The Issue Whether Respondents violated the provisions of chapter 440, Florida Statutes, by failing to secure the payment of workers' compensation coverage, as alleged in the Stop-Work Orders, and, if so, what penalty is appropriate.
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. Respondents are gas station/convenience stores located in South Florida. Northlake was created by Nazma Akter on May 6, 2014. MB was created by Ms. Akter on March 23, 2010. Congress Valero was created by Muhammad Saadat on July 21, 2011. Hena was created by Ms. Akter and Abu Ahsan on December 14, 2011. Hayma was created by Ms. Akter on December 14, 2011. Blue Heron was created by Ms. Akter on August 4, 2009. At all times relevant hereto, Respondents were duly-licensed to conduct business in the state of Florida. On February 2, 2015, the Department's Compliance Investigator Robert Feehrer, began a workers' compensation compliance investigation of Gardenia, LLC. Investigator Feehrer called the number listed for Gardenia, LLC, and was provided with a corporate office address. On February 10, 2015, upon arrival at Gardenia, LLC's, corporate office located at 165 US Highway 1, North Palm Beach, Florida, 33408, Investigator Feehrer spoke with Operations Manager Mohammad Hossain. Mr. Hossain stated that Gardenia, LLC, was a paper corporation and existed only for the purpose of paying unemployment taxes on the "six stores." Mr. Hossain went on to provide Investigator Feehrer with a list of Respondents and names of the employees that worked at each store. As an employee of Gardenia, LLC, and Respondents, Mr. Hossain's statements are party opponent admissions and bind Respondents. Lee v. Dep't of Health & Rehab. Servs., 698 So. 2d 1194, 1200 (Fla. 1997). With Mr. Hossain's statements and the list of Respondents' employees, Investigator Feehrer then consulted the Division of Corporations website, www.sunbiz.org, and confirmed that Respondents were current, active Florida companies. Investigator Feehrer then consulted the Department's Coverage and Compliance Automated System ("CCAS") for proof of workers' compensation coverage and exemptions associated with Respondents. Investigator Feehrer's CCAS search revealed that Respondents had no workers' compensation policies and no exemptions. On February 24, 2015, Investigator Feehrer conducted site visits at each of the six stores. Ms. Akter and Mr. Hossain accompanied Investigator Feehrer during these site visits. At all times material hereto, Ms. Akter was a corporate officer or managing member of each of the six Respondents. Muhammed Saadat and Abu Ahsan were corporate officers or managing members of Congress Valero, Hena, and Blue Heron. Kazi Ahamed was a corporate officer or managing member of Congress Valero and Hayma. Kazi Haider and Mohammed Haque were managing members of Hayma. All received compensation from the companies with which they were involved. Although Investigator Feehrer only personally observed one employee working at each location during his site visits, the payroll records revealed that at least four employees (including corporate officers or managing members without exemptions) received compensation for work at each location during the relevant period. Investigator Feehrer required additional information to determine compliance, and with Respondents' permission, contacted Respondents' accountant. Investigator Feehrer met with the accountant at least two times to obtain relevant information prior to March 30, 2015. Upon Ms. Akter's authorization, the accountant provided tax returns and payroll information for Respondents' employees. Information from Ms. Akter and Mr. Hossain also confirmed the specific employees at each of the six stores during the period of March 30, 2013, through March 30, 2015. On March 30, 2015, based on his findings, Investigator Feehrer served six Stop-Work Orders and Orders of Penalty Assessment. The Stop-Work Orders were personally served on Ms. Akter. Mr. Hossain was present as well and confirmed the lists of employees for each of the six stores were accurate. In April 2015, the Department assigned Penalty Auditor Christopher Richardson to calculate the six penalties assessed against Respondents. Respondent provided tax returns for the audit period and payroll transaction details were provided, as well as general ledgers/breakdowns, noting the employees for each Respondent company. Based on Investigator Feehrer's observations of the six stores on February 24, 2015, Auditor Richardson used the classification code 8061 listed in the Scopes® Manual, which has been adopted by the Department through Florida Administrative Code Rule 69L-6.021(1). Classification code 8061 applies to employees of gasoline stations with convenience stores. Classification codes are four-digit codes assigned to various occupations by the National Council on Compensation Insurance to assist in the calculation of workers' compensation insurance premiums. In the penalty assessment, Auditor Richardson applied the corresponding approved manual rate for classification code 8061 for the related periods of non-compliance. The corresponding approved manual rate was correctly utilized using the methodology specified in section 440.107(7)(d)1. and rule 69L-6.027 to determine the final penalties. The Department correctly determined Respondents' gross payroll pursuant to the procedures required by section 440.107(7)(d) and rule 69L-6.027. On January 14, 2016, the Department served the six Amended Orders of Penalty Assessment on Respondents, assessing penalties of $1,367.06 for Northlake, $9,687.00 for MB, $12,651.42 for Congress Valero, $18,508.88 for Hena, $7,257.48 for Hayma, and $4,031.60 for Blue Heron. The Department has demonstrated by clear and convincing evidence that Respondents were engaged in the gasoline station, self-service/convenience store industry in Florida during the periods of noncompliance; that Respondents failed to secure the payment of workers' compensation for their employees, as required by Florida's Workers' Compensation Law; and that the Department correctly utilized the methodology specified in section 440.107(7)(d)1. to determine the appropriate penalties.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a consolidated final order upholding the Stop-Work Orders and the Amended Orders of Penalty Assessment in the amounts of $1,367.06 for Northlake Mobile Enterprises, Inc.; $9,687.00 for MB Food and Beverage, Inc.; $12,651.42 for Congress Valero, Inc.; $18,508.88 for Hena Enterprises, Inc.; $7,257.48 for Hayma Enterprises, Inc.; and $4,031.60 for Blue Heron BP, Inc. DONE AND ENTERED this 16th day of June, 2016, in Tallahassee, Leon County, Florida. S MARY LI CREASY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 2016.
