The Issue Whether Respondent, Gulf Coast Site Prep, Inc., failed to comply with the coverage requirements of the Workers’ Compensation Law, chapter 440, Florida Statutes, by not obtaining workers’ compensation insurance for its employees, and, if so, what penalty should be assessed against Respondent pursuant to section 440.107, Florida Statutes (2014).1/
Findings Of Fact 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. Respondent, Gulf Coast Site Prep., Inc., is a Florida for-profit corporation organized on March 3, 2008. Respondent’s registered business address is 952 TR Miller Road, Defuniak Springs, Florida. Ashley Adams is Respondent’s President and Registered Agent. On March 27, 2015, the Department’s investigator-in- training, Jill Scogland, and lead investigator, Sharon Kelson, conducted a random workers’ compensation compliance check at Lot 34 in the Driftwood Estates residential subdivision in Santa Rosa Beach, Florida. Ms. Scogland observed two men on site. David Wayne Gibson was operating a front-end loader spreading dirt on site. Colby Smith was shoveling dirt on site. While Ms. Scogland was inspecting the site, a third man, Ashley Adams, arrived driving a dump truck with a load of dirt. Mr. Adams identified himself as the owner of Gulf Coast, and stated that he had an exemption from the requirement for workers’ compensation insurance and that he thought Mr. Gibson did as well. Mr. Adams advised Ms. Scogland that he hired both Mr. Gibson and Mr. Smith to work at the site.2/ At hearing, Respondent challenged the evidence supporting a finding that Respondent hired Mr. Gibson.3/ Specifically, Respondent argues that Ms. Scogland’s testimony that Mr. Adams told her he hired Mr. Gibson is unreliable because Ms. Scogland did not include that information in her field notes. Respondent claims that Ms. Scogland’s status as investigator-in-training on the date of the inspection is indicative of her unreliability. To the contrary, Ms. Scogland’s testimony regarding both the persons and events on the date of the inspection was clear and unequivocal. While Ms. Scogland admitted her field notes were not as detailed on the date in question as they are for more recent inspections, she was confident that her investigation of the facts was thorough. The fact that Ms. Scogland did not write down what Mr. Adams said does not render her testimony unreliable. The undersigned finds Ms. Scogland’s testimony to be clear and convincing. Ms. Scogland reviewed the Department of State, Division of Corporations’ online information and identified Mr. Gibson as President and Registered Agent of David Wayne Gibson Tractor Service, Inc. According to Ms. Scogland, the online records indicated the corporation had been administratively dissolved in September 2013. Ms. Scogland next accessed the Department’s Coverage and Compliance Automated System (CCAS) and determined that Mr. Gibson had obtained a workers’ compensation coverage exemption for himself, but the exemption had expired on February 15, 2015. The information contained in CCAS is information on new policies, cancellations, etc., reported to the Department by insurance agencies as required by administrative rule. Next, Ms. Scogland accessed the Division of Corporations’ website, verified Gulf Coast as an active corporation, and identified Mr. Adams as the sole officer of Gulf Coast. Ms. Scogland then accessed CCAS and determined that, although Gulf Coast did not have workers’ compensation coverage, Mr. Adams had an active exemption effective from February 12, 2014 through February 12, 2016. Mr. Adams had a prior exemption that expired on April 14, 2013, but had no valid exemption in place between April 14, 2013 and February 12, 2014. After contacting her supervisor, Michelle Lloyd, Ms. Scogland served Mr. Adams, on behalf of Gulf Coast, with a site-specific Stop-Work Order for failure to ensure workers’ compensation coverage for its employees. Ms. Scogland also served Mr. Adams with a Request for Production of Business Records for Penalty Assessment Calculation. The request was for Gulf Coast’s payroll, account, and disbursement records, as well as records identifying its subcontractors, payments thereto, and workers’ compensation coverage thereof, from March 28, 2013 through March 27, 2015 (the penalty period).4/ Mr. Adams did not provide any records to the Department in response to the records request. The Department’s penalty auditor, Eunika Jackson, was assigned to calculate the penalty to be assessed against Gulf Coast for failure to secure workers’ compensation insurance during the penalty period. The penalty to be assessed against an employer for failure to secure workers’ compensation coverage is two times the amount the employer would have paid in workers’ compensation insurance premiums when applying approved manual rates to the employer’s payroll during the penalty period. § 440.107(7)(d), Fla. Stat. Ms. Jackson consulted the Scopes Manual, which is published by the National Council on Compensation Insurance (NCCI), and identified class code 6217--Excavation and Drivers-- as the appropriate construction class code for the work being performed at the worksite. Respondent contests the assignment of class code 6217 to Mr. Adams, who was driving a dump truck and delivering a load of dirt to the site. Respondent admits that Mr. Gibson’s operation of the front-end loader was properly classified as Excavation and Drivers. NCCI Scopes Manual provides the following with regard to classification code 6217: Includes burrowing, filling or backfilling. * * * Code 6217 is applied to specialist contractors engaged in general excavation including ditch digging, burrowing, filling or backfilling provided such operations are not otherwise classified in the manual. The operations involve the removal of earth, small boulders and rocks by power shovels, trench diggers or bulldozers and piling it at the jobsite for backfill. The material may also be removed by dump trucks for fill in some other area. Code 