The Issue The issue in this case is whether Respondent failed to provide workers' compensation insurance coverage for employees, and, if so, what penalty should be assessed.
Findings Of Fact Petitioner is the state agency responsible for, inter alia, monitoring businesses within the state to ensure that such businesses are providing the requisite workers' compensation insurance coverage for all employees. The Division's headquarters are located in Tallahassee, Florida, but its investigators are spread throughout the state in order to more effectively monitor businesses. Respondent is a construction company that has been operating in excess of 30 years. It is a small company and usually only has a few employees at any given time. The company is located in Charlotte Harbor, Florida. Workers' compensation coverage is required if a business entity has one or more employees and is engaged in the construction industry in Florida. Workers' compensation coverage may be secured via three non-mutually exclusive methods: 1) The purchase of a workers' compensation insurance policy; 2) Arranging for the payment of wages and workers' compensation coverage through an employee leasing company; or 3) Applying for and receiving a certificate of exemption from workers' compensation coverage, if certain statutorily-mandated criteria are met. On January 8, 2009, Ira Bender, investigator for the Division, was doing on-site inspections in Port Charlotte, Florida. Bender stopped at the site on Edgewater Drive where new construction was underway at a YMCA. Bender observed a man (later identified as Thomas Woodall) sweeping the floor. Bender questioned Woodall and was told that Woodall worked for Respondent. When asked about his workers' compensation insurance coverage, Woodall advised that his insurance was maintained through Frank Crum Leasing Company ("Crum"). Bender called Crum and found that although Woodall had been carried as an employee of Respondent in the past, he had been released from coverage. The reason for his release was that his employment had been terminated for lack of business. Bender called Respondent to inquire about workers' compensation coverage. He was told that Respondent did not realize Woodall had been dropped from the Crum insurance coverage and that he would be reinstated immediately. In fact, coverage was restarted on that same day. Based on his finding that an employee had been working without coverage, Bender called his supervisor and provided his findings. The supervisor authorized issuance of a SWO based on the findings. The SWO was served on Respondent via hand- delivery at 11:45 a.m., on January 8, 2009. The SWO was also posted at the work site. The Division then requested business records from Respondent in order to determine whether there were any violations. If there were violations, then the Division would ascertain the amount of penalty to assess. Respondent cooperated and submitted the business records, as requested. After review of the business records, the Division issued its first Amended Order of Penalty Assessment ("Order") on January 14, 2009. The process employed by the Division was to locate all uncovered employees, i.e., those working without workers' compensation insurance for any period of time. The employees were then assigned a class code from the National Council on Compensation Insurance (NCCI) publication. Each trade or type of employment is assigned a code which sets the rate to be applied to an individual depending on the type of work he/she is performing. The Division assigned codes to the employees, determined how much the employee had been paid during the period of non-coverage, assigned the rate to the gross pay, and calculated the insurance premium needed to cover the worker for the time in question. A penalty of 1.5 times the premium was then assigned. The Order assessed a total penalty of $21,165.98 against Respondent. Respondent objected to the amount and refused to sign it due to errors contained in the Penalty Worksheet attached to the Order. Signing the Order would have allowed Respondent to return to work, but he refused to sign because he knew it was not correct. Pursuant to discussions between the parties and "additional records received," the Division issued a second Order on January 16, 2009, assessing a penalty of $6,501.27. Respondent believed that the Division was still in error and provided yet additional information--some verbal--to the Division. A third Order was issued on January 21, 2009, reducing the penalty to $3,309.56. However, Respondent still believed the penalty worksheet contained errors. Again, Respondent refused to sign and provided additional information to the Division. The Division issued a fourth Order on January 28, 2009, assessing a penalty of $2,822.24. That Order had an error concerning the spelling of an employee's name, but the penalty amount was correct. Respondent would not sign the fourth Order, because he did not believe he had intentionally violated any statute or rule concerning workers' compensation coverage for his employees. A corrected (fifth amended) Order was ultimately issued on May 19, 2009.1 The fifth Order asserts the amount of penalty now in dispute, which is the same amount appearing in the fourth amended Order. Respondent signed the fifth Order and entered into a payment plan for payment of the penalty, paying a down payment of $1,000 and monthly payments of $30 until paid in full. Respondent takes great offense to the fact that the penalty assessments were not faxed to him more quickly. He maintains that he had every intention to resolve this matter as quickly as possible, but the Division delayed and dragged out the process. The penalty worksheet attached to the fifth Order listed nine "Employee Names" that are subject to the penalty assessment. Each will be discussed below. The first "employee" is listed as "Cash" and is assigned Class Code 5403. This "employee" represents checks found in Respondent's records with the payee listed as "cash- casual labor" totaling $2,178.00 in gross payroll. Code 5403 was assigned because that is the code used by Crum for Respondent's general business. The manual rate for Code 5403 is $24.74. A penalty of $808.26 was assessed for that employee. The second employee is Jacob Prewitt. Prewitt was assigned Class Code 5221, due to the word "driveway" appearing on a check issued to him. Driveway work falls under a lower approved manual rate ($10.37) than general construction. The gross payroll amount was $1,960, and the penalty assigned to Prewitt was $304.88. The third employee is Woodall, assigned a Class Code of 5606, with a manual rate of $3.84. That code is used for supervisors and is, again, not as dangerous an occupation as general construction. The gross payroll for this entry was $1,008, and the penalty assessed for Woodall was $58.07. Cash is the fourth employee and has been covered in the discussion in paragraph 16, above. Barry Lawrence is the fifth employee; he is assigned Class Code 5437 as a cabinet maker/installer with a manual rate of $13.01. Lawrence had a Verification Letter issued by the Division indicating he was exempt from workers' compensation coverage. However, that exemption was limited to cabinet- making. By installing the cabinets, Lawrence performed work outside his exemption status. The gross payroll for his work was $6,200, and the penalty assessed for Lawrence was $1,209.33. Respondent was completely unaware that the exemption letter did not cover installation and had, in fact, always allowed cabinet- makers to install the cabinets as well. Brunderman Builders is listed as the sixth employee. It is assigned Class Code 5403 with a manual rate of $14.39. The gross payroll for this entry was $550, resulting in a penalty assessment of $118.73. The seventh employee is Jorge Gonzolas, assigned Class Code 5403, the general contracting code. Gonzolas was the employee of a contractor who was subcontracting with Respondent. The contractor died unexpectedly, and Gonzolas was left without payment for the work he had performed. Respondent generously decided to pay Gonzolas for his work, thereby, effectively making Gonzolas a de facto employee. The amount paid Gonzolas was $599.00; the penalty assessed for Gonzolas was $129.30. Woodall is again listed as employee number eight, this time with Class Code 5610, reflecting casual labor he did on one date that his insurance was not in place. The payroll amount for this work was $37.50. The penalty assessed for Woodall was $4.02. The ninth employee was Julio Garcia, assigned Class Code 8742 for outside sales, with a manual rate of $.64. The payroll amount for Garcia was $1,300. His penalty assessment amount was $12.48. Garcia was another one of the deceased subcontractor's employees that Respondent volunteered to pay for work Garcia had performed. The total payroll at issue for Respondent was $14,477.50. The total premium for that amount of payroll would have been $1,881.48, and the penalty assessed was $2,822.84. This is a fairly insignificant portion of Respondent's $5.5 million annual payroll. Respondent did not intentionally attempt to avoid the payment of workers' compensation insurance for its employees. There is no pattern of avoidance or indication that non-payment was Respondent's goal. Rather, there are plausible and reasonable explanations about the unpaid premiums. For Woodall, Respondent believed he was still covered through the Crum policy. For Gonzolas and Garcia, Respondent was simply attempting to be a nice guy. For Prewitt, the employee's exemption had unknowingly lapsed. For Lawrence, Respondent relied upon a Verification Letter from the state, but misinterpreted its scope. The Division, on the other hand, only pursued Respondent based on an actual finding of non-coverage. But for Woodall's presence at a work site doing manual labor (sweeping the floor), the Division would not have looked at Respondent's records. There is no indication the Division acted other than in strict accordance to its governing rules.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Financial Services, Division of Workers' Compensation, upholding the assessment of a penalty of $2,822.24 against Respondent, Brunderman Building Company, Inc. DONE AND ENTERED this 9th day of October, 2009, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of October, 2009.