The Issue Whether Respondent, John H. Woods, d/b/a Woods Construction, conducted operations in the State of Florida without obtaining workers’ compensation coverage which meets the requirements of Chapter 440, Florida Statutes (2008)1, in violation of Subsection 440.107(2), Florida Statutes, as alleged in the Amended Stop-Work Order and Order of Penalty Assessment and Second Amended Order of Penalty Assessment. If so, what penalty should be assessed by Petitioner, Department of Financial Services, Division of Workers’ Compensation, pursuant to Section 440.107, Florida Statutes.
Findings Of Fact Petitioner is the state agency charged with the responsibility of enforcing the requirement of Section 440.107, Florida Statutes, that employers in Florida secure the payment of workers’ compensation coverage for their employees. § 440.107(3), Fla. Stat. Workers’ compensation coverage is required if a business entity is engaged in the construction industry in Florida. Securing the payment of workers’ compensation coverage can be achieved via three different methods: purchase a workers’ compensation insurance policy; ensure that workers are paid and workers’ compensation coverage is provided by a third party entity called a Professional Employment Organization (PEO); or apply for a Certificate of Exemption from Workers’ Compensation Coverage (Exemption Certificate) assuming certain statutorily mandated criteria are met. These methods are not mutually exclusive of each other. On August 14, 2008, a workers’ compensation compliance investigator employed by Petitioner, visited a construction site in Lee County, Florida. On the site, she observed several groups of men conducting various construction activities including the laying of a sidewalk along Lexington Street in Fort Myers. The work performed involved construction activities as contemplated under the applicable agency rule. Fla. Admin. Code R. 69L-6.021. By a preponderance of evidence, it is determined that among the entities on the worksite was a group of three laborers who worked for Woods Construction. There was no proof of coverage for workers’ compensation for the Woods Construction Company, neither an insurance policy, nor any exemption certificate for the individuals encountered on the worksite. Woods Construction assumed that the three laborers were covered by Able Body Labor, a PEO. The evidence confirmed that two of the three laborers were covered. However, the third laborer, Filberto Castro, was unable to be included on the work roster due to his lack of corresponding documentation necessary for employment in the United States. Therefore, Castro was working without coverage. An SWO was issued and a Request for Production of Business Records for Penalty Calculation (BRR) was served on J. Woods Construction, Corp. [sic] on August 14, 2008. The SWO was later amended to conform to the correct name of the company, which is not a corporation. The amended SWO was served on John H. Woods on August 22, 2008, via certified mail. Pursuant to the BRR, Respondent provided business records to Petitioner. Petitioner’s Penalty Calculator’s duties are to receive records from the employer, and organize, identify, and audit those records which indicate payroll activities, while delineating other business activities, which may be related to the non-payroll activities of the business such as purchasing supplies, maintaining a place of business, etc. The characterization of the voluminous records received from Respondent were categorized into three distinct categories: reliable, somewhat reliable, and unreliable records. The records were characterized as “reliable” if they were records from an independent third party or the bank with whom Respondent conducted business, and were thus extremely difficult to alter without a high level of expertise. They are considered “source documentation.” The bank records capture the transactions as they occurred, to whom money was paid, and for what amount. The next category of records deemed “somewhat reliable” were those records which, on their face appear to be legitimate records, such as copies of the checks with corresponding amounts and dates to those in the “reliable” category. However, certain inconsistencies in these records demonstrated that they were less than reliable. These records were only used in select instances when there was corresponding source documentation supporting their veracity. A prime example, among many, is check number 1078 for $100.00 indicating a payment for a credit card; the corresponding checkstub indicates that the payment went to “Whitney,” a grand-child of John H. Woods. In toto, the documents illustrated that Respondent failed to follow generally accepted accounting principles by mislabeling or mischaracterizing funds on a regular basis. The third category of records were records which were considered “unreliable” as these records lacked any corresponding source documentation and they could not be