in the drug classification tables in the ARCI Document, which the rule incorporates by reference, there are columns to identify the drug or substance; trade name, if any; drug class; and penalty class. Not all drugs in a drug class are in the same penalty class. For example, all class 1 drugs are in penalty class A, with the exception of cocaine, morphine, and strychnine, which are in penalty class B. The majority of class 2 drugs are also in penalty class A, with the exception of caffeine, carisoprodol, diazepam, hydroxyzine, ketamine, levamisole, lidocaine, mepivacaine, and romifidine, which are in penalty class B. Class 3 drugs are generally split between penalty classes A and B, and class 4 drugs include both penalty classes B and C. Similarly, class 5 drugs are split between penalty classes C and D. It is clear from the text of the ARCI Document that the drug classifications and the penalty guidelines are intended to work together as a comprehensive approach to the impermissible drugging of racing horses. In the Recommended Penalty and Model Rule portion of the ARCI Document, there are separate penalties recommended for licensed trainers and for owners. For trainers, class A penalties include a minimum fine of $10,000 or 10% of the total purse, whichever is greater, absent mitigating circumstances, to a maximum of $25,000 or 25% of the purse with aggravating factors for a first offense. For a second offense in any jurisdiction, the fine amount is $25,000 or 25% of the total purse, whichever is greater, absent mitigating circumstances, and may increase with aggravating circumstances to a maximum of $50,000 or 50% of the purse, whichever is greater. For a third offense in any jurisdiction, the minimum fine is $50,000 or 50% of the total purse, whichever is greater, absent mitigating circumstances, and may increase with aggravating circumstances to a maximum of $100,000 or 100% of the purse, whichever is greater. For owners, the first and second offenses include disqualification and loss of purse. The penalty for a third offense includes disqualification, loss of purse, and a $50,000 fine. For owners and trainers, the monetary penalties may exceed the maximum permitted under section 550.4215(3), which authorizes a fine not exceeding the purse or sweepstakes earned by the animal, or $10,000, whichever is greater. The parties have submitted the House and Senate Bill analyses that address the amendment to section 550.2415 at issue here.1/ The House of Representatives Final Bill Analysis for CS/HB 239 includes the following statements: The bill changes the maximum fine for violations from $5,000 to $10,000 or the amount of the purse, whichever is greater. The bill also reduces the time for the division to begin administrative prosecutions for violations from 2 years to 90 days. The bill requires the division to adopt the Association of Racing Commissioners International (ARCI) rules regarding the medications, drugs, and naturally occurring substances given to race animals, including a classification system for drugs that incorporates ARCI’s Penalty Guidelines for drug violations, and updates current methodologies used in testing procedures. . . . * * * Effect of Proposed Changes * * * The bill requires that the penalty schedule for violations must incorporate the Uniform Classification Guidelines for Foreign Substances, Version 8.0, revised December 2014, by the ARCI. These guidelines are “intended to assist stewards, hearing offices and racing commissioners in evaluating the seriousness of alleged violations of medication and prohibited substance rules. ” The bill analysis for CS/SB 226 contains similar provisions stating that the ARCI Penalty Guidelines must be incorporated into a rule adopted by Respondent. The penalty guidelines included in rule 61D-6.011 do not incorporate the ARCI Recommended Penalties. The PMW’s website includes a listing of statutes and rules, with links to the rules. Included in that list is a statement that “The Association of Racing Commissioners International, Inc. ‘Uniform Classification Guidelines for Foreign Substances and Recommended Penalties and Model Rule’ is adopted and incorporated by rule.” Notwithstanding this statement, the ARCI Recommended Penalties are not incorporated into rule 61D-6.011 or any other rule identified in this proceeding. The rule provides for consideration of a number of aggravating and mitigating circumstances, when warranted, that allow for deviation from the identified penalty guidelines. As noted above, rule 61D-6.011(1) refers to the medications listed in rule 61D-6.008. Rule 61D-6.008 provides in pertinent part: Permitted medications for horses: The prescription medications defined in this rule shall be permitted under the conditions set forth to conserve and protect the health of the horse which is entered to race. All such medications shall be procured and administered by a licensed veterinarian, except where a valid prescription or dispensing occurs in compliance with the requirements of Chapter 474, F.S. The following permitted medications at concentrations less than or equal to the following schedule shall not be reported by the racing laboratory to the Division as a violation of Section 550.2415, F.S. [list of medications and concentration levels for each one]. Thus, subsection (1) of rule 61D-6.011 addresses violations where too much of a permitted medication is found in a race day sample, whereas subsection (2) addresses violations based upon prohibited medications. Petitioner presented the testimony of Scott Hay and Edward Martin in support of its contention that the penalty guidelines adopted by PMW are arbitrary and capricious. Dr. Scott Hay is a veterinarian who has worked with thoroughbred racehorses since 1988. He is a member of the American Association of Equine Practitioners, the American Veterinary Medical Association, and the Florida Veterinary Association. He serves as co-chair on the scientific advisory committee for the Racing Medication and Testing Consortium, which worked on the development of the ARCI Document. Dr. Hay was familiar with the ARCI Document and described the process used to determine threshold levels for medications. He testified that the scientific advisory committee relied extensively on the expertise of some of its members to determine the appropriate levels of medications that would be appropriate under the drug classifications. On the other hand, while he is familiar with PMW’s rules and was involved in the rulemaking workshops when the rules were first amended after the 2015 statutory change, he did not believe that he made any comments on these particular rules during that process. He did not provide any testimony that provided information on what methodology PMW used when formulating its penalty guidelines. Mr. Martin works for the Association of Racing Commissioners International as its president and has done so since 2005. He testified that the Racing Medication and Testing Consortium is a consortium of racing industry organizations that advises ARCI and regulatory entities on medication and anti-doping policies. He described the process by which the scientific advisory committee meets and considers recommendations on changes to policies. According to Mr. Martin, the scientific advisory committee relies on the collective judgment of the pharmacologists, chemists, toxicologists, and veterinarians to provide advice and expertise about appropriate public policy. The controlled therapeutic medication schedule is an attempt to provide some consistency in the regulation of some commonly used medications that are considered appropriate for equine care. The schedule recommends a threshold for testing, and only if that threshold is exceeded, is there a violation of the rules of racing. Mr. Martin pointed to the reference in rule 61D-6.011 to rule 61D-6.008. He testified that what “struck him” about the Florida rules is that rule 61D-6.008 encompasses the controlled therapeutic list, but rule 61D-6.011(1) appears to provide the same penalty for any violation of a substance itemized in 61D- 6.008. This treatment is not consistent with ARCI’s penalty schedule, but Mr. Martin did not know whether Florida made a conscious decision to impose a different recommended penalty than what is contained in the ARCI Document, and did not know the intent of the drafters with respect to the rule.