The Issue Whether or not Respondent violated provisions of Chapter 626, Florida Statutes, as more specifically alleged in the Administrative Complaint dated August 9, 1991.
Findings Of Fact Petitioner, the Department of Insurance and Treasurer, is the regulatory agency which is authorized to, and regulates the insurance industry in the State of Florida. Respondent, Shirley Ann Cramer, during times material, was licensed by Petitioner as a Series 218 and 220 licensee (life and health and property and casualty insurance), respectively. On September 28, 1990, Petitioner entered a final order imposing a disciplinary suspension for a period of one year effective September 28, 1990 (Case No. 89-L-413RCB) of all licenses issued to Respondent. On October 13, 1990, Respondent's counsel, John Waller, advised Respondent that Petitioner had suspended her license and that he would appeal the matter if she desired, however he advised that to do so would require a substantial cash outlay. Waller suggested that they consider that option, and, to that end, Respondent scheduled an appointment to discuss whether or not an appeal would be feasible. Waller advised Respondent that she had until October 28, 1990, to file her appeal. Respondent received a copy of the final order on or about October 25, 1990. Respondent ordered a copy of that order from Petitioner, by Federal Express delivery. On the following day, October 26, 1990, Respondent filed a pro se notice of appeal and submitted the necessary filing fee of $250. Subsequent thereto, Respondent contacted another attorney who had been formerly employed by the Department of Professional Regulation, Drucilla Bell, and the possibilities of an appeal was discussed with Ms. Bell. During late December, a fee arrangement was agreed upon, and Respondent paid Bell a down payment of $2500 to initially file a brief and a motion to stay the suspension pending the outcome of the appeal. Motions to stay the suspension were filed, both with Petitioner and with the Second District Court of Appeal. On February 6, 1990, Petitioner entered an order denying a stay of the final order, and on February 8, 1990, Respondent's counsel, Bell, filed a Petition For Supersedeas response to the Petition In Opposition To Stay Pending Appeal in the Second District Court of Appeal wherein she requested a grant of her motion. On February 14, 1991, the Second District Court of Appeal denied Respondent's Petition For Supersedeas. On October 10, 1990, Respondent, based on a referral by an associate, Gary Bingham, contacted Kenneth Newsome, the owner of Apollo International Incorporated, d/b/a Alpha Metal Products, located in Clearwater, Florida (herein Apollo) for the purpose of obtaining workers' compensation insurance. To that end, on October 17, 1990, Respondent received a premium payment check from Apollo in the amount of $5547.22 for workers' compensation insurance. Respondent initiated efforts to place coverage for Apollo by working up a rate quote based on the Form 940's which were submitted by Apollo's bookkeeper. Apollo's check was returned for insufficient funds after being deposited in the account of Respondent's insurance agency, A.S.A.P. On or about November 28, 1990, Apollo provided Respondent another check in the amount of $3000 as a premium payment for Apollo's workers' compensation insurance. That check was also deposited in A.S.A.P.'s account which was a premium trust account for customer funds. On two occasions during December 1990, to wit, December 6 and December 27, the balance on that account went below $3000. After receiving the $3000 check as payment toward Apollo's insurance, Respondent advised Apollo's owner, Newsome, that an additional premium was due based on an audit of the most recent Form 940's by the issuing carrier, the Florida assigned risk plan, and Newsome complained about the payment of any additional premium monies. During this period of time, Respondent received two telephone calls from entities who needed verification that Apollo had in fact obtained workers' compensation insurance. Respondent took those calls and advised the inquirers that a procedure was in place to obtain that coverage for Apollo. On October 7, 1990, when Agent Bingham advised Respondent that Apollo needed assistance in obtaining workers' compensation insurance she was being visited by Horace Smith, an insurance producer who was making a routine call and trying to market new business. Mr. Smith is a marketing manager for Guardian Property and Casualty, TransFlorida Casualty Insurance Company. Mr. Smith is the holder of an 055 series administrative license. Smith has been licensed in Florida since 1946. Smith has known Respondent approximately 18 years. Smith visited with Respondent at the Apollo site to determine whether or not that risk would be a coverage that his company was interested in writing. Smith inspected Apollo's premises and indicated a possibility of writing the commercial auto and commercial fire and general liability for Apollo when the existing coverage expired. Throughout the course of events, Respondent was under the impression both from her counsels Waller and Bell, that she could continue writing business during the pendency of her appeal. Respondent did not engage in any further acts of transacting insurance business other than the Apollo workers' compensation account. Respondent's failure to place insurance for Apollo was based on Apollo's failure to pay the premiums due. Respondent returned the unused premium to Apollo, although there was a slight delay in doing so. In this regard, Respondent had made repeated requests to Apollo to submit the additional premium monies, and within a month after the last demand was made and when the premiums were not remitted, Apollo received a return premium payment from Respondent within 30 days. Respondent attempted to complete the application for the Apollo worker's compensation insurance coverage. To this end, she visited the site and used all the documentation necessary to prepare a quote which was based on the requisite payroll information supplied by Apollo. The Apollo transaction was initiated prior to Respondent's receipt of the Final Order suspending her licenses.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Petitioner enter a final order dismissing the Administrative Complaint filed herein. DONE AND ENTERED this 25th day of June, 1992, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of June, 1992. APPENDIX Rulings on Petitioner's proposed findings: Paragraph 1, adopted as modified, Paragraphs 1, 2, and 3, Recommended Order. Paragraph 2, Recommended Order. adopted as modified, Paragraph 4, Paragraph 6, Recommended Order. adopted as modified, Paragraph 6, Paragraph 8, Recommended Order. adopted as modified, Paragraph 9, Paragraph 9, rejected, contrary to the weight of evidence, Paragraphs 7, 11 and 18, Recommended Order. Paragraph 10, adopted as relevant, Paragraph 19, Recommended Order. Remainder rejected as contrary to the greater weight of evidence, Paragraphs 7, 11, 12, 14 and 18, Recommended Order. Paragraph 11, rejected, unnecessary. Rulings on Respondent's proposed findings: Respondent's proposed findings are accepted and are substantially incorporated in this Recommended Order. Proposed findings not found herein were deemed irrelevant and were unnecessary to resolve the issues posed. COPIES FURNISHED: David D. Hershel, Esquire Department of Insurance and Treasurer 412 Larson Building Tallahassee, FL 32399-0300 Peter C. Clement, Esquire 2650 Tampa Road, Suite A Palm Harbor, FL 34684 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, FL 32399-0300