considered in assessing the payroll activities of the firm. In the construction industry, there are instruments called “draw requests.” The draw request is an item that a subcontractor or builder will utilize to show partial completion of a project and concurrently request more funds (the draw) to complete the remaining portion of the project. The draw requests are often utilized at pre-measured stages of the project, e.g.: 25 percent completion, 50 percent completion, etc. The draw requests would have attached source documentation such as receipts from suppliers, servicers, and other miscellanea to show that the project is worked upon as opposed to the funds being siphoned off elsewhere. Nowhere, in the box full of records produced, was a proper draw request found with attached receipts. Therefore, none of the records produced could be considered as reliable documents. Many irregularities in Respondent’s methodology of accounting were also noted; as an example, there were numerous times that company checks from Respondent were deposited by an entity known as “Hendry Contracting,” without explanation. Respondent personally held the license as a General Contractor, and would utilize Hendry Contracting as a subcontractor. Hendry Contracting did not have any license whatsoever. It utilized Respondent’s license while performing construction activities. Brad Hendry, the principal of Hendry Contracting, is married to Janice Hendry, the daughter of John H. Woods, the owner of Respondent, Woods Construction. Janice Hendry administered Respondent’s company account and the company account of Hendry Contracting. The evidence is clear that no separation of duties was attempted. Furthermore, Hendry admitted that she did not exercise any sense of separation between the two different accounts (Woods Construction and/or Hendry Contracting). The two businesses were “commingled,” and the ability to retain any form of standard accounting requirement of checks and balances has been nullified. Numerous irregularities that defied “generally accepted accounting principles” appeared, including personal loans to family members, wholesale transfers of monies from Respondent to Hendry Contracting without explanation, and checks drafted to Brad Hendry (personally). Further, Woods testified that he exercised little or no control over his company in the last ten years. Hendry also confirmed the haphazard method of managing the two firms’ different accounts by writing checks from one firm to another, when the other firm’s account was running low. Hendry’s testimony regarding the financial cooperation of Respondent and Hendry Contracting is indicative of the commingling of accounts, as well. Hendry testified that each entity would draw on each other’s accounts depending on the cash levels within each respective account. Hendry also testified that Hendry Contracting was utilized for obtaining bank loans and utilizing Hendry’s name to purchase materials when the other accounts were depleted. By utilizing only the bank records, a general ledger for Respondent was constructed which derived the amounts that came into the business and the amounts paid out for labor. The fact that Respondent had no general ledger meant that some items would never be accounted for, such as building supply costs. Based on that caveat, Florida Administrative Code Rule 69L- 6.035(i) was applied to the total payroll derived from the bank records. This had the effect of reducing total payroll by twenty percent to account for building supplies (which were never accounted for due to the non-existent business ledger of Respondent). The amount of money flowing and commingling between the two firms (Respondent and Hendry Contracting) and among family members, numbered in the hundreds of thousands of dollars. The commingled money was utilized for all manners of payments: loans (not expected to be paid back) to family members, inflated wages to family members for de minimis services, or payment for services/goods for family members’ personal residences. A proposed penalty in the amount of $365,876.82 was originally assessed, as reflected in the AOPA, and served on Respondent on August 26, 2008. Based on further records produced and the understanding that Respondent was a construction firm but was unable to show any receipts of building supplies, the proposed penalty, utilizing Florida Administrative Code Rule 69L- 6.035(i), decreased the payroll by 20 percent to account for building supplies that were not documented. After consideration of the documents provided and application of the rule, a Second AOPA was prepared showing an assessment in the amount of $306,876.82. With Hendry as the sole financial officer of Respondent, approximately $351,632.43 of payroll was allocated to various family members. There was unambiguous testimony from Woods and Hendry that family members were employed in various roles, most notably the grand-daughters who were earning wages while conducting