The Issue The issues are whether, under section 440.107, Florida Statutes, Petitioner may calculate a penalty assessment for a failure to secure the payment of workers' compensation for one day as though the failure persisted over two years and whether Petitioner may calculate a penalty assessment based on double the statewide average weekly wage (AWW) when the lone uncovered employee earned $10 per hour.
Findings Of Fact Respondent was incorporated in 2008 by Ineido Soler, Sr., and his son, Ineido Soler, Jr. Since the corporation began operations, the wife of Mr. Soler, Jr., Idalmis Pedrero, has served as the office manager of this family-owned company. At all material times, Respondent has contracted with a personnel leasing company to handle employee matters, such as securing the payment of workers' compensation. Ms. Pedrero's responsibilities include informing the employee leasing company of new hires, so the company can obtain workers' compensation coverage, which typically starts the day following notification. On the afternoon of November 22, 2015, Mr. Soler, Jr., telephoned his wife and told her that he and his father had hired, at the rate of $10 per hour, a new employee, Geony Borrego Lee, who would start work the following morning. Customarily, Ms. Pedrero would immediately inform the employee leasing company. However, Ms. Pedrero was working at home because, six days earlier, she had delivered a baby by caesarian section, and she was still recuperating and tending to her newborn. A fatigued Ms. Pedrero did not notify the employee leasing company that day of the new hire. Late the next morning, Ms. Pedrero was awakened by a call from her husband, who asked her if she had faxed the necessary information to the employee leasing company. Ms. Pedrero admitted that she had not done so, but would do so right away. She faxed the information immediately, so that the employee leasing company could add Mr. Lee to the workers' compensation policy, effective the next day, November 24. Uncovered for November 23, Mr. Lee joined three other employees of Respondent and performed roofing work at a worksite. Late in the afternoon of November 23, one of Petitioner's investigators conducted a random inspection of Respondent's worksite and determined that Respondent had secured the payment of workers' compensation for the three other employees, but not for Mr. Lee. The investigator issued an SWO on the day of the inspection, November 23. The SWO contains three parts. First, the SWO orders Respondent to cease work anywhere in the state of Florida. Second, the SWO includes an Order of Penalty Assessment, which does not contain a specific penalty, but instead sets forth the formula by which Petitioner determines the amount of the penalty to assess. Tracking the statute discussed below, the formula included in the SWO is two times the premium that the employer would have paid when applying approved manual rates to the employer's payroll "during periods for which it has failed to secure the payment of compensation within the preceding 2-year period." Third, the SWO includes a Notice of Rights, which advises Respondent that it may request a chapter 120 hearing. On November 24, Petitioner released the SWO after Respondent had secured the payment of workers' compensation for Mr. Lee. On November 25, the investigator hand delivered to Respondent a Request for Production of Business Records for Penalty Assessment Calculation (Request). The Request covers November 24, 2013, through November 23, 2015, and demands records in eight categories: identification of employer, occupational licenses, payroll documents, account documents, disbursements, contracts for work, identification of subcontractors, and documentation of subcontractors' workers' compensation coverage. The Request identifies "payroll documents" as: all documents that reflect the payroll of the employer . . . including . . . time sheets, time cards, attendance records, earning records, check stubs and payroll summaries for both individual employees and aggregate records; [and] federal income tax documents and other documents reflecting the . . . remuneration paid or payable to each employee . . . . The Request adds: The employer may present for consideration in lieu of the requested records, proof of compliance with F.S. 440 by a workers' compensation policy or coverage through employee leasing for all periods of this request where such coverage existed. If the proof of compliance is verified by the Department the requested records for that time period will not be required. The Request warns: If the employer fails to provide the required business records sufficient to enable the . . . Division of Workers' Compensation to determine the employer's payroll for the period requested for the calculation of the penalty provided in section 440.107(7)(d), F.S., the imputed weekly payroll for each employee shall be the statewide average weekly wage as defined in section 440.12(2), F.S., multiplied by 2. The Department shall impute the employer's payroll at any time after ten, but before the expiration of twenty eight business days after receipt by the employer of [the Request]. (FAC 69L-6.028) . . . . On December 11, 2015, Respondent provided the following documents to Petitioner: itemized invoices, including for workers' compensation premiums, from the employee leasing company to Respondent and checks confirming payment, but the invoices and checks are from December 2011; an employee leasing agreement signed by Respondent on August 1, 2014, and signed by the employee leasing company on August 5, 2014; an employee leasing application for Mr. Lee dated November 23, 2015, showing his date of birth as November 20, 