The Issue The issues in this proceeding are whether Respondent, Mark Dunlap, d/b/a Mark Dunlap Masonry of Central Florida, Inc., a dissolved Florida corporation, and Mark Dunlap Masonry of Central Florida, Inc. ("Respondent") failed to abide by the coverage requirements of the Workers' Compensation Law, chapter 440, Florida Statutes, by not obtaining workers' compensation insurance for its employees; and whether the Petitioner properly assessed a penalty against the Respondent pursuant to section 440.107, Florida Statutes.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following findings of fact are made: The Department is the state agency responsible for enforcing the requirement of the workers' compensation law that employers secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107(3), Fla. Stat. Respondent operates a masonry business located in Paisley, and is therefore engaged in the construction industry. On January 8, 2010, Hector Beauchamp, the Department's investigator, received a referral alleging that Respondent was working at 1601 Tillery Drive in Deltona, in violation of the Workers' Compensation Law. Mr. Beauchamp visited the plans examiner for the City of Deltona, who confirmed that a building permit had been issued for the cited address. Mr. Beauchamp drove to 1601 Tillery Drive in Deltona, where he found four people behind the house building a block wall as part of an addition to the single-family house at that address. Mark Dunlap was on the site, and told Mr. Beauchamp that the four men worked for his business, Mark Dunlap Masonry of Central Florida, Inc. Mr. Dunlap subsequently identified the four persons working on the site as Wayne Sochocki, Kevin Copeland, Annie Blackburn, and David Allen Baxley. Mr. Beauchamp researched the database maintained by the Department of State, Division of Corporations (accessible at www.sunbiz.org) and learned that Mark Dunlap Masonry of Central Florida, Inc. had been administratively dissolved for failure to file an annual report on September 25, 2009. Mr. Beauchamp also learned that Mr. Dunlap had owned another Florida corporation, Mark Dunlap Masonry, Inc., that had been administratively dissolved for failure to file an annual report on September 16, 2005. According to the Division of Corporations' information, both Mark Dunlap Masonry of Central Florida, Inc., and Mark Dunlap Masonry, Inc., had the same Federal Employer Identification Number ("FEIN") of 030531755. Mr. Dunlap claimed to Mr. Beauchamp that he was himself exempted from carrying workers' compensation coverage, but admitted that he had not secured coverage for the four employees building the block wall at 1601 Tillery Drive. Mr. Beauchamp consulted the Department's Coverage and Compliance Automated System ("CCAS") database, which lists the workers' compensation insurance policy information for each business as provided by the insurance companies, as well as any workers' compensation exemptions for corporate officers. CCAS indicated that in previous years Respondent had secured workers' compensation insurance through a leasing arrangement with Employee Leasing Solutions ("ELS"). In an employee leasing arrangement, the leasing company hires an employer's workers and leases them back to the employer. The leasing company provides payroll services and workers' compensation insurance coverage to the leased employees in exchange for a fee paid by the employer. However, only those employees specifically placed in the leasing arrangement by the employer and accepted as employees by the leasing company are covered by the leasing company's workers' compensation insurance. Mr. Beauchamp's investigation confirmed that Respondent's workers' compensation coverage obtained through the leasing agreement with ELS had been terminated as of July 8, 2008. The CCAS database confirmed that Mr. Dunlap had an active exemption from the requirement to obtain workers' compensation coverage. It also confirmed that none of the four employees whom Mr. Beauchamp found building the block wall at 1601 Tillery Drive were exempt. Mr. Beauchamp concluded that Respondent had failed to secure workers' compensation insurance coverage that met the requirements of chapter 440. Mr. Beauchamp therefore issued an SWO to Respondent on January 8, 2010, and personally served the SWO on Mr. Dunlap on the same date. Also on January 8, 2010, Mr. Beauchamp served Respondent with the Request for Production of Business Records for Penalty Assessment Calculation. The purpose of this request was to obtain the business records necessary to determine the appropriate penalty to be assessed against Respondent for violating the coverage requirements of chapter 440. Because section 440.107(7)(d)1. provides that the Department's assessment of a penalty covers the preceding three-year period, the request for production asked for Respondent's business records from January 9, 2007, through January 8, 2010. If an employer fails to produce business records sufficient to allow for the calculation of the appropriate penalty, the Department must calculate the applicable penalty by imputing the employer's payroll using the statewide average weekly wage for the type of work performed by the employee and multiplying that payroll by 1.5. The statewide average wage is derived by use of the occupation classification codes established by the proprietary Scopes Manual developed by the National Council on Compensation Insurance, Inc. ("NCCI"). The Scopes Manual has been adopted by reference in Florida Administrative Code Rule 69L-6.031(6). For Respondent's employees, Mr. Beauchamp applied the occupation classification code 5022, for masonry. Fla. Admin. Code R. 69L- 6.031(6)(b)9. The Department's Amended Order, assessing an imputed penalty in the amount of $121,001.30 against Respondent, was issued on February 12, 2010, and served on Mr. Dunlap by process server on March 5, 2010. Following service of the Amended Order, Respondent supplied the Department with additional business records, including Respondent's payroll runs from ELS and W-2's for the year 2007. However, even these records were not sufficient to permit the Department to calculate a penalty based on Respondent's actual payroll. The additional business records produced by Respondent did show that Mark Dunlap Masonry, Inc., had a policy of workers' compensation insurance in place with Business First Insurance Company from September 9, 2004, through February 22, 2008. Mr. Beauchamp had not previously found this coverage because the FEIN number listed by the Division of Corporations for Mark Dunlap Masonry, Inc., was incorrect. The Department issued the Second Amended Order on August 18, 2010, lowering the penalty assessment to $64,315.28. Although the Business First Insurance Company policy had been issued to Mark Dunlap Masonry, Inc., and not to Respondent, the Department nonetheless concluded that the policy brought Respondent into compliance with chapter 440 until February 22, 2008, and adjusted the penalty assessment accordingly. Respondent's workers' compensation coverage through the leasing agreement with ELS became effective on March 20, 2008, and was terminated on July 7, 2008. Of the four workers whom Mr. Beauchamp found at the work site on January 8, 2010, only Wayne Sochocki was listed on the ELS employee roster. Thus, Respondent was in compliance with respect to Mr. Sochocki for the period from March 20, 2008, through July 7, 2008. However, the records indicate that Respondent was not in compliance through the ELS leasing agreement with respect to its employees Kevin Copeland, Annie Blackburn, or David Allen Baxley because they had never been tendered to ELS as leased employees. The Department correctly imputed the penalty against Respondent for the four employees found at the work site on January 8, 2010, for all periods of noncompliance. The Department correctly determined the period of noncompliance for Mr. Sochocki to run from July 8, 2008 to January 8, 2010, and for Mr. Copeland, Ms. Blackburn and Mr. Baxley to run from February 22, 2008, to January 8, 2010. The Department utilized the correct occupation classification code for the four employees. The Department correctly utilized the procedure set forth by section 440.107(7)(d) and (e), and the penalty calculation worksheet incorporated by reference into Florida Administrative Code Rule 69L-6.027(1), to calculate the penalty assessed against Respondent by the Second Amended Order.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, assessing a penalty of $64,315.28 against Respondent. DONE AND ENTERED this 22nd day of March, 2011, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 22nd day of March, 2011. COPIES FURNISHED: Mark Dunlap Mark Dunlap Masonry, Inc. 45806 Lake Street Paisley, Florida 32767 Justin H. Faulkner, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 Julie Jones, Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 P. K. Jameson, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399 Honorable Jeff Atwater Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399
The Issue The issue in this case is whether Respondent failed to properly maintain workers' compensation insurance coverage for his employees, and, if so, what penalty should be assessed.