6217 includes excavation in connection with building foundations, swimming pools, landscape gardening and waterproofing operations. * * * This classification also is applied to specialist contractors engaged in grading land and landfilling, provided these operations are not otherwise classified in this manual. This classification includes ditch digging, burrowing, filling or backfilling, and operations such as scraping, cutting, piling or pushing the earth to rearrange the terrain. These operations utilize equipment such as bulldozers, motor graders and carryalls. [emphasis supplied]. Mr. Adams’ operation of the dump truck falls squarely within the definition of Excavation and Drivers. The material in the dump truck was fill for the site under excavation, a purpose which is directly addressed in the manual under code 6217. Under Respondent’s interpretation, fill removed from the site by a dump truck would be an excavation activity, but would no longer be excavation when the dump truck arrived at another site (or at another location on the same site) with the fill. That interpretation is illogical. No evidence was introduced to support a finding that typical operation of a dump truck in preconstruction was classified by a different code in the Scopes Manual. It is found that Ms. Jackson properly applied the Scopes Manual in assigning code 6217 to the work being performed by Mr. Adams on the site. Having no payroll records from Gulf Coast, Ms. Jackson had to impute the statewide average weekly wage as Respondent’s payroll for Mr. Adams and his subcontractor, Mr. Gibson. The average weekly wages were calculated based on the Workers’ Compensation and Employers Liability approved rate manual also published by NCCI and adopted by the Department by administrative rule. Ms. Jackson calculated a penalty of two times the workers’ compensation insurance premiums that would have applied to the purchase of insurance for Mr. Adams and Mr. Gibson during periods of non-compliance during the penalty. The period of non-compliance for Mr. Adams was April 15, 2013 to February 11, 2014, during which time his exemption had lapsed. The period of non-compliance for Mr. Gibson was February 16, 2015 to March 27, 2015, during which his exemption had expired. § 440.107(7)(e), Fla. Stat. Utilizing the penalty calculation worksheet adopted by Florida Administrative Code Rule 69L-6.027, Ms. Scogland calculated a penalty of $12,181.42. On May 20, 2015, the Department issued an Amended Order of Penalty Assessment against Gulf Coast in the amount of $12,181.42. The Department correctly calculated the penalty based on the statutory formulas and adopted rules governing workers’ compensation insurance.
Recommendation Having considered 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 upholding the Stop-Work Order and Amended Penalty Assessment against Respondent, Gulf Coast Site Prep., Inc., for its failure to secure and maintain required workers’ compensation insurance for its employees. DONE AND ENTERED this 14th day of January, 2016, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of January, 2016.
The Issue The issue for determination is whether Respondent failed to secure workers’ compensation coverage in violation of the requirements of the Workers’ Compensation Law, Chapter 440, Florida Statutes, as set forth in the Stop-Work Order issued on February 11, 2009, and, if so, whether Respondent should be assessed the penalty set forth in the 3rd Amended Order of Penalty Assessment issued on April 7, 2009.
Findings Of Fact At all times material hereto, Majestic was an employer in the State of Florida, engaged in the construction industry. At all times material hereto, John George was the president of Majestic. On February 11, 2009, the Department’s investigator, Ira Bender (Investigator Bender), visited Majestic’s model home site at 16874 Toledo Blade Boulevard, Port Charlotte, Florida. Investigator Bender spoke with two individuals, Linda Meldrum and Matt Brown, who were working at the worksite. Ms. Meldrum was a sales representative and Mr. Brown was a superintendent. Majestic does not dispute that, even though it had employees working at the model home site, it (Majestic) did not have workers’ compensation coverage for its employees. On February 11, 2009, a SWO and an OPA were issued by the Department to Majestic and were posted, by Investigator Bender, at the model home site, Majestic’s worksite. Investigator Bender testified that he posted the SWO and OPA at the worksite. His testimony is found to be credible. The SWO indicates, among other things, that Majestic failed to obtain workers’ compensation coverage that meets the requirements of Chapter 440, Florida Statutes, and the Insurance Code. The SWO further provides that the SWO “SHALL REMAIN IN EFFECT UNTIL THE [Department] ISSUES AN ORDER RELEASING THE [SWO] FOR ALL WORKSITES.” The OPA also indicates, among other things, that the penalty assessed against the employer (Majestic) would be in an amount equal to 1.5 times the amount the employer would have paid in premium within the preceding 3-year period, or $1,000.00, whichever was greater. The OPA further provides that the “penalty may be amended until a Final Order or an Order of Conditional Release from [SWO] is issued.” Majestic stipulates and does not dispute that it was without workers’ compensation coverage for all of its employees. The SWO and OPA indicate that they were hand-delivered to Majestic at its place of business on February 13, 2009. Investigator Bender did not hand-deliver the SWO and OPA; however, he testified at hearing regarding the SWO and OPA and the usual or standard practice of the Department in hand- delivering a SWO and OPA. His testimony is found to be credible. An inference is drawn and a finding of fact is made that the standard operating procedure of the Department is to hand-deliver the SWO and OPA to the employer’s address, i.e., at its place of business. The SWO and OPA indicate the employer’s (Majestic’s) address