secretarial duties. A further $472,292.94 was paid to Hendry Contracting during the three-year audit time- period. Hendry Contracting never had any discernible workers’ compensation coverage for this amount of payroll, rendering Respondent liable for failure to secure workers’ compensation coverage for the monies paid. The remainder of the unsecured payroll assessed to Respondent was for various non-family workers for whom no proof of workers’ compensation coverage could be ascertained. The Second AOPA was computed by calculating Respondent’s payroll for the past three years using the business records Respondent provided. The payroll was then divided for each year by 100 and that figure was multiplied by an approved manual rate assigned to the classification codes (class codes) found in the National Council on Compensation Insurance’s Scope of Trade Manual (Scopes Manual). Class codes were assigned to the individuals listed on the penalty worksheet according to their historical duties. The grand-daughters and other female employees of Respondent were listed as clerical employees (classification code 8810), while the remaining names were listed as general carpentry workers (classification code 5645). Next, the product of the approved manual rate and the payroll for each year divided by 100 was then multiplied by 1.5, pursuant to statute, to derive the penalty for each year or part of a year. The penalties for each employee and year or part of a year were then added together to come up with a total penalty of $306,213.78. Based on the assessment of the financial records in conjunction with the documents admitted into evidence, the grand total of $306,213.78 is a true and correct penalty amount for Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Chief Financial Officer of the Department of Financial Services, Division of Workers’ Compensation, enter a final order: Finding that Respondent failed to secure the payment of workers’ compensation insurance coverage for its employees in violation of Subsections 440.10(1)(a) and 440.38(1), Florida Statutes; and Assessing a penalty against Respondent in the amount of $306,213.78, which is equal to 1.5 times the evaded premium based on the payroll records provided by Respondent and on the applicable approved manual rates and classification codes for the period extending from August 15, 2005, through August 14, 2008, as provided in Subsection 440.107(7), Florida Statutes. DONE AND ENTERED this 17th day of July, 2009, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of July, 2009.
The Issue The issue is whether Respondent was an employee engaged in the construction industry and required to obtain workers' compensation insurance while working on the roof of the Myakka Animal Clinic and, if so, what penalty should be imposed.
Findings Of Fact On August 24, 1998, Petitioner's investigator observed Respondent working on the roof of the Myakka Animal Clinic in Venice, Florida. At the time, Respondent was regularly employed by Paradise Roofing, Inc., where he had an exemption from workers' compensation insurance coverage. He has never previously been guilty of a violation of the workers' compensation laws. The contract price was $800. However, the evidence is conflicting as to the identity of the party that entered into the contract with the Myakka Animal Clinic. The veterinarian testified that her understanding of the agreement was that Respondent was to do the work, but, if any problems arose, he was not alone, and she could go to Paradise Roofing, Inc., to ensure that the labor and materials were satisfactory. Although there are other indications in the record that Respondent may have been working on his own on this job, there is sufficient conflict in the evidence that Petitioner has failed to prove that Respondent was doing the job as a self- employed person, rather than an exempt employee of Paradise Roofing, Inc. Respondent's understanding of the contractual relationship carries less weight than the veterinarian's understanding of this relationship.
Recommendation It is RECOMMENDED that the Division of Workers' Compensation enter a final order dismissing the Notice and Penalty Assessment Order and any related stop work order. DONE AND ENTERED this 2nd day of April, 1999, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 2nd day of April, 1999. COPIES FURNISHED: Edward A. Dion, General Counsel Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Mary Hooks, Secretary Department of Labor and Employment Security 303 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Louise T. Sadler, Senior Attorney Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Eric Kristiansen 3750 Aba Lane North Port, Florida 34287
The Issue At issue in this proceeding is the amount of reasonable expenses, including reasonable attorney’s fees, that should be awarded as a consequence of the filing of a claim for benefits under the Florida Birth-Related Neurological Injury Compensation Plan.