Findings Of Fact The Department is the state agency responsible for ensuring that all employers maintain workers' compensation insurance for themselves and their employees. It is the duty of the Department to make random inspections of job sites and to answer complaints concerning potential violations of workers' compensation rules. Respondent is an individual doing business as a roofer in the construction industry. At all times relevant hereto, Respondent was operating an unincorporated business. (Respondent had previously operated a business known as Helms Roofing, Inc., but that corporation had been dissolved in 1990.) Roofing work is assigned a Class Code of 5551 for purposes of calculating workers' compensation insurance coverage. On August 25, 2009, the Department sent an investigator to 4205 Glascow Court in Fort Myers, Florida, in response to a complaint that had been made. The complaint alleged that certain workers were operating without proper insurance coverage. Upon arrival at the job site (at approximately 11:00 a.m.), inspector Qureshi observed two men engaged in work on the roof of the house. (Respondent maintains that Qureshi could see him on the roof, but that she could not see the other worker, Troy Wilhite, because Wilhite was on the back side of the roof.) When the men came down from the roof at around 11:15 a.m., Qureshi identified herself to Respondent and asked whether the two men had workers' compensation insurance in place. Respondent advised that he was covered and that he had Wilhite's application for coverage in his truck. He was planning to fax the application, in accordance with his normal procedure, when the men broke for lunch. Wilhite had come to work that day to take the place of an employee of Respondent's who failed to show up for work. Wilhite had arrived only shortly before 11:00 a.m., that morning. Wilhite filled out the application for insurance at the job site, and it was ready to be faxed to AMC Staff Leasing ("AMC"). According to Respondent's unrefuted testimony, he and Wilhite had not started putting the shingles on the roof when Qureshi arrived. Rather, the men were doing chalk lines on the tar-paper covering as a prerequisite to laying the shingles. Respondent said that Wilhite was not yet working; they were only "chalking some lines." There was no competent, substantial evidence as to whether chalking lines constituted roofing work. Respondent presumed that after faxing Wilhite's application to AMC at lunch time, the men would be covered and ready to work after lunch. It was Respondent's experience that coverage could be obtained from AMC in "about 5 minutes." Qureshi checked the Department's database and ascertained from it that neither Respondent, nor Wilhite, had current workers' compensation insurance coverage. A review of the records from AMC revealed that Wilhite was not a named employee covered by its insurance at that time. Wilhite had been covered previously, and there was no reason to expect that his current application would be denied, but obviously it had not been sent in at the time Qureshi conducted her investigation. Respondent was listed as an employee, but his last period of employment ended on July 12, 2009. AMC required a contracted employer to submit payrolls every week in order to maintain their coverage. Respondent said his coverage with AMC had been cancelled during a period of time in which he had no work to do, but that he had paid a penalty and sent in his payment for coverage before starting work on August 25, 2009. Respondent had been out of work for a few weeks, so his coverage had lapsed, and he had to pay the penalty to get reinstated. Qureshi's review of the Department's database and AMC's records failed to verify the existence of coverage, so Qureshi prepared and hand delivered an SWO to Respondent immediately upon determining the absence of proper coverage. The SWO had an OPA at the bottom, but the OPA was silent as to an exact amount of penalty. Qureshi asked for and received from Respondent his business records. Using those records, Qureshi ascertained that Respondent worked without appropriate insurance coverage during the period of April 22, 2009, through August 25, 2009. The gross payroll to Respondent for that period was $2,605.05. Applying its formula for calculation of a penalty for non- compliance, the Department assessed a penalty of $813.69 for Respondent's period of non-coverage. An additional penalty of $49.22 was assessed for Wilhite's period of non-compliance, i.e., August 25, 2009. Respondent testified that he never worked without insurance coverage and explained his actions to obtain coverage. Respondent's testimony was very credible. He obviously believed that both he and Wilhite were properly covered by workers' compensation insurance at the time they worked on the job site. Respondent had taken measures to reinstate his own coverage with AMC and had Wilhite's application ready to file. Although the Department's database does not identify Respondent as having coverage, Respondent's testimony is believable. Neither Respondent, nor the Department, offered any explanation as to this discrepancy. Comparing the (hearsay) print-out of the computer screen from the Department's database to Respondent's (credible, but self-serving) testimony, makes it difficult to make a determination as to whether coverage did or did not exist for Respondent. Wilhite was obviously not covered by insurance during the morning of August 25, 2009. The Department's penalty worksheet indicates a salary of $163.96 for Wilhite on that day. Wilhite was being paid ten or twelve dollars per hour and was on the roof for only a short time on that day. It is impossible to reconcile the $163.96 salary assigned to Wilhite by the Department in its penalty calculation. Respondent had paid Wilhite money over a period of time, but not for working as a roofer. Rather, Wilhite and Respondent were long-time friends, and Respondent often paid Wilhite to help with various kinds of projects and endeavors (e.g., helping around his house, helping him deliver materials, etc.). There is no credible evidence that Wilhite worked as a roofer at the job site on the morning of August 25, 2009. It is clear that Wilhite was at the site, and by filling out an application for workers' compensation coverage, it is obvious he intended to work. But whether Wilhite did any roofing work on the morning of the investigation has not been established in the record. The most credible competent, substantial evidence presented at final hearing would suggest that Respondent had the appropriate workers' compensation insurance coverage for himself.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Financial Services, Division of Workers' Compensation, rescinding the Amended Stop-Work Order and Amended Penalty Assessment against Respondent, Jeffery G. Helms. DONE AND ENTERED this 5th day of March, 2010, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Honorable Alex Sink Chief Financial Officer R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 2010. Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Julie Jones, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Jeffery G. Helms 2413 Ted Avenue South Lehigh, Florida 33973 Paige Billings Shoemaker, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229
The Issue The issues in this case are: (1) whether Respondent, PFR Services Corp., failed to secure the payment of workers' compensation coverage for its employees in violation of chapter 440, Florida Statutes (2017)2/; and (2) if so, the penalty that should be imposed.