for its place of business as 4061 Royal Palm Beach Boulevard, Royal Palm Beach, Florida. The Department’s investigator, who is indicated on the SWO and OPA as the one who hand-delivered the SWO and OPA, did not testify at hearing. Further, Majestic denies receiving the SWO and OPA at its place of business and was unaware of the SWO and OPA. The Department failed to show by clear and convincing evidence2 that the SWO and OPA were hand-delivered to Majestic on February 13, 2009, at its place of business. Also, on February 13, 2009, the Department issued to Majestic a request for business records (Request) in order to calculate the penalty to be assessed. The Request indicates, among other things, that the business records being requested were to be submitted by Majestic within five business days of the service of the Request; that the business records were to be submitted to Investigator Bender, providing his contact information; and that the failure of Majestic to do so would result in imputed weekly payroll, which was the statewide average weekly wage multiplied by 1.5. Further, the Request indicates that it was personally served on Majestic on February 13, 2009, at Majestic’s address for its place of business by the same investigator who was indicated as having hand-delivered the SWO and OPA. The Department failed to show by clear and convincing evidence3 that the Request was personally served on Majestic at its place of business on February 13, 2009. Majestic did not comply with the Request. An Amended OPA was issued by the Department on March 4, 2009. The Amended OPA provided, among other things, that the total assessed penalty was $4,298.20; and that the SWO would remain in effect until either the Department issued a release from the SWO, indicating the terms or conditions upon which the SWO would be released, or the Department issued a conditional release from the SWO, indicating the terms or conditions upon which the SWO would be conditionally released. A penalty worksheet was attached to the Amended OPA. The penalty worksheet reflected, among other things, the name of Majestic’s employees who were covered by the SWO; the imputed class code for each of the employees—each employee had the same class code; the period of non-compliance; the imputed gross payroll for each employee; the insurance premium for each employee; and the penalty times 1.5 for each employee, totaling $4,298.20. Because Majestic did not provide the requested business records, the penalty assessment was based upon imputed payroll and employee class codes. The Amended OPA indicates that it was hand-delivered to Majestic at the address of its place of business on March 6, 2009, by the same investigator who was indicated as having hand- delivered the SWO and OPA and the Request. Majestic maintains that the Amended OPA was not hand-delivered to it (Majestic) at its place of business. The Department failed to show by clear and convincing evidence4 that the Amended OPA was hand-delivered to Majestic on March 6, 2009, at its place of business. On March 23, 2009, Investigator Bender returned to the model home site, i.e., the worksite. At that time, he found Ms. Meldrum and Mr. Brown working. Ms. Meldrum, the sales representative, had continued working her normal work schedule of Monday, Tuesday, Wednesday, Saturday, and Sunday, since the posting of the SWO; she had never ceased working as usual. Mr. Brown, the superintendent, had continued working part-time and being paid his normal salary, since the posting of the SWO; he too had never ceased working as usual. Terry Hearn, assistant to Mr. George, also worked for Majestic and was paid a salary from February 12 through March 23, 2009. The SWO had not been lifted. The SWO was still in effect on March 23, 2009. Mr. George testified that Majestic had no knowledge of a SWO until sometime in March 2009. He did not testify that Majestic was ever served with the SWO at its place of business. His testimony is found to be credible. The evidence is not clear and convincing5 that Majestic was served with the SWO. A 2nd Amended OPA was issued by the Department on March 25, 2009. The 2nd Amended OPA amended the total penalty to an amount of $32,298.20, based upon “additional penalty of $28,000.00 added to original penalty for working thru the SWO.” The additional penalty represented 28 days that the employees were working during the time that the SWO was in effect, at $1,000.00 per day. The 2nd Amended OPA indicates that it was personally served on Majestic at the address of its place of business on March 27, 2009, by the same Department’s investigator who was indicated as having hand-delivered the SWO and OPA. The Department failed to show by clear and convincing evidence6 that the Amended OPA was hand-delivered to Majestic on March 6, 2009, at its place of business. However, Majestic admits that it received notification regarding an assessed penalty in mid-March 2009. Hence, an inference is drawn and a finding of fact is made that Majestic received notification of the 2nd Amended OPA. Mr. George testified that Majestic’s person who handled its workers’ compensation coverage was no longer with Majestic at the pertinent time and did not inform Majestic about its workers’ compensation coverage; and that Majestic was, therefore, not aware that it did not have workers’ compensation coverage until it received notification in mid-March of the SWO. However, Mr. George further testified that Majestic was responsible for maintaining workers’ compensation coverage; and that he was not making any excuses for Majestic’s failure to maintain such coverage. His testimony is found to be credible. Furthermore, Mr. George testified that, if Majestic had been notified of the SWO at its place of business, it would have immediately ceased all work and obtained the workers’ compensation coverage. His testimony is found to be credible. However, Mr. George’s testimony fails to demonstrate that the SWO and OPA were not posted at the worksite: Investigator