Findings Of Fact Background 1. Heather Nicole Hosken (Heather) is the natural daughter of Cynthia and Brian Hosken, and was born September 4, 1993, at Cape Canaveral Hospital, Cocoa Beach, Brevard County, Florida. 2. Within a few days of Heather’s birth, NICA was advised by the office of the "participating physician", who provided obstetrical services during Heather’s delivery, that she might qualify for coverage under the Plan. Consequently, NICA, through its executive director Lynn Dickinson, spoke with the Hoskens by telephone and, by letter of September 27, 1993, advised them as follows: Per our telephone conversation of this date, enclosed please find two medical information release forms. One of these forms is for the mother’s medical records, the other form is for your daughter’s medical records. Please complete these forms and return them to us, so that we may obtain medical records to assist you in filing a NICA claim. For your review, I am enclosing a copy of Section 766.301-766.316, Florida Statutes, which is the law that governs the Florida Birth-Related Neurological Injury Compensa- tion Association. zit you have any questions, please contact me. 3. Thereafter, Ms. Dickinson spoke with the parents by telephone and made arrangements to meet with them in the area of their residence; however, Mr. Hosken subsequently cancelled the appointment stating that he would contact Ms. Dickinson again in the future. Notwithstanding such advice, neither Ms. Dickinson nor NICA received any further contact regarding this potential claim until in or about April 12, 1994, when Mr. Frederick Feins’ office, now counsel for the Hoskens, contacted NICA to inquire about, inter alia, the procedure for filing claims. Finally, on June 8, 1994, Mr. Feins’ office again contacted NICA by telephone regarding the information needed for the claim (petition) for benefits, and NICA provided, by letter of June 8, 1994, a draft petition for counsel’s benefit. To further assist counsel, the letter provided: Dear Mr. Fein: 4 Enclosed is a draft petition which may be used for your convenience. Please complete and forward to Ann Cole, Division of Administrative Hearings, 1230 Apalachee Park- way, Tallahassee, Florida 32399-1550 along with $15.00 (payable to Division of Administrative Hearings) for the filing fee. Please send us a courtesy copy along with completed medical authorization release forms for the mother and the infant. We have enclosed blank authorization forms for your convenience. Please send us a complete copy of the mother’s prenatal records, labor and delivery records and a copy of the baby’s nursery notes/records. Please do not delay filing your claim while waiting for records or bills. We can obtain them for you. We will also request all outstanding bills. If you have any questions or if I may assist you in any way to expedite this or any other claim, please contact me. 4. On June 27, 1994, Mr. Fein, on behalf of the claimants, filed a petition with the Division of Administrative Hearings ("DOAH") for compensation under the Florida Birth-Related Neurological Injury Compensation Plan (the "Plan"), and on or about July 12, 1994, DOAH served the Florida Birth-Related Neurological Injury Compensation Association ("NICA") with a copy of the claim. The petition that was filed substantially mirrored the draft petition NICA had provided petitioner’s counsel. 5. Respondent, NICA, following service of a copy of the petition, evaluated the claim and arranged for a _ medical examination to assess whether Heather was currently "permanently and substantially mentally and physically impaired" so as to qualify for benefits under the Plan. That examination was conducted by Michael Duchowny, M.D., a pediatric neurologist associated with Miami Children’s Hospital, on September 20, 1994, and he rendered his report to NICA on or about September 26, 1994, concluding that Heather’s "neurologic examination reveals evidence of a profound developmental delay affecting both motor and cognitive functioning. [Heather] has not progressed past the newborn and the prognosis for neurologic function is extremely guarded. I believe that her deficits are relatively fixed and that the long term prognosis is extremely poor." 6. Following its receipt of Dr. Duchowny’s report, NICA determined the claim to be compensable, and by letter of October 7, 1994, advised claimants’ counsel as follows: Dear Mr. Fein: As per Section 766.305(3), Florida Statutes, the Association agrees that Heather Hosken suffered a birth-related neurological injury as defined in Section 766.302(2), Florida Statutes. A copy of Dr. Duchowny’s medical evaluation is attached. We are prepared to provide medical benefits as provided by Section 766.31(1) (a) and are willing to offer the full $100,000.00 as provided in Section 766.31(1) (b). Please forward to this office, your detail of time and expense records for the above stated claim so that we may reach agreement on reasonable attorney’s fee and costs as per Section 766.31(1)(c), Florida Statutes. Also, please contact me so that we may discuss how the funds will be disbursed. Moreover, on November 4, 1994, NICA telefaxed a draft stipulation to claimants’ counsel so NICA’s agreement to accept the claim for compensation could, consistent with the provisions of Section 766.305(6), Florida Statutes, be approved by the Hearing Officer. 