Findings Of Fact The Parties Petitioner is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation insurance covering their employees, pursuant to chapter 440. Respondent is a Florida corporation. At all times relevant to this proceeding, its business address was 8040 Northwest 95th Street, Hialeah, Florida. The evidence establishes that Respondent was actively engaged in business during the two-year audit period, from October 17, 2015, through October 16, 2017, pertinent to this proceeding.3/ The Compliance Investigation On October 16, 2017, Petitioner's compliance investigator, Cesar Tolentino, conducted a workers' compensation compliance investigation at a business located at 8040 Northwest 95th Street, Hialeah, Florida. The business was being operated as a restaurant, to which National Council on Compensation Insurance ("NCCI") class code 9082 applies. Tolentino observed Maria Morales, Gabriela Nava, and Geraldine Rodriquez performing waitressing job duties and Rafael Briceno performing chef job duties. The evidence established that these four persons were employed by Respondent. Additionally, the evidence established that corporate officers Rosanna Gutierrez and Mary Pineda were employed by Respondent.4/ The evidence established that neither had elected to be exempt from the workers' compensation coverage requirement. In sum, the evidence established that Respondent employed six employees, none of whom were independent contractors, and none of whom were exempt from the workers' compensation coverage requirement. Tolentino conducted a search of Petitioner's Coverage and Compensation Compliance Automated System, which consists of a database of workers' compensation insurance coverage policies issued for businesses in Florida, and all elections of exemptions filed by corporate officers of businesses in Florida. Tolentino's search revealed that Respondent had never purchased workers' compensation coverage for its employees; that its corporate officers had not elected to be exempt from the workers' compensation coverage requirement; and that Respondent did not lease employees from an employee leasing company. Gutierrez acknowledged that Respondent had not purchased workers' compensation coverage for its employees, and told Tolentino that she did not know it was required. Based on Tolentino's investigation, on October 16, 2017, Petitioner served Stop-Work Order No. 17-384 ("Stop-Work Order") on Respondent. At the time Tolentino served the Stop-Work Order, he informed Gutierrez that if Respondent obtained a workers' compensation policy and provided Petitioner a receipt of the amount paid to activate the policy within 28 days of issuance of the Stop-Work Order, Respondent's penalty would be reduced by the amount paid to activate the policy. On October 16, 2017, Petitioner, through Tolentino, also served on Respondent a Request for Production of Business Records for Penalty Assessment Calculation ("Business Records Request"), requesting Respondent provide several categories of business records covering the two-year audit period from October 16, 2015, to October 16, 2017. Specifically, Petitioner requested that Respondent provide its payroll documents consisting of time sheets, time cards, attendance records, earnings records, check stubs, check images, and payroll summaries, as applicable. Petitioner also requested that Respondent provide, as applicable, its federal income tax documents; account documents, including business check journals and statements and cleared checks for all open or closed business accounts; cash and check disbursements records; workers' compensation coverage records; and independent contractor records. At the time Tolentino served the Business Records Request, he informed Gutierrez that if Respondent obtained a workers' compensation policy and provided Petitioner the complete business records requested within ten business days, Respondent's penalty would be reduced by 25 percent. The evidence establishes that Respondent did not provide any business records within that time period, so is not entitled to receive that penalty reduction. On November 16, 2017, Petitioner issued an Amended Order of Penalty Assessment, assessing a total penalty of $35,262.32 against Respondent for having failed to secure workers' compensation coverage for its employees during the audit period. On December 14, 2017, Gutierrez met with Tolentino and, at that time, provided documentation to Petitioner showing that Respondent had acquired workers' compensation coverage for its employees, effective October 28, 2017, and had paid $3,966.00 for the policy. At the December 14, 2017, meeting, Gutierrez presented an envelope postmarked October 30, 2017, showing that Respondent had mailed Petitioner proof of having obtained the workers' compensation coverage within 28 days of the date the Stop-Work Order was issued; however, this mail was returned, so Petitioner did not receive such proof within 28 days. The evidence established that this mail was returned to Respondent on December 4, 2017——several days after the 28-day period had expired, and too late for Respondent to take additional steps to deliver to Petitioner the proof of its having purchased the workers' compensation policy.5/ Because Petitioner did not receive Respondent's proof of having purchased a workers' compensation policy within 28 days of issuance of the Stop-Work Order, it did not reduce the penalty imposed on Respondent by the amount that Respondent had paid for the premium. The evidence also establishes that at the December 14, 2017, meeting, Respondent tendered to Petitioner a cashier's check in the amount of $1,000.00. As a result of having received proof of workers' compensation coverage for Respondent's employees, Petitioner issued an Agreed Order of Conditional Release from Stop-Work Order ("Order of Conditional Release") on December 14, 2017, releasing Respondent from the Stop-Work Order. The Order of Conditional Release expressly recognized that Respondent "paid $1,000.00 as a down payment for a penalty calculated pursuant to F.S. 440.107(7)(d)1." Additionally, page 1 of 3 of the Penalty Calculation Worksheet attached to the Amended Order of Penalty Assessment admitted into evidence at the final hearing reflects that Respondent paid $1,000.00 toward the assessed penalty of $35,262.32. This document shows $34,262.32 as the "Balance Due." Calculation of Penalty to be Assessed Petitioner penalizes employers based on the amount of workers' compensation insurance premiums the employer has avoided paying. The amount of the evaded premium is determined by reviewing the employer's business records. In the Business Records Request served on October 16, 2017, Petitioner specifically requested that Respondent provide its payroll documents, federal income tax documents, disbursements records, workers' compensation coverage records, and other specified documents. When Gutierrez met with Tolentino on December 14, 2017, she provided some, but not all, of the business records that Petitioner had requested. Respondent subsequently provided additional business records to Petitioner, on the eve of the final hearing. Petitioner reviewed all of the business records that Respondent provided. However, these business records were incomplete because they did not include check images, as specifically required to be maintained and provided to Petitioner pursuant to Florida Administrative Code Rule 69L-6.015(6). Check images are required under Florida Administrative Code Rule 69L-6.015(6) because such images reveal the payees, which can help Petitioner identify the employees on the employer's payroll at any given time. This information is vital to determining whether the employer complied with the requirement to have workers' compensation coverage for all of its employees. Because Respondent did not provide the required check images, the records were insufficient to enable Petitioner to calculate Respondent's payroll for the audit period. Under section 440.107(7)(e), business records provided by the employer are insufficient to enable Petitioner to calculate the employer's payroll for the period for which the records are requested, Petitioner is authorized to impute the weekly payroll for each employee as constituting the statewide average weekly wage multiplied by 1.5. To calculate the amount of the penalty due using the imputed method, Petitioner imputes the gross payroll for each employee for each period during which that employee was not covered by required workers' compensation insurance. To facilitate calculation, Petitioner divides the gross payroll amount for each employee for the specific non-compliance period by 100.6/ Petitioner then multiplies this amount by the approved NCCI Scopes Manual rate——here, 2.34, which applies to restaurants——to determine the amount of the avoided premium for each employee for each non-compliance period. This premium amount is then multiplied by two to determine the penalty amount to be assessed for each employee not covered by required workers' compensation insurance for each specific period of non- compliance. Performing these calculations, Petitioner determined that a penalty in the amount of $35,262.32 should be assessed against Respondent for failing to provide workers' compensation insurance for its employees, as required by chapter 440, for the period from October 17, 2015, through October 16, 2017. As discussed above, on December 14, 2017, Respondent paid a down payment of $1,000.00 toward the penalty, and this was expressly recognized in the Stop-Work Order that was issued that same day. Thus, the amount of the penalty to be assessed against Respondent should be reduced by $1,000.00, to $34,262.32. As previously noted, this amount is identified on page 1 of 3 of the Amended Order of Penalty Assessment as the "Balance Due." As discussed in paragraphs 17 and 18, above, the evidence establishes that Respondent purchased a workers' compensation policy to cover its employees within 11 days of issuance of the Stop-Work Order, and mailed to Petitioner proof of having purchased such policy on October 30, 2017——well within the 28-day period for providing such proof. However, as discussed above, this mail was returned to Respondent on December 4, 2017——too late for Respondent to take additional steps to provide such proof to Petitioner within the 28-day period. There is no evidence in the record showing that failure of the mailed proof to be received by Petitioner was due to any fault on Respondent's part. Respondent's Defenses On behalf of Respondent, Gutierrez testified that Respondent did everything that Tolentino had told them to do. Respondent purchased workers' compensation insurance and provided proof to Petitioner that its employees were covered.7/ Gutierrez also testified that although Respondent's business was created in May 2013, it did not begin operating and, therefore, did not have any employees, until January 2016.8/ However, as previously noted, the persuasive evidence does not support this assertion.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: The Department of Financial Services, Division of Workers' Compensation, enter a final order determining that PFR Services Corp. violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage for its employees during the audit period, and imposing a penalty of $30,296.32. DONE AND ENTERED this 14th day of January, 2019, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of January, 2019.
The Issue Whether Respondent committed the violations alleged in the Department of Financial Services, Division of Workers' Compensation's (Department's) Stop Work Order and Second Amended Penalty Assessment and if so, what penalty should be imposed?
