Findings Of Fact 12. The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on February 17 2009, and the Third Amended Order of Penalty Assessment issued on September 4, 2009, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop- Work Order and Order of Penalty Assessment and the Third Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-042-D7, and being otherwise fully advised in the premises, hereby finds that: 1. On February 17, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-042-D7 to ROYMO, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of rights wherein ROYMO, INC. was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 2. On February 17, 2009, the Stop-Work Order and Order of Penalty Assessment was served via personal service on ROYMO, INC. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On February 25, 2009, the Department issued an Amended Order of Penalty Assessment to ROYMO, INC. in Case No. 09-042-D7. The Amended Order of Penalty Assessment assessed a total penalty of $61,692.98 against ROYMO, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein ROYMO, INC. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 4. The Amended Order of Penalty Assessment was served on ROYMO, INC. by personal service on February 25, 2009. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On March 10, 2009, ROYMO, INC. filed a timely Petition for a formal administrative hearing in accordance with Sections 120.569 and 120.57, Florida Statutes. The Petition was forwarded to the Division of Administrative Hearings and assigned Case No. 09- 1388. 6. On September 4, 2009, the Department issued a Third Amended Order of Penalty Assessment to ROYMO, INC. in Case No. 09-042-D7. The Third Amended Order of Penalty Assessment assessed a total penalty of $29,911.26 against ROYMO, INC. The Third Amended Order of Penalty Assessment was served on ROYMO, INC. through the Division of Administrative Hearings. A copy of the Third Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and is incorporated herein by reference. 7. On November 6, 2009, ROYMO, INC. filed a Notice of Voluntary Dismissal in DOAH Case No. 09-1388. A copy of the Notice of Voluntary Dismissal filed by ROYMO, INC. is attached hereto as “Exhibit D.” 8. On November 9, 2009 Administrative Law Judge Daniel M. Kilbride entered an Order Closing File, relinquishing jurisdiction to the Department. A copy of the November 9, 2009 Order Closing File is attached hereto as “Exhibit E.”
Findings Of Fact 8. The factual allegations contained in the Order of Penalty Assessment issued on September 22, 2009, which is fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-235-D3-OPA, and being otherwise fully advised in the premises, hereby finds that: 1. On July 8, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Request for Production of Business Records for Penalty Assessment Calculation in Division of Workers’ Compensation Case No. 09-235-D3- OPA to JUAN MERLO D/B/A MERLO HARVESTING. 2. On July 8, 2009, the Request for Production of Business Records for Penalty Assessment Calculation was served by personal service on JUAN MERLO D/B/A MERLO HARVESTING. A copy of the Request for Production of Business Records for Penalty Assessment Calculation is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On September 22, 2009, the Department issued an Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-235-D3-OPA to JUAN MERLO D/B/A MERLO HARVESTING. The Order of Penalty Assessment assessed a total penalty of $104,004.19 against JUAN MERLO D/B/A MERLO HARVESTING. The Order of Penalty Assessment included a Notice of Rights wherein JUAN MERLO D/B/A MERLO HARVESTING was advised that any request for an administrative proceeding to challenge or contest the Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 4. On September 25, 2009, the Order of Penalty Assessment was served by certified mail on JUAN MERLO D/B/A MERLO HARVESTING. A copy of the Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On October 13, 2009, JUAN MERLO D/B/A MERLO HARVESTING filed a petition for administrative review with the Department. The petition for administrative review was forwarded to the Division of Administrative Hearings on October 22, 2009, and the matter was assigned DOAH Case No. 09-5854. 6. On December 14, 2009, JUAN MERLO D/B/A MERLO HARVESTING filed A Notice of Voluntary Dismissal with the Division of Administrative Hearings. A copy of the Notice of Voluntary Dismissal is attached hereto as “Exhibit C” and incorporated herein by reference. 7. On December 16, 2009, the Administrative Law Judge issued an Order Closing File which relinquished jurisdiction to the Department for final agency action. A copy of the Order Closing File is attached hereto as “Exhibit D” and incorporated herein by reference.
The Issue Whether the Respondent, Steve Mundine Construction, Inc., timely challenged the Second Amended Order of Penalty Assessment and, if not, whether pursuant to the doctrine of equitable tolling Respondent’s untimely filed challenge should be accepted.