Bender testified that he posted the SWO and the OPA at the worksite on February 11, 2009, and Investigator Bender’s testimony was found credible. Therefore, the evidence is insufficient to disturb the finding of fact that the SWO and OPA were posted at the worksite on February 11, 2009. Subsequently, on May 20, 2009, Majestic provided the Department with the business records requested in the Request. Majestic provided the Department its (Majestic’s) Quickbook records, which contained, among other things, Majestic’s actual payroll and proper class codes. Majestic requests compensation for the time expended by its employees, who were very limited in number, in obtaining the information needed by the Department in order to obtain the correct codes. Majestic did not present any evidence demonstrating a cost associated with providing the information to the Department. Having received Majestic’s Quickbook records, the Department issued a 3rd Amended OPA on April 7, 2009. The 3rd Amended OPA amended the total penalty to an amount of $29,173.08, based upon “Employees added to the penalty, class codes changed and business records used (no imputing).” A penalty worksheet was attached to the 3rd Amended OPA. The penalty worksheet reflected, among other things, the name of Majestic’s employees who were covered by the SWO; the class code for each of the employees; the period of non- compliance; gross payroll for each employee; the insurance premium for each employee; and the penalty times 1.5 for each employee, totaling $1,173.08. Further, the penalty worksheet reflected, among other things, the time period of the violation of the SWO, i.e., February 12 through March 23, 2009; the number of days of the violation, i.e., 28 days; the statutory penalty, i.e., $1,000.00, times the number of days in violation; the total penalty for violating the SWO in the amount of $28,000.00; and a total penalty in the amount of $29,173.08. Majestic entered into a payment agreement with the Department, and the SWO was conditionally released. Majestic does not dispute that the persons listed on the 3rd Amended OPA were employed by it during the time period that the SWO was in effect and that the class codes for the employees are correct. However, Majestic does dispute the assessed penalty in the amount of $28,000.00. At the time of hearing, the number of persons employed by Majestic’s had been considerably reduced to only three employees.
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: Finding that Majestic Custom Homes and Realty, Inc. violated Sections 440.10 and 440.107, Florida Statutes, by failing to secure the payment of workers' compensation coverage for its employees and by failing to cease all business operations at the worksite after service of the Stop-Work Order at the worksite. Affirming and upholding the Stop-Work Order and 3rd Amended Order of Penalty Assessment in the total amount of $29,173.08. DONE AND ENTERED this 28th day of September, 2009, in Tallahassee, Leon County, Florida. ERROL H. POWELL 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 September, 2009.
The Issue Whether Respondent, Department of Financial Services, Division of Workers' Compensation (Department or Respondent), should pay Petitioners’, Stephen Ogles, LLC, or RL Ogles Roofing, LLC (Petitioners), attorney's fees and costs under section 57.111, Florida Statutes (2013),1/ for initiating Division of Administrative Hearings (DOAH) Case Nos. 13-2448 and 13-2517.
Findings Of Fact Respondent is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees and officers, pursuant to section 440.107, Florida Statutes. Petitioners are in the business of roofing, within the construction industry, as defined by subsection 440.02(8), and are Florida employers over whom Respondent has jurisdiction to enforce the payment of workers' compensation premiums for the benefit of Petitioners' employees. Petitioners are the sole members of their respective limited liability companies, each with one employee. An officer of a corporation may elect to be exempt from chapter 440, Workers' Compensation, by filing a notice of election with the Respondent. § 440.02(15)(b)1., Fla. Stat. An officer of a corporation who elects to be exempt from Florida's Workers' Compensation Law is not an employee. § 440.02 (15)(b)3., Fla. Stat. Jonas Hall is employed as an investigator for the Division of Workers’ Compensation. He has been conducting workers’ compensation compliance investigations for approximately five years, and during that time has been involved in between 2,000 and 3,000 investigations. On June 12, 2013, Respondent issued a Stop-Work Order and Order of Penalty Assessment to Stephen Ogles, LLC, and RL Ogles Roofing, LLC, and a Stop Work Order For Specific Worksite Only to Ogles Construction and Roofing, LLC. Findings of Fact 8 through 18 below set forth the specific facts and circumstances known to Respondent at the time the SWO was issued. These facts are based upon the testimony at hearing of Jonas Hall, which is found credible, as well as documentary evidence offered by Respondent, which is corroborative of Mr. Hall’s testimony. Mr. Hall began a random site investigation on June 12, 2013, after he noticed construction work about to be performed at a single-family dwelling located in Live Oak, Florida. Upon investigation, four men were found to be installing roofing at a private residence. One of those workers, Robert Ogles, advised Respondent's investigator that he was working with his three sons, Stephen, Matt, and Robert, Jr. Investigator Hall first spoke to the elder Robert Ogles who advised Investigator Hall that he was the general contractor on the job and that his sons were working as subcontractors. At no time during the interview did Robert Ogles state that his sons were employees of his company, Ogles Construction and Roofing, LLC. Investigator Hall next spoke to Stephen Ogles who stated that he owned his own business and had a valid workers’ compensation exemption. Investigator Hall