Findings Of Fact The Department is the state agency charged with enforcement of the laws related to workers' compensation pursuant to Chapter 440, Florida Statutes. On August 15, 2006, Katina Johnson, a workers' compensation compliance investigator for the Division, observed two men painting the exterior of a home at 318 First Street, in Jacksonville. The two men were identified as William Furr and his son, Corey Furr. Upon inquiry, Mr. Furr stated that he held a lifetime exemption from workers' compensation requirements. He provided to Ms. Johnson a copy of his exemption card, which was issued April 30, 1995, in the name of Arby's Painting & Decorating. The exemption card had no apparent expiration date. 4. In 1998, Sections 440.05(3) and 440.05(6), Florida Statutes, were amended, effective January 1, 1999, to limit the duration of construction workers' compensation exemptions to a period of two years. Express language in the amended statute provided that previously held "lifetime exemptions" from workers' compensation requirements would expire on the last day of the birth month of the exemption holder in the year 1999. Ms. Johnson researched Respondent's status on the Department's Compliance and Coverage System (CCAS) database that contains all workers compensation insurance policy information from the carrier to an insured, and determined that Respondent did not have a State of Florida workers' compensation insurance policy. The CCAS database indicated that Respondent previously held an exemption as a partner for Arby's Painting and Decorating, and that the exemption expired December 31, 1999. Ms. Johnson also checked the National Council on Compensation Insurance ("NCCI") database which confirmed that Respondent did not have a current workers' compensation insurance policy in the State of Florida. After conferring with her supervisor, Ms. Johnson issued a Stop-Work Order and Order of Penalty Assessment to Respondent on August 15, 2006. She also made a request for business records for the purpose of calculating a penalty for lack of coverage. Respondent submitted a written payroll record for his son, Corey Furr, along with a summary of what Respondent had earned on various jobs he performed from 2004 through 2006 and a Miscellaneous Income Tax Form 1099 for himself. On August 30, 2006, he also provided to the Department a copy of his occupational license with the City of Jacksonville. Based on the financial records supplied by Respondent, Ms. Johnson calculated a penalty for a single day, August 15, 2006, for Corey Furr. She calculated a penalty from January 1, 2005, through August 15, 2006, for William Furr. Ms. Johnson assigned a class code to the type of work performed by Respondent using the SCOPES Manual, multiplied the class code's assigned approved manual rate with the payroll per one hundred dollars, and then multiplied the result by 1.5. The Amended Order of Penalty Assessment assessed a penalty of $5,296.37. A Second Amended Order of Penalty Assessment was issued November 1, 2006, with a penalty of $5,592.95. This Second Amended Order of Penalty Assessment was issued because Ms. Johnson used the incorrect period of violation for Respondent when she initially calculated the penalty. On August 25, 2006, Respondent entered into a Payment Agreement Schedule for periodic payment of the penalty, and was issued an Order of Conditional Release from Stop-Work Order by the Department. Respondent paid ten percent of the assessed penalty, provided proof of compliance with Chapter 440, Florida Statutes, by forming a new company and securing workers' compensation exemptions for both himself and his son, Corey Furr, and agreed to pay the remaining penalty in sixty equal monthly payments. Respondent claims that he was not aware of the change in the law and continued to operate under the belief that his "lifetime exemption" remained valid. Although under no statutory obligation to do so, the Department sent a form letter to persons on record as holding exemptions to inform them of the change in the law and the process to be followed to obtain a new exemption.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That the Division of Workers' Compensation enter a Final Order affirming the Stop Work Order issued August 15, 2006, and the Second Amended Order of Penalty Assessment issued to Respondent on November 1, 2006. DONE AND ENTERED this 23rd day of February, 2007, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON 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 23rd day of February, 2007.
The Issue The issue is whether Petitioner violated Chapter 440, Florida Statutes, by not having workers’ compensation insurance coverage, and if so, what penalty should be imposed.
Findings Of Fact Petitioner operates a gas station and convenience store in Winter Garden. Mohammad Sultan is Petitioner’s owner and president. On November 2, 2006, Margaret Cavazos conducted an unannounced inspection of Petitioner’s store. Ms. Cavazos is a workers’ compensation compliance investigator employed by the Department. Petitioner had nine employees, including Mr. Sultan and his wife, on the date of Ms. Cavazos' inspection. Petitioner had more than four employees at all times over the three-year period preceding Ms. Cavazos' inspection. Petitioner did not have workers’ compensation insurance coverage at the time of Ms. Cavazos’ inspection, or at any point during the three years preceding the inspection. On November 2, 2006, the Department served a Stop-Work Order and Order of Penalty Assessment on Petitioner, and Ms. Cavazos requested payroll documents and other business records from Petitioner. On November 6, 2006, the Department served an Amended Order of Penalty Assessment,1 which imposed a penalty of $70,599.78 on Petitioner. The penalty was calculated by Ms. Cavazos, using the payroll information provided by Petitioner and the insurance premium rates published by the National Council on Compensation Insurance. The parties stipulated at the final hearing that the gross payroll attributed to Mr. Sultan for the period of January 1, 2006, through November 2, 2006, should have been $88,000, rather than the $104,000 reflected in the penalty worksheet prepared by Ms. Cavazos. The net effect of this $16,000 correction in the gross payroll attributed to Mr. Sultan is a reduction in the penalty to $68,922.18.2 On November 3, 2006, Mr. Sultan filed a notice election for exemption from the Workers’ Compensation Law. His wife did not file a similar election because she is not an officer of Petitioner. The election took effect on November 3, 2006. On November 6, 2006, Petitioner obtained workers’ compensation insurance coverage through American Home Insurance Company, and Petitioner also entered into a Payment Agreement Schedule for Periodic Payment of Penalty in which it agreed to pay the penalty imposed by the Department over a five-year period. On that same date, the Department issued an Order of Conditional Release from Stop-Work Order. Petitioner made the $7,954.30 “down payment” required by the Payment Agreement Schedule, and it has made all of the required monthly payments to date. The payments required by the Payment Agreement Schedule are $1,044.09 per month, which equates to approximately $12,500 per year. Petitioner was in compliance with the Workers’ Compensation Law at the time of the final hearing. Petitioner reported income of $54,358 on gross receipts in excess of $3.1 million in its 2005 tax return. Petitioner reported income of $41,728 in 2004, and a loss of $8,851 in 2003. Petitioner had total assets in excess of $750,000 (including $540,435 in cash) at the end of 2005, and even though Petitioner had a large line of credit with Amsouth Bank, its assets exceeded its liabilities by $99,041 at the end of 2005. Mr. Sultan has received significant compensation from Petitioner over the past four years, including 2003 when Petitioner reported a loss rather than a profit. He received a salary in excess of $104,000 in 2006, and he was paid $145,333 in 2005, $63,750 in 2004, and $66,833 in 2003. Mr. Sultan’s wife is also on Petitioner’s payroll. She was paid $23,333.40 in 2006, $25,000 in 2005, and $12,316.69 in 2004. Mr. Sultan characterized 2005 as an “exceptional year,” and he testified that his business has fallen off recently due to an increase in competition in the area. Todd Baldwin, Petitioner’s accountant, similarly testified that 2006 was not as good of a year as 2005, but no corroborating evidence on this issue (such as Petitioner’s 2006 tax return) was presented at the final hearing. Mr. Sultan testified that payment of the penalty imposed by the Department adversely affects his ability to run his business. The weight given to that testimony was significantly undercut by the tax returns and payroll documents that were received into evidence, which show Petitioner’s positive financial performance and the significant level of compensation paid to Mr. Sultan and his wife over the past several years. The effect of the workers’ compensation exemption elected by Mr. Sultan is that his salary will no longer be included in the calculation of the workers’ compensation insurance premiums paid by Petitioner. If his salary had not been included in Ms. Cavazos’ calculations, the penalty imposed on Petitioner would have been $40,671.36. Ms. Cavazos properly included Mr. Sultan’s salary in her penalty calculations because he was being paid by Petitioner and he did not file an election for exemption from the Workers' Compensation Law until after her inspection.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department issue a final order imposing a penalty of $68,922.18 on Petitioner to be paid in accordance with a modified payment schedule reflecting the reduced penalty and the payments made through the date of the final order. DONE AND ENTERED this 22nd day of August, 2007, in Tallahassee, Leon County, Florida. S T. KENT WETHERELL, II 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 22nd day of August, 2007.