Findings Of Fact The Petitioner is the state agency charged with the responsibility of enforcing and assuring employers meet the requirements of chapter 440, Florida Statutes. The law in Florida requires employers to maintain appropriate workers’ compensation coverage for their employees. At all times material to this case, the Respondent was doing business in Florida and was subject to the requirements of the law. On May 6, 2015, Stephanie Scarton, an investigator employed by the Petitioner, stopped at one of the Respondent’s construction sites and initiated an investigation as to whether the Respondent maintained appropriate workers’ compensation for the two employees found at the job site. After determining that the requisite documentation for workers’ compensation coverage was not produced, Ms. Scarton issued a Stop-Work Order (Petitioner’s Exhibit A). The Stop- Work Order advised the Respondent that he, Steven Mundine, d/b/a, Steve Mundine Construction, Inc., was in violation of Florida law by “failing to obtain coverage that meets the requirements of chapter 440, F.S., and the Insurance Code.” Petitioner’s Exhibit A included a Notice of Rights that provided, in part: You have a right to administrative review of this action by the Department under sections 120.569 and 120.57, Florida Statutes. * * * FAILURE TO FILE A PETITION WITHIN THETWENTY-ONE (21) DAYS CONSTITUTES A WAIVER OF YOUR RIGHT TO ADMINISTRATIVE REVIEW OF THEAGENCY ACTION. [Emphasis in original] In response to the Stop-Work Order, the Respondent met with Cathy Nunez on May 7, 2016, and executed an Agreed Order of Conditional Release from Stop-Work Order (Petitioner’s Exhibit B). In addition to signing the agreed order, the Respondent submitted an affidavit that provided: I Steve Mundine have terminated Bill Busch and Karl G. Kerr. I am no longer conducting business as Steve Mundine Const. Inc. I have opened a new company Paradigm Building, LLC but will not work til we applied and received exemptions. Including Richard Hans. Under the terms of the Agreed Order of Conditional Release from Stop-Work Order the Respondent represented that he would remit periodic payments of the remaining penalty amount pursuant to a Payment Agreement Schedule for Periodic Payment of Penalty with the Department or pay the remaining penalty amount in full within 28 days after the service of the Stop-Work Order. As a condition of receiving the conditional release the Respondent remitted $1,000.00 toward the penalty amount. In order to assist the Petitioner with the accurate calculation of the penalty that would be due, the Respondent was advised that he needed to submit records. When the Respondent asked Cathy Nunez if he needed to retain a lawyer, she did not tell him that he did not need a lawyer. She advised him that a lawyer was not required to produce the records that were needed to make the penalty calculation. The Respondent did produce records to the Petitioner and in turn an Amended Order of Penalty Assessment (Petitioner’s Exhibit C) was completed that advised the Respondent that he owed a total penalty of $63,837.82. Cathy Nunez hand-delivered the Amended Order of Penalty Assessment to the Respondent on July 24, 2015. Included was a second Notice of Rights that advised the Respondent of his right to challenge the assessment. Additionally, the Respondent was advised that a petition to seek administrative review of the action had to be filed within twenty-one days. After considering additional records submitted by the Respondent, the Petitioner prepared a Second Amended Order of Penalty Assessment (Petitioner’s Exhibit D) to itemize the revised amount owed by the Respondent. The Second Amended Order of Penalty Assessment ordered the Respondent to pay a total penalty of $47,006.28. Stephanie Scarton delivered the Second Amended Order of Penalty Assessment to the Respondent on December 22, 2015. At the same time (December 22, 2015), Ms. Scarton presented the Respondent with a Payment Agreement Schedule for Periodic Payment of Penalty (Petitioner’s Exhibit E). The payment agreement acknowledged that the Respondent had previously remitted $1,000.00 toward his penalty and allowed for the remaining $46,006.28 to be repaid over the course of 60 monthly payments. The Respondent did not agree to sign the payment agreement. Accordingly, a blank agreement was left with the Respondent, not the one providing for the payments previously described. On December 22, 2015, the Respondent disagreed with the repayment amount and believed the penalty had been incorrectly calculated. On December 22, 2015, the Respondent knew he had a limited amount of time to challenge the Second Amended Order of Penalty Assessment. On December 22, 2015, Ms. Scarton hand-delivered to the Respondent the Second Amended Order of Penalty Assessment including a Notice of Rights. The only documents not left with the Respondent on December 22, 2015, were copies of the payment agreement signed by Ms. Scarton. On December 22, 2015, the Notice of Rights provided to the Respondent was identical to the Notice of Rights previously provided to him. Before leaving the Respondent on December 22, 2015, Ms. Scarton reminded the Respondent he had a limited amount of time to file a petition seeking administrative review of the agency action. The Petitioner did not misrepresent the procedural requirements to challenge the agency action, did not lull the Respondent into a false sense of security or inaction, and did not advise the Respondent as to whether he should retain a lawyer in connection with an administrative review of the penalty assessment. The weight of the credible evidence supports the finding that when the Respondent eventually filed a petition to challenge the agency action, it was beyond the 21 days allowed by law.