then spoke to the younger Robert Ogles who also advised him that he owned his own business and had a valid workers’ compensation exemption. Finally, Investigator Hall spoke to the third son, Matt Ogles, who also stated that he owned his own business and had a valid workers’ compensation exemption. At no time during the interview of June 12, 2013, did any of the three sons state that they were employees of their father’s business. After interviewing the four Ogles, Investigator Hall left the jobsite in order to gain access to a wireless internet connection for his computer. Once he obtained a connection, Investigator Hall accessed the Division of Corporations website to look up the correct names of the businesses owned by the four Ogles. With respect to the two Petitioners, the website revealed that Stephen Ogles was the sole member of Stephen Ogles, LLC, and that Robert Ogles, Jr., was the sole member of RL Ogles Roofing, LLC. Investigator Hall then accessed the Coverage and Compliance Automated System (CCAS) to ascertain the status of workers compensation coverage for the four individuals. CCAS revealed that while both Petitioners had at one time held exemptions, both exemptions had expired at the time of Investigator Hall’s site visit on June 12, 2013. Based upon this information, Investigator Hall reasonably concluded that both Petitioners were not in compliance with Florida workers’ compensation coverage requirements. With respect to the third son, Matt, Mr. Hall’s investigation revealed that his company, Matt Ogles, LLC, held a valid exemption, and was therefore compliant with the workers compensation coverage requirements. As such, Investigator Hall did not issue an SWO to Matt Ogles, LLC. After accessing information about Petitioners’ status on his computer, Investigator Hall returned to the jobsite. Upon his return, he observed all four of the Ogles working at the jobsite, with two actively working on the roof of the home. Investigator Hall then called those on the roof down, and served the SWOs on Petitioners. The facts uncovered in Investigator Hall's investigation on June 12, 2013, provided the Department with a reasonable basis to issue the SWOs to Petitioners. On June 17, 2013, Petitioners timely filed a Request for Hearing alleging the affirmative defense that Petitioners had valid workers' compensation exemptions. The Request for Hearing filed on behalf of Stephen Ogles, LLC, specifically stated: The Respondent disputes the SWO, to wit: The Owner’s exemption was not expired. And although worded somewhat differently, the Request for Hearing filed on behalf of RL Ogles Roofing, LLC, stated: The Respondent disputes the SWO, to wit: The WC Exemption was current. The Requests for Hearing filed by Petitioners on June 17, 2013, are consistent with the representations made to Investigator Hall on June 12, 2013, to wit, both Petitioners were subcontractors on the job, and held valid exemptions. On September 10, 2013, Petitioners filed an Amended Request for Hearing disputing the penalty assessment, and contending that Petitioners were employees of Ogles Construction and Roofing, LLC. The Amended Request for Hearing stated in pertinent part: The Respondents disputes the SWO, to wit: Ogles Construction and Roofing LLC disputes the penalty assessment. RL Ogles, LLC contends that he was an employee of Ogles Construction and Roofing, LLC. Stephen Ogles, LLC contends that he was an employee of Ogles Construction and Roofing, LLC. On October 8, 2013, Respondent issued an Order Releasing Stop-Work Order (Revocation) to Stephen Ogles, LLC, and RL Ogles Roofing, LLC. Two witnesses testified as to the reasonableness of the attorney’s fees being sought by Petitioners. Petitioners’ witness on the subject, John Middleton, is a Jacksonville attorney with eight years’ experience in handling workers’ compensation defense matters. Mr. Middleton opined that the $5,000 in fees being claimed by each Petitioner was not excessive, particularly in view of the successful outcomes for Petitioners in the underlying cases. Respondent’s witness, Ralph Paul Douglas, Jr., is a Tallahassee attorney who has concentrated his practice on workers’ compensation matters for twenty years. Mr. Douglas testified that Petitioners’ attorney in the underlying cases claimed 13.3 hours per case for legal services. However, according to Mr. Douglas, at least 1.3 hours of the total hours should be deducted as not awardable due to those hours relating to the preparation of a motion in response to an order to compel. Such fees “cannot be related to any delay, any confusion caused by that party claiming the fees, . . . obfuscation, . . . anything that does not move the case along in the docket.” It was Mr. Douglas’s opinion that 12 hours of legal services is a reasonable number for the underlying cases. However, since the same itemized list of services was submitted for both cases, Mr. Douglas concluded that the second itemized list was duplicative and mostly amounted to only ministerial work. The second itemized list should be, therefore, apportioned. Mr. Douglas testified that a $10,000 fee for the work done on the underlying cases would not be appropriate or reasonable based on the pleadings, the deposition testimony of the attorney performing the work, and the itemization of services. Rather, a reasonable fee would be 12 hours at $200 per hour for one case ($2,400) and $1,200 on the second case. Thus, the total fees that should be awardable for both cases would be $3,600. While the testimony of both Mr. Middleton and Mr. Douglas is credible, the undersigned gives greater weight to the testimony of Mr. Douglas due to his greater experience in the field of workers’ compensation law, and his more detailed analysis of the legal services performed in the underlying cases. The unrebutted testimony presented by Stephen Ogles and Robert Ogles, Jr., established that their respective LLC’s employ fewer than 25 full-time employees and have a net worth of less than $2 million each.