The Issue At issue in this proceeding is whether the Respondent, Forever Floors and More, Inc. ("Forever Floors"), failed to abide by the coverage requirements of the Workers' Compensation Law, chapter 440, Florida Statutes by not obtaining workers' compensation insurance for its employees, and, if so, whether the Petitioner properly assessed a penalty against the Respondent pursuant to section 440.107, Florida Statutes.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following findings of fact are made: The Department is the state agency responsible for enforcing the requirement of the Workers' Compensation Law that employers secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. Forever Floors is a Florida corporation. The Division of Corporations’ “Sunbiz” website indicates that Forever Floors was first incorporated on February 4, 2012, and remained active as of the date of the hearing. Forever Floors’s principal office is at 8205 Oak Bluff Road, Saint Augustine, Florida 32092. Forever Floors is solely owned and operated by Christopher Bohren. Mr. Bohren is the president and sole officer of the corporation. Forever Floors was actively engaged in performing tile installation during the two-year audit period from April 3, 2013, through April 2, 2015. John C. Brown is a government operations consultant for the Department. During the period relevant to this proceeding, Mr. Brown was a Department compliance investigator assigned to Duval County. Mr. Brown’s job included conducting random compliance investigations and investigating referrals made to his office by members of the public. Mr. Brown testified that as an investigator, he would enter worksites and observe the workers and the types of work they were doing. On April 2, 2015, Mr. Brown visited a worksite at 3714 McGirts Boulevard in Jacksonville. He observed two workers installing tile in a shower in an older single-family residence that was undergoing renovations. Mr. Brown identified himself to the two workers and then inquired as to their identities and employment. Mr. Bohren replied that he was the company officer and that his company had an exemption from the requirement to provide workers’ compensation insurance coverage. Mr. Bohren identified the other worker as Dustin Elliott and stated that Mr. Elliott had worked for Forever Floors for about eight months. Mr. Bohren told Mr. Brown that he paid Mr. Elliott sometimes by check and sometimes with cash. After speaking with Mr. Bohren, Mr. Brown returned to his vehicle to perform computer research on Forever Floors. He consulted the Sunbiz website for information about the company and its officers. His search confirmed that Forever Floors was an active Florida corporation and that Christopher Bohren was listed as its registered agent, and as president of the corporation. No other corporate officers were listed. Mr. Brown also checked the Department's Coverage and Compliance Automated System ("CCAS") database to determine whether Forever Floors had secured the payment of workers' compensation insurance coverage or had obtained an exemption from the requirements of chapter 440. CCAS is a database that Department investigators routinely consult during their investigations to check for compliance, exemptions, and other workers' compensation related items. CCAS revealed that Forever Floors had no active workers' compensation insurance coverage for its employees and that no insurance had ever been reported to the state for Forever Floors. There was no evidence that Forever Floors used an employee leasing service. Mr. Bohren had an active exemption as an officer of the corporation pursuant to section 440.05 and Florida Administrative Code Rule 69L-6.012, effective September 24, 2013, through September 24, 2015. There was no exemption noted for Dustin Elliott. Based on his jobsite interviews with the employees and Mr. Bohren, and his Sunbiz and CCAS computer searches, Mr. Brown concluded that as of April 2, 2015, Forever Floors had an exemption for Mr. Bohren but had failed to procure workers’ compensation coverage for its employee, Dustin Elliott, in violation of chapter 440. Mr. Brown consequently issued a Stop- Work Order that he personally served on Mr. Bohren on April 2, 2015. Also on April 2, 2015, Mr. Brown served Forever Floors with a Request for Production of Business Records for Penalty Assessment Calculation, asking for documents pertaining to the identification of the employer, the employer's payroll, business accounts, disbursements, workers' compensation insurance coverage records, professional employer organization records, temporary labor service records, documentation of exemptions, documents relating to subcontractors, documents of subcontractors' workers’ compensation insurance coverage, and other business records, to enable the Department to determine the appropriate penalty owed by Forever Floors. Mr. Brown testified, and Mr. Bohren confirmed, that Mr. Bohren provided no records in response to the Request for Production. The case file was assigned to a penalty calculator, who reviews the records and calculates the penalty imposed on the business. Mr. Brown did not state the name of the person assigned to calculate the penalty in this case. Anita Proano, penalty audit supervisor for the Department, later performed her own calculation of the penalty as a check on the work of the penalty calculator. Ms. Proano testified as to the process of penalty calculation. Penalties for workers' compensation insurance violations are based on doubling the amount of evaded insurance premiums over the two- year period preceding the Stop-Work Order, which in this case was the period from April 3, 2013, through April 2, 2015. § 440.107(7)(d), Fla. Stat. Because Mr. Bohren had no payroll records for himself or Mr. Elliott on April 2, 2015, the penalty calculator lacked sufficient business records to determine the company’s actual gross payroll on that date. Section 440.107(7)(e) provides that where an employer fails to provide business records sufficient to enable the Department to determine the employer’s actual payroll for the penalty period, the Department will impute the weekly payroll at the statewide average weekly wage as defined in section 440.12(2), multiplied by two.1/ In the penalty assessment calculation, the Department consulted the classification codes and definitions set forth in the SCOPES of Basic Manual Classifications (“Scopes Manual”) published by the National Council on Compensation Insurance (“NCCI”). The Scopes Manual has been adopted by reference in rule 69L-6.021. Classification codes are four-digit codes assigned to occupations by the NCCI to assist in the calculation of workers' compensation insurance premiums. Rule 69L- 6.028(3)(d) provides that "[t]he imputed weekly payroll for each employee . . . shall be assigned to the highest rated workers' compensation classification code for an employee based upon records or the investigator's physical observation of that employee's activities." Ms. Proano testified that the penalty calculator correctly applied NCCI Class Code 5348, titled “Ceramic Tile, Indoor Stone, Marble, or Mosaic Work,” which “applies to specialist contractors who perform tile, stone, mosaic, or marble work.” The corresponding rule provision is rule 69L- 6.021(2)(aa). The penalty calculator used the approved manual rates corresponding to Class Code 5348 for the periods of non- compliance to calculate the penalty. On May 22, 2015, the Department issued an Amended Order of Penalty Assessment in the amount of $23,538.34, based on Mr. Bohren’s imputed wages for the periods not covered by his exemption and the imputed wages for Mr. Elliott for the entire penalty period. Mr. Bohren was served with the Amended Order of Penalty Assessment on June 8, 2015. The evidence produced at the hearing established that Ms. Proano utilized the correct class codes, average weekly wages, and manual rates in her calculation of the Amended Order of Penalty Assessment. The Department has demonstrated by clear and convincing evidence that Forever Floors was in violation of the workers' compensation coverage requirements of chapter 440. Dustin Elliott was an employee of Forever Floors on April 2, 2015, performing services in the construction industry without valid workers' compensation insurance coverage. The Department has also demonstrated by clear and convincing evidence that the penalty was correctly calculated through the use of the approved manual rates and the penalty calculation worksheet adopted by the Department in rule 69L-6.027. Ms. Proano’s recalculation of the penalty confirmed the correctness of the penalty calculator’s work. Forever Floors could point to no exemption, insurance policy, or employee leasing arrangement that would operate to lessen or extinguish the assessed penalty. At the hearing, Christopher Bohren testified that he is the sole proprietor of Forever Floors and that Mr. Elliott had only worked for him for six-to-eight months, mostly on a part-time basis, as of April 2, 2015. He stated that the penalty assessed in this case is more than he has made from his start-up business. After his discussion with Mr. Brown, he immediately procured workers’ compensation insurance coverage for Mr. Elliott and intends to stay within the ambit of the law in the future. Mr. Bohren testified that he was unable to access his business records because they were with his ex-wife, from whom he had an apparently acrimonious departure. Mr. Bohren’s testimony elicited sympathy, but the equitable considerations that he raised have no effect on the operation of chapter 440 or the imposition of the penalty assessed pursuant thereto.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, assessing a penalty of $23,538.34 against Forever Floors and More, Inc. DONE AND ENTERED this 28th day of October, 2015, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 28th day of October, 2015.