Recommendation Based upon 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 the Respondent’s request for administrative review of the Second Amended Order of Penalty Assessment was not timely filed. DONE AND ENTERED this 27th day of May, 2016, in Tallahassee, Leon County, Florida. S J. D. PARRISH 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 May, 2016. COPIES FURNISHED: Christopher Ivey Miller, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 (eServed) John Laurance Reid, Esquire Dickens Reid PLLC 517 East College Avenue Tallahassee, Florida 32301 (eServed) Young J. Kwon, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 (eServed) Michael Joseph Gordon, Esquire Florida Department of Financial Services Workers Compensation Compliance 200 East Gaines Street Tallahassee, Florida 32399 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
The Issue Whether Gio & Sons, Inc. (Respondent) violated Sections and 440.38, Florida Statutes, and if so, what penalty should be imposed. References to sections are to the Florida Statutes (2004).
Findings Of Fact Petitioner is the state agency responsible for enforcing provisions of Florida law, specifically Chapter 440, Florida Statutes, which require that employers secure workers’ compensation coverage for their employees. Respondent, whose principal is Giovanny Martinez, Jr. (Mr. Martinez), is in the business of providing drywall installation services. At all times material to this case, Respondent is an employer within the meaning of Section 440.02(16)(a), Florida Statutes. At all times material to this case, Respondent was legally obligated to provide workers' compensation insurance in accordance with the provisions of Chapter 440, Florida Statutes, for all persons employed by Respondent to provide drywall installation services within Florida. In particular, Chapter 440 requires that the premium rates for such coverage be set pursuant to Florida law. At all times material to this case, Respondent failed to obtain workers' compensation coverage on behalf of over 150 employees. It is undisputed that Respondent had not furnished the required coverage, and that there was no valid exemption from this requirement. Accordingly, on February 26, 2004, the Stop Work Order was properly entered. Thereafter, Petitioner reviewed Respondent's payroll records, which revealed that Respondent employed the individuals referred to in paragraph 5, whose identities are not in dispute, under circumstances which obliged Respondent to provide workers' compensation coverage for their benefit. Based upon Respondent’s payroll records, Petitioner correctly calculated the penalty amount imposed by law under all the circumstances of the case, and issued the Amended Order imposing a penalty assessment in the amount of $107,885.71. Mr. Martinez does not dispute the factual or legal merits of Petitioner's case.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order that affirms the Amended Order in the amount of $107,885.71. DONE AND ENTERED this 15th day of December, 2004, in Tallahassee, Leon County, Florida. S FLORENCE SNYDER RIVAS 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 15th day of December, 2004. COPIES FURNISHED: Joe Thompson, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 Giovanny Martinez, Jr. Gio & Sons, Inc. 6910 Southwest 18th Court Pompano Beach, Florida 33068 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florid a 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue is whether the Stop-Work Order and 2nd Amended Order of Penalty Assessment issued by Petitioner, Department of Financial Services, Division of Workers' Compensation (Department), on July 1, 2015, and February 29, 2016, respectively, should be upheld.
Findings Of Fact The Department is the state agency responsible for enforcing the various requirements of chapter 440. Respondent is a Florida corporation with offices located at 1904 28th Avenue North, St. Petersburg, Florida. The company is engaged in the construction business, and its activities fall within the statutory definition of "construction industry." See § 440.02(8), Fla. Stat. Respondent also does business under the name of M & M Construction of South Florida, but both are the same corporate entity with the same Federal Employer Identification Number and use the same bank accounts. Respondent's assertion that the two are separate and work done under the "d/b/a" name cannot be used to establish liability under chapter 440 is rejected. On July 1, 2015, Munal Abedrabbo, a Department compliance inspector, made a random inspection of a job site at 4115 East Busch Boulevard, Tampa, where remodeling work on a commercial building was being performed. When he entered the premises, Mr. Abedrabbo observed Bernard Reed on a ladder painting an interior ceiling. After identifying himself, he informed Mr. Reed that he needed to verify his insurance coverage. Mr. Abedrabbo was directed to Mr. Cook, Respondent's vice-president and part owner, who acknowledged that he was the general contractor on the job and had three employees/painters working that day, Reed, James Dabnes, and John Russell. Mr. Cook informed the inspector that the three employees were leased from Paychek, Inc., an employee leasing company, and that firm provided workers' compensation coverage for the leased employees. Mr. Abedrabbo returned to his vehicle and accessed on his computer the Department of State, Division of Corporations, Sunbiz website to verify Respondent's status as a corporation. After verifying that it was an active corporation, he then checked the Department's Coverage and Compliance Automated System to verify whether Respondent had a workers' compensation policy or any exemptions. He was unable to find any active policy for Respondent, as the most recent policy had lapsed in January 2013. Mr. Cook has an