The Issue The issues are whether Respondent violated Chapter 440, Florida Statutes, by failing to obtain workers' compensation insurance, and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees as required by Section 440.107, Florida Statutes (2008). Respondent is a Florida Corporation that engages in the painting business. Abner Gonzalez is Respondent's President. Painting is a workplace operation that satisfies the criteria of the term "construction industry" as set forth in the Basic Manual of the National Council on Compensation Insurance, Inc. (NCCI). On May 15, 2009, Petitioner's investigator, Allen DiMaria conducted an investigation at the intersection of Normandy Boulevard and Guardian Drive in Jacksonville, Florida. Mr. DiMaria observed one worker on a ladder and another worker on the ground painting a block and masonry entrance to a development. The workers at the site identified themselves to Mr. DiMaria as Abner Gonzalez and César Silvestre. Mr. Gonzalez stated that Respondent had a contract to paint the wall and that he and Mr. Silvestre were Respondent's employees. Mr. Gonzalez stated that, as a corporate officer, he had an exemption for workers' compensation. Mr. Gonzalez admitted that Respondent had not secured workers' compensation for Mr. Silvestre. Mr. DiMaria was able to confirm that Mr. Gonzalez had a current valid construction exemption, specifically for painting. However, Mr. Gonzalez did not have a painting exemption for the entirety of the prior three years. On May 15, 2009, Mr. DiMaria issued and personally served on Respondent a Stop-Work Order and Order of Penalty Assessment for failure to comply with statutory requirements. Mr. DiMaria also issued Respondent a Request for Production of Business Records for Penalty Assessment Calculation. Because Respondent did not promptly provide Petitioner with the requested business records, Petitioner's staff imputed Respondent's payroll and calculated the penalty as the average weekly wage rate multiplied by 1.5. pursuant to Section 440.107, Florida Statutes. Petitioner then issued the Amended Order of Penalty Assessment in the amount of $26,180.24 on June 11, 2009. Respondent subsequently provided Petitioner with business records. The records included Respondent's bank statements for the prior three years and Respondent's 2007 Employer's Quarterly Federal Tax Returns. The records also showed that Respondent provided employment without workers' compensation insurance to persons other than Mr. Gonzalez and Mr. Silvestre during the prior three years. On June 26, 2009, Petitioner issued the Second Amended Order of Penalty Assessment based upon Respondent's business records in the amount of $7,641.14. The Second Amended Order of Penalty Assessment, showing the reduced penalty, was served on Respondent by certified mail.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent issue a final order affirming the Stop-Work Order and Second Amended Order of Penalty Assessment in the amount of $7,641.14. DONE AND ENTERED this 14th day of October, 2009, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD 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 October, 2009. COPIES FURNISHED: Paige Billings Shoemaker, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 Abner Gonzales 1924 Firefly Drive Green Cove Springs, Florida 32043 Tracy Beal, Agency Clerk Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
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 The issue is whether Horace Bradley Sheffield Builders, LLC (“Sheffield Builders”), had insufficient workers’ compensation insurance during the time period in question; and, if so, the amount of the resulting penalty.