The Issue The issues to determine in this matter are whether Respondent Alpha and Omega Builders of Jacksonville, Inc., failed to secure workers’ compensation coverage for its employees; and, if so, whether Petitioner Department of Financial Services, Division of Workers’ Compensation (Department), correctly calculated the penalty assessment it imposed against Respondent.
Findings Of Fact The Department is the state agency charged with enforcing the requirement of chapter 440 that employers in Florida secure workers’ compensation insurance coverage for their employees. See § 440.107(3), Fla. Stat. Respondent is a corporation located in Jacksonville, Florida, engaged in the roofing industry. Ms. Beckstrom, the Jacksonville supervisor for workers’ compensation compliance investigators, testified at the final hearing. Ms. Beckstrom largely read from the January 30, 2018, investigative report and narrative completed by Investigator Frank Odom, who did not testify at the final hearing.1/ Ms. Beckstrom did not perform the investigation of Respondent, but authorized Mr. Odom to do so. On January 30, 2018, Mr. Odom investigated the worksite at 5065 Soutel Drive, Jacksonville, Florida, which is the J. Fralin Funeral Home, a commercial business (the Soutel Drive site). Mr. Odom’s narrative stated, “[a]s I approached the site I observed 3 individuals on the roof installing shingles.” Much of the remaining portions of Mr. Odom’s narrative, which ultimately led to his determination that Respondent employed these three individuals without workers’ compensation insurance, is inadmissible hearsay. Although Ms. Beckstrom testified extensively on what Mr. Odom wrote in the investigative report and narrative, the undersigned cannot base findings of fact on inadmissible hearsay unless it explains or supplements other evidence. In contrast, Mr. Jessie, the owner of Respondent, testified at the final hearing that Mr. Odom contacted him the morning of January 30, 2018, by telephone. When Mr. Odom asked if Respondent had three individuals working on the Soutel Drive site, Mr. Jessie testified that he told Mr. Odom that these individuals were not supposed to be working.2/ Mr. Jessie stated that when he arrived at the Soutel Drive site after receiving the call from Mr. Odom, the three individuals had left. On cross-examination, Mr. Jessie did not recognize the names of Roberto Flores, Alex Alvarado, or Dagoberto Lopez, who Mr. Odom identified in the investigative report and narrative as the three individuals working on the roof at the Soutel Drive site. Mr. Jessie testified that he normally employs workers through an organization called Action Labor, who in turn secures the applicable workers’ compensation insurance for them. Mr. Jessie testified that he had arranged, through Action Labor, for three individuals to work on the Soutel Drive site, and that Action Labor had provided him a “ticket” for three individuals to work at the site. His testimony is credited. Although not crystal clear from his testimony, the undersigned understood Mr. Jessie to refer to Action Labor as an employee leasing company.3/ Mr. Jessie further testified that after meeting with Mr. Odom at the Soutel Drive site, he received a Stop-Work Order and Order of Penalty Assessment, as well as a Request for Production of Business Records for Penalty Assessment Calculation (Request for Production). The Request for Production requested several categories of business records from Respondent, for the time period of January 31, 2016, through January 30, 2018, to determine Respondent’s payroll during that time period (audit period). The Request for Production requested that Respondent provide all payroll documents, account documents, disbursements, workers’ compensation coverage, temporary labor service and day labor service records, subcontractors, and documentation of subcontractors’ workers’ compensation insurance coverage. At the final hearing, Ms. Murcia, the Department’s penalty auditor, testified that because Respondent had not timely provided sufficient records in response to the Request for Production, the Department issued the Amended Order. Ms. Murcia testified that the Department received some records requested pursuant to the Request for Production in February 2019 (which was well after the response deadline of 10 business days), but that they were incomplete and thus not sufficient to calculate a penalty. Because Respondent failed to provide sufficient records in response to the Request for Production, the Department calculated the Amended Order based on a completely imputed payroll. Ms. Murcia explained that the Department calculates a gross payroll for an employer (who provides insufficient records) at the statewide average weekly wage multiplied by 1.5 for each employee for the period requested for the calculation of the penalty. Based on this imputation calculation, the Amended Order imposed a penalty in the amount of $166,791.18. The evidence presented at the final hearing was insufficient to establish that the three individuals observed at the Soutel Drive site on January 30, 2018, were Respondent’s employees or subcontractors on that day or at any time during the audit period. The evidence presented at the final hearing established that Respondent failed to timely present sufficient records pursuant to the Request for Production.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, the undersigned recommends that the Department enter a final order dismissing the Stop-Work Order and Order of Penalty Assessment, and the Amended Order of Penalty Assessment, against Respondent. DONE AND ENTERED this 3rd day of April, 2019, in Tallahassee, Leon County, Florida. S ROBERT J. TELFER III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of April, 2019.
Findings Of Fact On January 7, 1981, the Petitioner notified the Respondent that an action was being commenced to revoke the Respondent's self-insurance privilege pertaining to employee compensation insurance coverage in the State of Florida. That notification stated as grounds that the Respondent, having had its self- insurer's surety bond terminated, the revocation proceeding would take place. The notification letter afforded the Respondent an opportunity for hearing on this revocation question and on January 24, 1981, the Respondent requested a formal hearing. The matter was forwarded to the Division of Administrative Hearings on February 3, 1981. On February 13, 1981, the Petitioner acknowledged receipt of the request for formal hearing and the Petitioner identified the steps that it deemed to be necessary before the Respondent could continue as a self-insured employer, to include the necessity to provide an excess loss insurance policy. The formal hearing de novo was conducted on March 27, 1991. The Respondent has employees working in the State of Florida and it has been operating as a self-insured employer in the State of Florida from 1977, through January, 1981, by the process of posting a $25,000 surety bond. On December 11, 1980, the Petitioner received a termination notice related to the Respondent's self-insurer's bond. The bond issued by the Underwriters Insurance Company of North America was officially cancelled February 3, 1981. The Respondent, subsequent to the time of the bond cancellation, has failed to purchase a further bond, which bond at present must be a minimum amount of $380,000 or to provide other sufficient security. In lieu of the opportunity for self-insurance, the Respondent could purchase a workers' compensation insurance policy; however, at the time of the hearing, in addition to not having an appropriate bond or other security, the Respondent had not purchased such an insurance policy. The Respondent has no cash and negotiable instruments filed with the Florida Bureau of Self Insurance as surety for workers' compensation coverage. The Respondent also is without an acceptable excess loss insurance policy for purposes of workers' compensation.