exemption, covering the period October 20, 2014, through October 19, 2016, but the exemption is with a different company, Thomas Cook Carpenter, LLC. Mr. Abedrabbo spoke again with Mr. Cook and informed him that Department records showed no insurance coverage for his employees. Mr. Cook telephoned Paychek, Inc., and then confirmed that the three painters had no workers' compensation insurance. Mr. Cook explained that before he allowed Mr. Reed to begin work, Mr. Reed had shown him an insurance certificate that turned out to be "falsified," and then "conveniently lost it" when the inspector appeared. He also explained his firm "was caught with our pants down once before" and he did not want it to happen again. For that reason, he contended he was especially careful in hiring leased employees. Even so, he does not deny that Respondent has had no insurance in place since January 2013 and Paychek, Inc., failed to provide coverage. The Department issued a Stop Work Order and Penalty Assessment the same day. To determine the amount of Respondent's unsecured payroll for purposes of assessing a penalty in accordance with section 440.107(7)(d)(1), Florida Statutes, the Department requested Respondent to provide business records for the preceding two years. This period of non-compliance is appropriate, as Respondent was actively working in the construction industry during that time period without securing insurance. The request informed Mr. Cook that if complete records were not provided, the Department would use the imputation formula found in section 440.107(7)(e) to calculate the penalty. After reviewing the information provided by Respondent, on August 18, 2015, the Department issued an Amended Order of Penalty Assessment in the amount of $114,144.52 for the period July 7, 2014, through June 30, 2015. Based on two depositions of Mr. Cook, a 2nd Amended Order of Penalty Assessment in the amount of $105,663.48 was issued on February 29, 2016. The Department penalty auditor calculated the final penalty assessment using the "imputed" method because insufficient business records were provided to determine Respondent's payroll for all relevant time periods, except the month of October 2014. In addition to missing bank statements and check images, Respondent failed to provide its entire second bank account. Although Mr. Cook contends some records were in the possession of M & M Construction of South Florida, and he could not access them in a timely manner, this does not excuse Respondent's failure to timely produce all relevant records. Under the imputed method, the penalty auditor used the average weekly wage ($841.57) times two to determine Respondent's payroll for the imputed portions. See Fla. Admin. Code R. 69L-6.028(2); § 440.107(7)(e), Fla. Stat. The gross payroll was then divided by 100 in order to be multiplied by the applicable approved manual rates. The Department applied the proper methodology in computing the penalty assessment. A class code is a numerical code, usually four digits, assigned to differentiate between the various job duties or scope of work performed by the employees. The codes were derived from the Scopes Manual Classifications (Manual), a publication that lists all of the various jobs that may be performed in the context of workers' compensation. The Manual is produced by the National Council on Compensation Insurance, Inc., an authoritative data collecting and disseminating organization for workers' compensation. The Manual provides that class code 5474 applies to painters who perform painting activities. Reed, Dabnes, and Russell were assigned this code. Mr. Cook agrees this code is correct. Mr. Cook was assigned class code 5606 (construction executive) and placed on the penalty assessment because he is an owner of the corporation and was managing the work. Although Mr. Cook argues he had an exemption and should not be placed on the assessment, Department records reflect that Mr. Cook had an exemption with a different company during the audit period. Therefore, his inclusion in the employee census was correct. Because Respondent's business records included checks written to Kerry Francum for tile work, he was assigned class code 5348 (tile work) and placed on the penalty assessment as an employee. At his deposition, Mr. Cook acknowledged that Francum performed tile work for his firm and was an employee. At hearing, Mr. Cook changed his testimony and contended Francum was only a material supplier, not a subcontractor, and should not be on the penalty assessment. This assertion has not been accepted. Mr. Francum's inclusion on the assessment is appropriate. Respondent's business records also indicated a check was written to Kerry Randall, a tile subcontractor. At hearing, however, Mr. Cook established, without contradiction, that because of Mr. Randall's violent temper, he was paid a one-time fee of $1,000.00 and let go before he performed any work. Mr. Randall should be removed from the assessment. The Department has demonstrated by clear and convincing evidence that the 2nd Amended Order of Penalty Assessment is correct, less any amount owed for Mr. Randall.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order assessing Respondent the penalty in the 2nd Amended Order of Penalty Assessment, less any amount owed for Mr. Randall. DONE AND ENTERED this 21st day of November, 2016, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER 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 21st day of November, 2016.
The Issue Whether Respondent violated chapter 440, Florida Statutes (2016), by failing to secure payment of workers’ compensation coverage, as alleged in the Stop-Work Order (“SWO”) and Third Amended Order of Penalty Assessment (“Third AOPA”); and, if so, whether Petitioner correctly calculated the proposed penalty assessment against Respondent.