7. A stipulation, which substantially comported with the draft stipulation forwarded by NICA, was ultimately executed by the parties on December 29, 1994, and filed with DOAH on January 6, 1995. By final order of January 17, 1995, the stipulation was approved by the Hearing Officer, and all disputes between the parties were resolved with the exception of the amount of reasonable expenses, including attorney’s fees, that should be awarded. The claim for attorney’s fees and_expenses 8. Pertinent to the claim for attorney’s fees, the time records of the law firm of Thornton, Davis & Murray, P.A., counsel for petitioners, reflect that from March 18, 1994, to January 30, 1995, the following time had been logged, by the individual indicated, on petitioner’s file: NAME HOURS LOGGED Calvin F. David (attorney) 12.00 Frederick J. Fein (attorney) 127.75 Holly S. Harvey (attorney) 43.50 Jeffrey B. Shalek (attorney) 6.00 Jinny E. Anderson (paralegal) -50 Naomi G. Berjah (paralegal) 29.00 [Petitioner’s exhibit 1).? 9. At hearing, Mr. Fein acknowledged that some of the hours contained in the firm’s time records should not be considered as an expense of pursuing the claim, including the hours spent negotiating a fee agreement with the federal government to pursue a claim against NICA to recover benefits paid by the government, researching the entitlement to fees under the Federal Medical Recovery Act, conversations with referral counsel regarding the status of the claim, and any time expended in seeking recovery of attorney’s fees in this proceeding. 10. The actual entries or hours that Mr. Fein conceded were not germane to the claim were not identified at hearing but, post-hearing, Mr. Fein submitted a proposed "order awarding attorney’s fees and costs" which reflected a claim for 122.00 hours on behalf of Mr. Fein as opposed to the 127.75 hours reflected on the time records for the period of March 18, 1994, to January 30, 1995. No time was deducted for any other attorney or paralegal. The "order" did not, however, identify the entries to which the 5.75 hour reduction related, and the reduction made falls far short of the time identified by Mr. Fein’s expert as excludable or, on examination of the time records, is suspect and remains unexplained. li. Here, substantial time has been dedicated to reviewing the time records entry by entry, and line by line. Based on that review, it must be concluded that the time logged is grossly excessive for this NICA claim and includes a substantial amount of time that is inadequately explained or unrelated to the NICA claim. 12. In concluding that the time logged is excessive for this NICA claim, it is observed that the claim was straight- forward, lacked any novel aspects, and the earliest medical reports disclosed that Heather was profoundly impaired, mentally and physically. Moreover, NICA assisted the claimants in filing the claim, expeditiously processed the claim, promptly accepted the claim for compensation, and, but for the claim for attorney's fees, did not contest any matter regarding compensability or benefits. 13. The reliability of the time logged or, stated differently, the reliability of the records as an accurate indication of the time reasonably dedicated to the claim, is further rendered suspect based on the firm's practice of recording all time in quarter (.25) hour segments. This practice, particularly when coupled with the firm’s practice of lumping every task performed on a given day by a lawyer or paralegal into a single entry, leads to inflated hours and unreliable records.° 14. Among the time that is facially unrelated to the NICA claim is that time logged between August 4, 1994, and December 13, 1994, wherein the time records reflect numerous entries by Mr. Fein, Jeffrey P. Shalek, Holly S. Harvey, and J.E. Anderson, for work related to representing the federal government in pursuit of a claim against NICA and research related to the Federal Medical Recovery Act which, based on the context of those entries, each with the other, is clearly related to the federal representation and not to the NICA claim.* 45. First, with regard to the time recorded by Jeffrey P. Shalek on August 4, September 20, and September 28, 1994, totaling 6.00 hours, such time is patently related to the federal claim. Second, with regard to the time recorded for Holly Ss. Harvey between November 10 and November 22, 1994, in the amount of 43.50 hours, such time is all related to researching the Federal Medical Recovery Act and when read, particularly in conjunction with Mr. Fein’s time, is patently related to the federal claim.°? Third, with regard to the time recorded for g.E. Anderson of November 30 and December 13, 1994, totalling .50 hours, it is observed that the entry of December 13, 1994, for .25 hours again patently relates to the federal claim. The other entry for J.E. Anderson of November 30, 1994, of one-quarter (.25) hour for “update of pleading index" is rejected as de minimus, not shown to be related to the NICA claim, and not shown to have been necessary. 16. Next, with regard to the time recorded by Calvin F. David, totaling 12.00 hours, it is observed that the time recorded for April 6, August 4, August 9, August 30, and October 14, 1994, totaling 4 hours, did not reasonably relate to the NICA claim but, rather, related to the federal representation, revising the contingency contract with the client, and a review of the "charges printout." 