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 in chapter 440, Florida Statutes (2016),1/ that employers in Florida secure workers’ compensation coverage for their employees. While an exemption can be obtained for up to three corporate officers, any employer in the construction industry with at least one employee must have workers’ compensation coverage. § 440.02(15), Fla. Stat. The Department fulfills its enforcement duty by conducting compliance investigations, and a compliance investigation can begin with a Department investigator visiting a worksite. Lewis Johnson is employed in Tallahassee, Florida, as a compliance investigator for the Department. Mr. Johnson monitors construction and non-construction entities to ensure that they have obtained workers’ compensation coverage. On April 20, 2017, Mr. Johnson was conducting routine checks in the Killearn Lakes area of Tallahassee. He had just visited three worksites and found that the construction firms working those sites had workers’ compensation coverage. Mr. Johnson then drove past a site where a fence was being built: As I saw the fence being built, I stopped momentarily. I took a picture to document the work activity. I then got out and I made contact with the two workers. The first worker identified himself as Horace Bradley Sheffield [III], he advised that he was the subcontractor, owned his own business, Bradley’s Quality Framing and Trim, LLC. He had another gentleman there with him, that gentleman was initially very quiet. I asked Sheffield III whom he worked for, he told me that he was employed by his dad. I asked him who his dad was, he said that his dad was Horace Bradley Sheffield, and that his dad owned Horace Bradley Sheffield Builders, LLC, and that he was the general contractor for the home that was under construction, and that he was working directly for his dad. I then spoke briefly with the gentleman that was with Horace Bradley III regarding his employment. Initially during my conversation with Horace Bradley III, he said that he was trying out this worker. He said that he’d only – he’d been on the job for two days himself, but this was this guy’s first day, and he was just trying him out. So in my conversation with the employee who was identified as Colter Gilmore, Colter said “No, I’m being paid $10 dollars an hour,” and so I documented that information. After the conversation with Mr. Sheffield III, Mr. Johnson looked for any records pertaining to Quality Framing and Trim, LLC, within the Coverage and Compliance Automated System (“CCAS”) and the Division of Corporations. CCAS is a database maintained by the Department, and it enables Department investigators, such as Mr. Johnson, to ascertain if any construction company operating in Florida has workers’ compensation coverage. CCAS indicated that Quality Framing and Trim, LLC, had been dissolved and had no workers’ compensation coverage. CCAS also revealed that Mr. Sheffield III’s exemption had expired on July 10, 2015. After reporting to his supervisor that Mr. Sheffield was paying his son as a subcontractor, Mr. Johnson received authorization to issue a Stop-Work Order to Mr. Sheffield III on April 20, 2017. After issuing the Stop-Work Order, Mr. Johnson testified that he: placed a call to Mr. Horace Bradley Sheffield, the owner of Horace Bradley Sheffield Builders, LLC, Bradley’s dad, and I made him aware of the fact that I had just issued his son a Stop-Work Order for violation of Florida Statute 440; did not have proof of compliance. And then we spoke on the phone regarding that, and he expressed that he did not know, he did not – he was unaware that his son’s workers’ comp exemption had expired. What he said that was most interesting was that he did hire his son as a subcontractor; that he was paying his son directly. I asked him how much, he was paying his son approximately $4.50 a square foot to build a fence, and so that was the renumeration between son and father for the build. And so I then expressed to him that, because of that violation, his son being in violation of Florida Statute 440, that he himself was also in violation because, as a general contractor, it is Mr. Sheffield’s job to demand and require the proof of workers’ compensation coverage from any employer to include a subcontractor. Q: And did Mr. Sheffield do that in this case? A: No, sir, he did not. He sort of indicated that he just failed to do so. Mr. Johnson learned through CCAS that Sheffield Builders had no workers’ compensation policy but that Mr. Sheffield had an exemption for himself. After conferring with his supervisor regarding Mr. Sheffield’s lack of workers’ compensation coverage for those working for Sheffield Builders, Mr. Johnson served a Stop-Work Order and an Order of Penalty Assessment on Mr. Sheffield via hand-delivery on April 21, 2017. The Stop-Work Order required Sheffield Builders to cease all business operations at the Killearn Lakes worksite and was to remain in effect until lifted by the Department. The Order of Penalty Assessment notified Sheffield Builders that it was required to pay an amount: [e]qual to 2 times the amount the employer would have paid in premium when applying approved manual rates to the employer’s payroll during periods for which it failed to secure the payment of workers’ compensation within the preceding 2-year period. Employers who have not been previously issued a Stop-Work Order may receive a credit for the initial payment of the estimated annual workers’ compensation policy premium [for] the dollar or percentage amount attributable to the initial payment of the estimated workers’ compensation expense to a licensed employee leasing contract. In all cases a minimum penalty of $1,000 is assessed against the employer. Section 440.107(7)(d), F.S. Mr. Johnson also served on April 21, 2017, a “Request for Production of Business Records for Penalty Assessment Calculation” (“the Request for Production”). Through the Request for Production, the Department sought various types of financial documents pertaining to Sheffield Builders’ payroll during the period between December 10, 2015, and April 20, 2017 (“the noncompliance period”), so that it could calculate the penalty to be imposed on Sheffield Builders. The business records requested by the Department consisted of payroll documents such as time sheets, check stubs, earnings records, and federal income tax documents; account documents such as all business check journals and statements, including cleared checks for all open and closed business accounts; check and cash disbursements; proof