Findings Of Fact Based on the oral and documentary evidence admitted at the final hearing, and the entire record in this proceeding, the following Findings of Fact are made: Background 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. The Department is the agency responsible for conducting random inspections of jobsites and investigating complaints concerning potential violations of workers’ compensation rules. Gregg Construction is a corporation engaged in business in the State of Florida. Gregg Construction has been operating as a business since November 9, 2007. William Gregg is the owner of Gregg Construction and its sole employee. The address of record for Gregg Construction is 166 Big White Oak Lane, Crawfordville, Florida 32327. On June 15, 2017, the Department’s investigator, Lewis Johnson, conducted a routine visit to a jobsite to conduct a compliance investigation. Mr. Johnson observed Mr. Gregg use a table saw, measure, and cut a piece of wood. Mr. Johnson then observed Mr. Gregg nail the wood to the exterior wall of the home at the jobsite. After Mr. Johnson inquired about the work Mr. Gregg was performing, Mr. Gregg ultimately told Mr. Johnson that he was working as a subcontractor for Respondent. Based on Mr. Johnson’s observations, Mr. Gregg was performing construction-related work at the job site. Mr. Johnson then conducted a search of the Department’s Coverage and Compliance Automated System (“CCAS”), which revealed that Respondent did not have active workers’ compensation coverage for Mr. Gregg. Based on the results of his investigation, on May 10, 2017, Mr. Johnson issued a SWO to Respondent for failure to maintain workers’ compensation coverage for its employees. On May 10, 2017, Mr. Johnson hand-served a Request for Production of Business Records for Penalty Assessment Calculations (“Records Request”) on Respondent. The Records Request directed Respondent to produce business records for the time period of May 10, 2015, through May 11, 2017. While Respondent provided tax returns, it did not provide sufficient business records to the Department. Penalty Assessment To calculate the penalty assessment, the Department uses a two-year auditing period looking back from the date of the SWO, May 10, 2017, also known as the look-back period. Generally, the Department uses business records to calculate the penalty assessment. If the employer does not produce records sufficient to determine payroll for employees, the Department uses imputed payroll to assess the penalty as required by section 440.107(7)(e) and Florida Administrative Code Rule 69L-6.028. Eunika Jackson, a Department penalty auditor, was assigned to calculate the penalty assessment for Respondent. Based upon Mr. Johnson’s observations at the jobsite on May 10, 2017, Ms. Jackson assigned National Council on Compensation Insurance (“NCCI”) classification code 5645 to calculate the penalty. Classification code 5645 applies to work involving carpentry. Ms. Jackson applied the approved manual rates for classification 5645 for the work Mr. Johnson observed Mr. Gregg perform. The application of the rates was utilized by the methodology specified in section 440.107(7)(d)1. and rule 69L- 6.027 to determine the penalty assessment. The manual rate applied in this case was $15.91 for the period of May 11, 2015, through December 31, 2017; and $16.92 for the period of January 1, 2016, through June 10, 2017. The statewide average weekly wage, effective January 1, 2017, was used to calculate the penalty assessment. Mr. Johnson discovered that Mr. Gregg previously held an exemption, which expired on April 26, 2013. Although Mr. Gregg currently has an exemption, his exemption was not in effect during the audit period. On June 6, 2017, the Department issued its first AOPA that ordered Respondent to pay a penalty of $46,087.72, pursuant to section 440.107(7)(d). On August 1, 2017, Petitioner issued the Second AOPA based upon records submitted by Respondent, which reduced the penalty assessment to $14,752.62. After this matter was referred to the Division, on January 23, 2018, Petitioner filed a Motion for Leave to Amend Order of Penalty Assessment and issued the Third AOPA based upon records submitted by Respondent. Based on the Department’s calculation, the record demonstrates that the penalty assessment, based on records provided by Respondent, would be $9,785.50.
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 the following: that Respondent failed to secure and maintain workers’ compensation coverage for Mr. Gregg; and that Respondent shall pay a penalty of $9,785.50.1/ DONE AND ENTERED this 23rd day of March, 2018, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN 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 23rd day of March, 2018.
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes (2016),1/ by failing to secure the payment of workers’ compensation coverage, as alleged in the Third Amended Order of Penalty Assessment; and, if so, what penalty is appropriate.