17. Finally, as to the time recorded by Mr. Fein that did not reasonably relate to the NICA claim, are the time charges of March 23 (11.00 hours), August 4 (3.00 hours), August 10 (1.00 hour), August 30 (2.00 hours), September 19 (.50 hours), September 30 (.50 hours), October 5 (.50 hours), October 14 (2.00 hours), October 19 (2.50 hours), October 21 (1.00 hour), October 24 (1.00 hour), October 31 (1.50 hours), November 1 (2.00 hours), November 3 (.50 hours), November 7 (.50 hours), November 18 (1.00 hour), November 22, 1994 (1.00 hour), and January 24, 1995 (1.00 hour). As to the March 23, 1994, charge of 11.00 hours, it relates to "Travel to Melbourne. Attendance at meeting with Wolfman and plaintiffs. Travel back to office." Notably, the infant was born in Brevard County, petitioners reside in Brevard County, and there was no showing that competent or able counsel was not available in that area. Given that proper venue was Brevard County, Section 766.307(1), Florida Statutes, and there was no showing that counsel was unavailable in that area to 10 represent petitioners, travel time cannot be recovered. See, In re Florear, Inc., 16 B.R. 726 (S.D. Fla. 1982). Moreover, since there is no proof of record as to how long the conference took with the clients, that item cannot be separately addressed. As for the time recorded for January 24, 1995, that was a status conference with referring counsel and, considering it occurred after resolution of the claim, there was no proof that it was relevant to the filing of the claim. As to the remaining hours, they were facially incurred with respect to anticipated representation of the federal government on claims against NICA, or were so intertwined with those claims as not to be divisible. Accordingly, petitioners have failed to demonstrate that these 32.50 hours were reasonably expended in pursuit of the claim for compensation. ° 18. Reducing the hours claimed, as set forth in paragraph 8, by the foregoing hours that are clearly objectionable, leaves the following hours, by individual, that must still be addressed. NAME HOURS Calvin F. David (attorney) "8.00 Frederick J. Fein (attorney) 97.25 Naomi G. Berjah (paralegal) 29.00 19. With regard to the entries made for Ms. Berjah, as well as those for Mr. David and Mr. Fein that have not heretofore been rejected, the firm’s practice of lumping every task performed on a given day by the lawyer or paralegal into a single entry with only the gross hours noted for the day, renders it impossible to discern, absent further explanation, the time dedicated to any particular task. Moreover, such practice, when Mr. Fein’s 11 entries include tasks which are not related to the NICA claim, such as representing the federal government, conferring with the referring attorney regarding the status of the case, preparing contingency contracts, or exploring the possibility of opting out of NICA through the "bad faith" exception or otherwise, ’ renders it impossible, absent speculation, to derive an accurate picture of the hours dedicated to the NICA claim. 20. The unreliability of the firm’s time records, as a gauge of the number of hours reasonably expended in pursuit of the NICA claim, is, as heretofore noted, intensified by the firm’s practice of recording all time in quarter (.25) hour segments. This practice, by its very nature, leads to inflated hours and unreliable records. 21. In reaching the foregoing conclusions, the expert opinion of Michael Eidson, Esquire, has not been overlooked. His conclusion as to the relationship of the time claimed to the subject claim, as well as the necessity and reasonableness of the time expended, is not, however, persuasive. Indeed, Mr. Eidson assumed the number of hours recorded related to the claim for compensation and, essentially, accepted the integrity of the number of hours claimed; however, when made aware, he readily conceded that time recorded incident to, inter alia, representing the federal government was not relevant to the NICA claim. Accordingly, since the record demonstrates that much of the time expended was not relevant to the NICA claim and that the firm’s time records are otherwise not reliable, Mr. Eidson’s opinion that the hours claimed were reasonably and necessarily expended is rejected. 12 22. Given the proof, the testimony of John Kelner, Esquire, is credited, and his opinion that the reasonable number of hours necessarily required to pursue this simple claim for compensation benefits was between 20 and 40 hours is accepted. Giving petitioner’s counsel the full benefit of doubt, and considering his relative inexperience, 40 hours are found to be reasonable in this case. 23. The next consideration in establishing a reasonable fee is the determination of the market rate" or prevailing hourly rate, or range of hourly rates, charged in the community by lawyers of reasonably comparable skill, experience and reputation, for similar services. 24. In deriving the market rate, careful consideration has been accorded the hourly rates referenced in the affidavit of Mr. Fein for the lawyers and paralegals employed by his firm. {Petitioners’ exhibit 1] Those rates are, however, excessive, and bear no reasonable relationship to the prevailing rate in the community, when the fee basis is hourly billing for time worked. 25. With regard to Mr. Fein, the $210.00 hourly rate he seeks to ascribe to his services is patently not a real world rate but, rather, an in-house rate used in contingency fee cases where his contract with the client accords him the option of a contingency percentage or a court awarded reasonable fee, which even is higher, at his option. That rate is clearly illusory since it bears no reasonable relationship to the market rate in the community or to those cases Mr. Fein has handled on which the fee basis is hourly billing for time worked. In such cases, 13 which Mr. Fein describes as insurance defense, he has billed "as high as 185 an hour and ... as low as 155 an hour." Given that Mr. Fein was not admitted to the Florida Bar until 1989, has yet to be lead counsel on any case that has been tried, and bills in quarter hour segments, it is doubtful that he could even command that rate. 26. As for the rates ascribed to the other attorneys, with the exception of Calvin David, and paralegals who worked on this case, as set forth in Mr. Fein’s affidavit, they suffer the same disparities and bear no reasonable relationship to the market when the fee basis is hourly billing for time worked. 