of any workers’ compensation insurance or exemptions; and subcontractor information. The Request for Production required Sheffield Builders to provide the aforementioned records within 10 business days of receiving the Request for Production. Mr. Sheffield provided business records, and the Department used those records to reduce the proposed penalty to $7,801.92. Eunika Jackson, a penalty auditor employed by the Department, calculated the aforementioned penalty based on the business records provided by Mr. Sheffield. For each person for whom Sheffield Builders failed to obtain workers’ compensation coverage during the noncompliance period, Ms. Jackson determined how much money Sheffield Builders paid each person during that period. Sheffield Builders paid $32,477.00 to Mr. Sheffield, III; $1,578.00 to Risocani Alfredo; $16,861.50 to Roland Hedrington; and $100.00 to Adam Chew during the noncompliance period. The gross payroll amount for each person was divided by 100 in order to create a percentage, and the percentage associated with each person was then multiplied by an “approved manual rate.” An approved manual rate is associated with a particular class code. A class code describes an employee’s scope of work based on the type of work he or she performs on a daily basis. The National Council on Compensation Insurance publishes the Scopes Manual, and the Scopes Manual sets forth class codes for numerous types of work. Multiplying the gross payroll percentage by an approved manual rate results in a workers’ compensation insurance premium for a particular employee. As required by section 440.107(7)(d)1., Florida Statutes, each premium amount is multiplied by two in order to calculate a penalty associated with each employee for whom workers’ compensation insurance was not obtained. Ms. Jackson then added the individual penalties associated with Horace Sheffield III, Risocani Alfredo, Roland Hedrington, and Adam Chew in order to calculate the total penalty of $7,801.92. With regard to Mr. Sheffield III, Mr. Sheffield acknowledged at the final hearing that his son did not have workers’ compensation coverage during the time period in question. Mr. Sheffield testified that his son had attempted to renew his exemption on-line but failed to realize that his attempt had been unsuccessful. Mr. Sheffield testified that Roland Hedrington had workers’ compensation through his employer, Professional Electrical Systems. Also, Mr. Sheffield supplied the Department with the workers’ compensation policy that Mr. Hedrington provided to him. Ms. Jackson testified as to why she included the compensation paid to Mr. Hedrington in the penalty calculation: Q: And so Roland Hedrington, why did you put that individual down on the penalty? A: He’s on there because the check images that I reviewed had his name written on the check images. [Mr. Sheffield] came back and gave us a certificate of insurance for Professional Electrical Services – or Systems, I did review that document. In addition to that, I went in to CCAS to determine whether or not if Mr. Roland had a workers’ comp exemption, because per statute and rule, we cannot exempt the payments to an individual if they do not have a workers’ comp exemption, even though the company that they work for may have a workers’ comp policy. So in my review of CCAS, it was determined that Professional Electrical did have a valid workers’ comp policy, but on the exemption tab, there was only one individual who had an exemption, and it wasn’t Mr. Roland. So therefore, the payments issued to Mr. Roland [are] considered uninsured, because the payment was issued to that individual and not the entity. Q: Is Roland listed as an owner of the company? A: He wasn’t. When I did my research in Sunbiz, I didn’t find his name on the employer’s detail. Q: And so from the records, Roland is simply an employee of Professional Electrical Systems, correct? A: Yes. Q: And so the payment that went from [Sheffield Builders] in this case to Roland did not go through the – that transaction was not pursuant [to] a worker’s compensation policy of Professional Systems, correct? A: Correct. Q: Okay. ALJ: So let me make sure I understand. So the check in question – or the payment in question to Mr. Roland Hedrington, he works for some sort of LLC, but the check was made payable to him as an individual? A: Correct. ALJ: All right. And the LLC had [a] workers’ compensation exemption? A: Coverage and an exemption, yes. ALJ: Okay. But the coverage did not apply to Mr. Hedrington? A: It wouldn’t apply because the payment was a direct payment to Mr. Hedrington, and not the payment to Professional Electrical. So if the payment was to Professional Electrical, then it’s indicating that Professional Electrical did the services, and whoever that employer is, in turn, would pay his employees, so the payments are covered. But because the payment document had Roland’s name on it, it’s indicating it’s a direct transaction between a subcontractor and a general contractor, not the actual entity that he works for. ALJ: So let me ask a question. So because a check was written to this individual, Mr. Roland Hedrington, I guess in theory he could have been working on his own accord, and that – and he doesn’t have workers’ comp as an individual, so that’s why you put him in the penalty calculation. A: Correct. ALJ: Okay. But if the check had been written payable to the LLC that had coverage, then it would not have gone to the calculation? A: Correct. There is no dispute regarding the mechanics behind the Department’s calculation of the penalty. The only dispute concerns the Department’s inclusion of the funds paid to Mr. Sheffield III, and Mr. Hedrington in the penalty calculation. The Department has proven by clear and convincing evidence that the payments from Sheffield Builders to Horace Sheffield III, Risocani Alfredo, and Adam Chew were not covered by workers’ compensation coverage and that Sheffield Builders should be fined $6,031.46. The Department has not proven by clear and convincing evidence that Roland Hedrington was not working under the auspices of Professional Electrical Systems when Mr. Hedrington performed work for Sheffield Builders during the noncompliance period. As a result, the payment to Mr. Hedrington should not be included in the Department’s penalty calculation.
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 imposing a penalty of $6,031.46 on Sheffield Builders, LLC. DONE AND ENTERED this 27th day of July, 2018, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of July, 2018.