Findings Of Fact Parties. The Department is responsible for enforcing the requirements of chapter 440, which mandate employers in Florida secure the payment of workers’ compensation insurance to cover their employees in case of workplace injuries. § 440.107, Fla. Stat. ASAP Flooring is owned and operated by Mr. Reinartsen; it has been an active corporation since 2006. ASAP Flooring provides flooring, painting and drywall services for construction projects. Ms. Brigantty is a Department compliance investigator. Her job is to ensure compliance by employers in her district with the workers’ compensation insurance regulations. Her job duties include conducting investigations triggered either through a report to the Department of non-compliance or through random inspections of workplaces and jobsites. As part of her investigative duties she conducts employer and employee interviews, collects financial documentation, and researches various data banks for corporate and workers’ compensation status. Department’s Investigation and Assessment. On October 24, 2016, Ms. Brigantty was driving around Pinellas County as part of her work duties. She stopped to conduct a random check at a residential construction site located at 3583 Douglas Place, Palm Harbor, Florida 34683 (“Jobsite”). At the Jobsite, Ms. Brigantty observed two men -- later identified as Eric Reinartsen and Wallace Humbert -- preparing and installing floors. After identifying herself as a compliance officer and interviewing them, she discovered Mr. Reinartsen was the owner of ASAP Flooring, and Mr. Humbert was an ASAP Flooring employee. Mr. Reinartsen admitted ASAP Flooring did not have workers’ compensation. At the time, he believed ASAP Flooring was exempt from the workers’ compensation insurance requirements due to his role as a corporate officer and because it only had one employee. During the initial interview, Ms. Brigantty learned Mr. Humbert had worked for ASAP Flooring for four or five months and was paid a flat fee per job. After meeting with Mr. Reinartsen, Ms. Brigantty checked the Florida Department of State, Division of Corporations website to confirm Respondent’s status as an active corporation, and that Mr. Reinartsen was its only officer. Mr. Brigantty then used the Department’s database, Coverage and Compliance Automated System (“CCAS”), which contained information on employers and their workers’ compensation status and any exemptions. According to CCAS, at the time of Ms. Brigantty’s inspection, ASAP Flooring had no workers’ compensation insurance. CCAS also reflected Respondent had an exemption from the workers’ compensation insurance requirements for Mr. Reinartsen because he was its sole corporate officer, but there was no exemption for Mr. Humbert or for any other employees. On October 24, 2016, after confirming ASAP Flooring had at least one employee, but had not secured workers’ compensation insurance, the Department issued a SWO and had it personally served on Mr. Reinartsen at the Jobsite.3/ At this time, the Department also served Mr. Reinartsen with a Request for Production of Business Records for Penalty Assessment Calculations. In response, Respondent provided bank statements, check images, check stubs, tax information and e-mails to the Department. These documents showed that during the previous two-year period (“look-back period”), October 24, 2014, to October 24, 2016, Respondent had a number of employees, but did not have workers’ compensation coverage for them. At the hearing, Respondent did not dispute ASAP Flooring was required to have workers’ compensation insurance, the status of the people identified as employees, or the fact that it did not have adequate workers’ compensation coverage.4/ Penalty Calculation. To calculate the penalty assessed against Respondent, the Department’s Auditor utilized the information she gleaned from documents submitted by Respondent and through Mr. Reinartsen’s deposition testimony taken in these proceedings. She then applied the formulas and rules set forth in the Florida Administrative Code to the information and utilized a Penalty Calculation Worksheet (the “worksheet”) to compute the final penalty assessment amount. The worksheet for the Third OPA is attached as Appendix “A” to this Recommended Order (“Appx. A”). Through her review of ASAP Flooring’s business records and Mr. Reinartsen’s deposition testimony, the Auditor confirmed (1) the individuals who were direct employees or construction subcontractors during those periods of non-compliance (Appx. A, column “Employer’s Payroll”); (2) the periods of non-compliance (Appx. A, column “b”); (3) the gross payroll for those individuals during these periods of non-compliance (Appx. A, column “c”); and (4) the services provided by those individuals. The Auditor used the services to determine the classification codes created by the National Council on Compensation Insurance (“NCCI”), and listed in the NCCI’s Scopes Manual, which has been adopted by the Department through Florida Administrative Code Rule 69L-6.021(1). These classification codes are four-digit codes assigned to various occupations by the NCCI to assist in the calculation of workers’ compensation insurance premiums. To derive the gross pay figures in the worksheet (Appx. A, column “c”) the Auditor explained she utilized payment information in the ASAP Flooring’s business records. Although Respondent initially asserted some of these payments were actually for both labor and materials, these distinctions were not detailed in the business records created at the time of service or payment. Regardless, pursuant to rule 69L-6.035(i) and (j), the Auditor excluded the cost of materials from the payroll calculations. Specifically, she applied an “80:20” ration rule for those payments Respondent claimed were partly labor and partly materials: considering 80 percent of the total payment as “labor” for penalty calculation purposes; and excluding 20 percent for penalty calculation purposes as “materials.” Using the gross payroll (Appx. A, column “c”) and the appropriate NCCI manual rate (Appx. A, column “e”), the Auditor calculated the premium rate (Appx. A, column “f”) for each individual or entity (Appx. A, column “Employer’s Payroll”). She then multiplied the premium rate by two to reach a penalty amount (Appx. A, column “g”). This calculation method to determine a final penalty is authorized by section 440.107(7)(d)1., and rule 69L-6.027. Ultimately, based on the amounts indicated in the worksheet, the Department issued a Third Amended OPA calculating the penalty as $15,577.84. The Department applied a 25 percent reduction, yielding a remaining penalty of $11,683.38. According to the evidence, in November 2016, Respondent paid $1,000 to the Department as a “down payment” toward any ultimate assessment. Applying this $1,000 as a credit to the penalty in the Third OPA results in Respondent owing $10,683.38. Respondent’s Defenses. At the final hearing, Mr. Reinartsen did not dispute any of the figures in the worksheet or the penalty amount. Rather, he raised three arguments unrelated to ASAP Flooring’s failure to secure workers’ compensation insurance for its employees. First, Respondent asserted Ms. Brigantty was not properly outfitted to enter a construction site and therefore, he argued, she was violating rules set forth by the Occupational Safety and Health Agency (“OSHA”). Ms. Brigantty admitted she was not wearing a hard hat, and did not think she was wearing steel-toed boots with hard soles when she entered the Jobsite. Second, Respondent argued Ms. Brigantty did not issue a SWO to another contractor at a neighboring construction site who was putting in pavers, identified only as “Luis.” Mr. Reinartsen could not provide the name of the other contractor’s company, a last name, or any other identifying information; nor did Respondent provide evidence that “Luis” was in a similar situation: non-compliant with and non-exempt from chapter 440. Ms. Brigantty did not remember going to the neighboring site or speaking to anyone else during her stop at the Jobsite. Finally, Respondent argued the penalty is substantial and payment in full (as opposed to a payment plan spread out over a number of years) would put him and his small family-owned company out of business. Ultimate Findings. The Department demonstrated, by clear and convincing evidence, Respondent violated chapter 440 as charged in the SWO by failing to secure workers’ compensation coverage for its employees. The Department demonstrated, by clear and convincing evidence, the penalty for this violation is $11,683.38.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: The Department of Financial Services, Division of Workers’ Compensation, enter a final order determining that Respondent, ASAP Flooring, violated the requirement in chapter 440 to secure workers’ compensation coverage and imposing a total penalty of $11,683.38, less the $1,000 down payment, the balance to be paid in $100 a month increments. DONE AND ENTERED this 12th day of February, 2018, in Tallahassee, Leon County, Florida. S HETAL DESAI Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of February, 2018.
The Issue The issue in this case is whether Elite Restoration and Construction, LLC (Respondent), violated the provisions of chapter 440, Florida Statutes,1/ by failing to secure the payment of workers’ compensation, as alleged in the Stop-Work Order and Second Amended Order of Penalty Assessment; and, if so, what is the appropriate penalty.
Findings Of Fact The Department 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 corporate officers. Respondent is an active Florida corporation that was formed on August 28, 2009, with a principal address of 7185 West Village Drive, Homosassa, Florida 34446. Respondent was engaged in business operations in the state of Florida during the entire period of November 2, 2014, to November 1, 2016. Brian Johnson (Respondent’s owner or Mr. Johnson) is Respondent's sole shareholder, owning 100 percent of the stock. The Department's investigator, Michael Robinson, commenced a random worksite compliance investigation on November 1, 2016, at a gas station at 970 Atlantic Boulevard, Jacksonville, Florida 32225. He observed Respondent's owner, Mr. Johnson, and three others, Tim Neeld, Derrick Windier, and James Ingash, painting a metal canopy covering the gas pumps. Mr. Johnson told the investigator that his company, Elite Restoration & Construction, LLC, was a subcontractor for Aluminum Plus of DeLand, Florida. By searching the Division's Coverage and Compliance Automated System, the investigator determined that Brian Johnson obtained a workers' compensation exemption on October 12, 2016, or 20 days prior to the investigation, and further determined that an employee leasing contract previously held by Respondent terminated on January 15, 2015, which is more than nine months prior to the investigation. Mr. Johnson confirmed that Respondent had an exemption for himself, effective October 12, 2016, but did not have any workers' compensation insurance for its employees. On November 1, 2016, after consulting with a supervisor, the Department's investigator issued the Stop-Work Order, which was posted at Respondent's worksite and personally served upon Respondent’s owner. On the same day, the investigator also personally served the Request for Production, which requested business records to determine Respondent's payroll during the two-year penalty period proscribed by section 440.107(7)(d)1., which in this case is from November 2, 2014, to November 1, 2016. The Request for Production explicitly states that the requested records must be provided within 10 business days from receipt of the request. Respondent obtained an Agreed Order of Conditional Release from the Stop-Work Order on November 8, 2016, by terminating the three workers observed during the compliance investigation who did not have workers’ compensation coverage and paying the Department a $1,000 down payment toward the penalty that would be calculated in this case. Respondent