27. Given the record, the proof offered on behalf of petitioners is rejected as unpersuasive, and the opinion of John Kelner that the range of rates in the community for similar services, considering the experience of the personnel who worked on this claim, would be a blended or mixed fee of $100.00 to $150.00 per hour. Here, a mixed rate of $150.00 per hour is accepted as a reasonable rate in the community for the services rendered, 28. Finally, petitioners’ attorneys incurred certain expenses for which they seek recovery as reasonably incurred in connection with pursuing the claim for compensation. Such costs total $5,354.42. ([Petitioners’ exhibit 1] NICA does not object to the filing fee of $15.00, medical expert fee of $1,050.00, cost for obtaining the medical records of Dr. Pettit of $10.00, and copy service charge of $2,256.40 incurred between May 4, 1994, and September 27, 1994, for Heather’s medical records. 14 Accordingly, such expenses totaling $3,331.40 are awarded, without further discussion. 29. The expenses opposed by NICA are (1) courier service fees of $40.95, (2) mileage expense of $7.43, (3) copy service expense of February 14, 1995, of $266.50, (4) travel expenses of $281.64 for Mr. Fein’s trip to Orlando, (5) the cost of photocopies at the firm of $687.90, (6) phone charges of $395.06, (7) postage of $53.54, and (8) the cost of Westlaw research of $290.00. As to items (1), (2), (Ss), (6), (7), and (8), there was no independent proof as to what services these expenses were incurred for and, therefore, the reasonableness of the amount or the need to incur those expenses has not been established. Moreover, it is as likely that they were incurred incident to the firm’s efforts to represent the federal government as its representation of petitioners and, if mixed, which is likely, cannot be allocated. As to item (3), the copy services of February 14, 1995, it is observed that such expense was incurred subsequent to the resolution of petitioner’s claim. Accordingly, there being no other showing concerning that cost, its relevance to the claim or reasonableness has not been shown. As to item (4), the travel expenses of Mr. Fein’s trip to Orlando, such is presumed to refer to his meeting with his clients in Melbourne on March 23, 1994. Consistent with the conclusion that time spent traveling to meet with his clients is not recoverable, so also is the conclusion that the travel expense is not recoverable. In re Florcar, Inc., 16 B.R.- 726 (S§.D. Fla. 1982). Accordingly, none of the expenses to which NICA has objected are recoverable. 15 The "cap" or maximum award of attorney’s fees and expenses recoverable in this case 30. Pursuant to the provisions of Section 766.31(1) (c), Florida Statutes, petitioners are entitled to recover and NICA is obligated to pay reasonable expenses incurred in connection with the filing of the claim, including reasonable attorney’s fees. In establishing the award of attorney’s fees, the Hearing Officer is constrained to base such award on the six factors contained in subsection 766.31(1)(c), discussed infra. 31. Here, notwithstanding petitioners’ entitlement to an award of reasonable attorney’s fees and expenses as prescribed by statute, the proof demonstrates they entered into a contingency fee contract with Mr. Fein’s firm. Pursuant to that agreement, following resolution of their claim, they resolved their obligation for fees and expenses to the firm by payment of 33 1/3 percent of the $100,000 they received in compensation of the claim. According to Mr. Fein, his firm has recovered all attorney’s fees and expenses from petitioners to which the firm is entitled or petitioners are obligated to pay, and that whatever is awarded here is to be paid to petitioners as reimbursement. 32. Given such circumstances, the maximum award that could be made in this case is an award for expenses, including reasonable attorney’s fees, not to exceed a total award of $33,333.00, and not the fee award of $46,345.00 and expense award of $5,591.25 sought at hearing. (Petitioner's proposed order, page 3]. See, Lane v_ Head, 566 So.2d 508 (Fla 1990), Florida Patient’s Compensation Fund v. Rowe, 472 So.2d 1145, 1151 (Fla. 16 1985), Government Employees Insurance Co. v. Robinson, 581 So.2da 230 (Fla. 3d DCA 1991), Erickson Enterprises, Inc. v- Louis Wahl & Sons, 422 So.2d 1085 (Pla. 3d DCA 1982), and Trustees of Cameron -. Brown Investment Group v. Tavormina, 385 So.2d 728 (Fla. 3d DCA 1980). Given the award made, such restraint is not, however, significant to these proceedings.
Conclusions For Petitioners: Frederick J. Fein, Esquire Thornton, Davis & Murray, P.A. World Trade Center, Suite 2900 80 Southwest Eighth Street Miami, Florida 33130 For Respondent: David W. Black, Esquire Atkinson, Diner, Stone, Black & Mankuta, P.A. Post Office Drawer 2088 1946 Tyler Street Hollywood, Florida 33022-2088
Other Judicial Opinions A party who is adversely affected by this final order is entitled to judicial review pursuant to Sections 120.68 and 766.311, Florida Statutes. Review proceedings are governed by the Florida Rules Of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Agency Clerk Of The Division Of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the appropriate District Court of Appeal. See, Section 120.68(2), Florida Statutes, and Florida Birth-Related Neurological Injury Compensation Association v. Carreras, 598 So.2d 299 (Fla. ist DCA 1992). The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. 23