produced business records for penalty calculation on November 17, 2016, and February 28, 2017, which is beyond the 10-day time period required by the Request for Production.2/ The Department's penalty auditor, Lynne Murcia, used those records to calculate a $21,475.30 penalty for failing to comply with the workers' compensation insurance requirements of chapter 440. On April 20, 2017, when Respondent’s owner came to the Department’s Jacksonville office, he was personally served with the Amended Penalty and advised of his right to seek administrative review of the Stop-Work Order and Amended Penalty. Mr. Johnson filed a petition for hearing on behalf of Respondent on May 5, 2017, stating that the penalty calculated was wrong because it included income earned in states other than Florida. Respondent produced additional business records on May 17, August 21, and August 31, 2017, for the purpose of demonstrating that a portion of his company’s payroll was derived from work completed at worksites outside of Florida, and arguing that the out-of-state payroll should not be included in the penalty calculation. The invoices showed $182,056.78 in total income, consisting of $77,268 from 14 jobs in Florida, and $104,788.60 for 14 jobs outside of the State of Florida. Upon initial review, the Department’s auditor declined to make any adjustments because the invoices did not provide information showing earnings of specific employees for jobs outside of Florida. Thereafter, Mr. Johnson produced additional records that allowed the Department’s auditor to trace out-of-state employment to transactions in Respondent’s general ledger. The Department's auditor reviewed Respondent's additional records and removed out-of-state payroll and per diem payments. In accordance with that review, the Department issued the 2nd Amended Penalty which reduced the penalty to $16,671.14. The 2nd Amended Penalty also reduced the 2016 payroll attributed to Respondent's owner. Respondent was an "employer" in the state of Florida, as that term is defined in section 440.02(16), from November 2, 2014, to November 1, 2016. Respondent did not secure the payment of workers' compensation insurance coverage, nor have others secured the payment of workers' compensation insurance coverage for the employees listed on the penalty worksheet of the 2nd Amended Penalty during the periods of noncompliance listed on the penalty worksheet. None of the employees listed on the penalty worksheet of the 2nd Amended Penalty had a valid Florida workers' compensation coverage exemption during the periods of noncompliance listed on the penalty worksheet. In the past, Respondent had an employee leasing contract with Southeast Personnel Leasing, Inc. That contract was terminated on January 15, 2015, due to the leasing company’s concerns about out-of-state employment that would not be covered by the leasing company's workers' compensation insurance. None of the employees listed on the penalty worksheet of the 2nd Amended Penalty were "independent contractors" as that term is defined in section 440.02(15)(d)1. None of the employees listed on the penalty worksheet of the 2nd Amended Penalty were employees of a temporary labor company. Employees on the penalty worksheet of the 2nd Amended Penalty are correctly classified under Class Code 5474, painting, as defined in the "Scopes Manual" published by the National Council on Compensation Insurance, Inc. (NCCI), and adopted in Florida Administrative Code Rule 69L-6.021(2)(jj). The approved manual rates used in the penalty worksheet of the 2nd Amended Penalty, as defined by the NCCI Scopes Manual and adopted by the Office of Insurance Regulation, are the correct manual rates for the corresponding periods of noncompliance listed on the penalty worksheet. In calculating the 2nd Amended Penalty, the Department’s auditor used the worksheet required by rule 69L-6.027, along with Respondent’s bank statements, check images, general ledger, and tax returns filed with the Internal Revenue Service. The auditor capped Respondent’s owner’s pay for that portion of 2014 falling within the penalty period because his salary and dividend totaling $73,484 in 2014 exceeded the statewide average of $862.51 per week or $44,850.52 per year. She also adjusted the period of noncompliance for Mr. Johnson, pursuant to rule 69L-6.028(2), because he obtained an exemption from Florida’s Workers’ Compensation Law on October 12, 2016. The auditor explained that she used Respondent’s tax returns for 2014 and 2015 because she believed they were the most reliable indication of salaries and wages, officer compensation, and payroll for outside services and subcontractors. She further explained that she used Respondent’s tax returns and general ledger as the most accurate sources for determining payroll for 2016. The auditor’s explanation is reasonable and credited. Mr. Johnson questioned the auditor’s method of determining payroll and offered alternative methods using spreadsheets he created to identify what he called “member draws” and other summaries. The invoices provided by Respondent to the Department, however, do not match the summaries; and Respondent’s method of determining payroll, when compared to the method utilized by the Department, is not accurate or reliable. The auditor’s method reflected in the 2nd Amended Penalty appropriately applied approved manual rates corresponding to Class Code 5474, painting, to determine the evaded workers’ compensation insurance premium. Then, the evaded premium was properly multiplied by two in accordance with section 440.107(7)(d)1.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order, consistent with this Recommended Order, upholding the Stop-Work Order and imposing the penalty set forth in the 2nd Amended Order of Penalty Assessment against Elite Restoration and Construction, LLC. DONE AND ENTERED this 20th day of February, 2018, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, 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 20th day of February, 2018.