1996, his hourly pay as $10, and his hire date as November 23, 2015; and an employee census dated December 1, 2015, showing, for each employee, a date of hire and, if applicable, date of termination. Partially compliant with the Request, this production omitted any documentation of workers' compensation coverage prior to August 1, 2014, and any documentation of payroll except for Mr. Lee's rate of pay. On December 14, 2015, Respondent filed with Petitioner its request for a chapter 120 hearing. On December 30, 2016, Petitioner issued an Amended Order of Penalty Assessment (Amended Assessment), which proposes to assess a penalty of $63,434.48. On the same date, Petitioner transmitted the file to DOAH. Petitioner issued a Second Amended Order of Penalty Assessment on February 16, 2016, which is mentioned in, but not attached to, the Prehearing Stipulation that was filed on April 26, 2016, but the second amended assessment reportedly leaves the assessed penalty unchanged from the Amended Assessment. In determining the penalty assessment, Petitioner assigned class code 5551 from the National Council on Compensation Insurance because Mr. Lee was performing roofing work; determined that the entire two-year period covered in the Request was applicable; identified the AWW as $841.57 based on information provided by the Florida Department of Economic Opportunity for all employers subject to the Florida Reemployment Assistance Program Law, sections 443.01 et seq., Florida Statutes, for the four calendar quarters ending June 30, 2014; applied the appropriate manual rates for class code 5551 to $841.57, doubled, and divided the result by 100--all of which yielded a result of $31,717.24, which, doubled, results in a total penalty assessment of $63,434.48. There is no dispute that the classification code for Mr. Lee is code 5551, the AWW is $841.57, and the manual rates are 18.03 as of July 1, 2013, 18.62 as of January 1, 2014, and 17.48 as of January 1, 2015. Because Petitioner determined that Respondent had failed to provide sufficient evidence of its payroll, Petitioner calculated the penalty assessment by using the AWW of $841.57, doubled, instead of Mr. Lee's actual rate of $10 per hour. Petitioner's calculations are mathematically correct. For the 5.27 weeks of 2013, the penalty assessment is $3198.58 based on multiplying the AWW, doubled, by the manual rate of 18.03 divided by 100 multiplied by 2 and multiplied by 5.27. For the 52 weeks of 2014, the penalty assessment is $32,593.67 based on multiplying the AWW, doubled, by the manual rate of 18.62 divided by 100 multiplied by 2 and multiplied by 52. For the 46.44 weeks of 2015, the penalty assessment is $27,326.48 based on multiplying the AWW, doubled, by the manual rate of 17.48 divided by 100 multiplied by 2 and multiplied by 46.44. Adding these sums yields a total penalty assessment of $63,118.73, which approximates Petitioner's penalty assessment calculation of $63,434.48. (Mistranscription of difficult-to- read manual rates or a different rule for handling partial weeks may account for the small difference.) Respondent challenges two factors in the imputation formula: the two-year period of noncompliance for Mr. Lee instead of one day's noncompliance and the AWW, doubled, instead of Mr. Lee's $10 per hour rate of pay. Underscoring the differences between the two-year period of noncompliance and double the AWW and the actual period of noncompliance and Mr. Lee's real pay rate, at the start of the two-year period, Mr. Lee was three days past his 16th birthday and residing in Cuba, and Mr. Lee continues to earn $10 per hour as of the date of the hearing. The impact of Petitioner's use of the two-year period of noncompliance and double the AWW is significant. If the calculation were based on a single day, rather than two years, the assessed penalty would be less than the statutory minimum of $1000, which is described below, even if double the AWW were used. One day is 0.14 weeks, so the penalty assessment would be $82.38 based on multiplying the AWW, doubled, by the manual rate of 17.48 divided by 100 multiplied by 2 and multiplied by 0.14. If the calculation were based on the entire two years, rather than a single day, the assessed penalty would be about one-quarter of the proposed assessed penalty, if Mr. Lee's actual weekly rate of pay were used instead of double the AWW. Substituting $400 for twice the AWW in the calculations set forth in paragraph 15 above, the penalty would be $760.14 for 2013, $7746.92 for 2014, and $6494.17 for 2015 for a total of $15,001.23. Explaining why Petitioner treated one day of noncompliance as two years of noncompliance, one of Petitioner's witnesses referred to Mr. Lee as a "placeholder" because the real focus of the imputation formula is the employer. The same witness characterized the imputation formula as a "legal fiction," implying that the formula obviously and, in this case, dramatically departs from the much-smaller penalty that would result from calculating exactly how much premium that Respondent avoided by not covering the modestly paid Mr. Lee on his first day of work. Regardless of how Petitioner characterizes the imputation formula, the statutory mandate, as discussed below, is to determine the "periods" during which Respondent failed to secure workers' compensation insurance within the two-year period covered by the Request. The focus is necessarily on the employee found by the investigator to be uncovered and any other uncovered employees. Petitioner must calculate a penalty based on how long the employee found by the investigator on his inspection has been uncovered, determining how many other employees, if any, in the preceding two years have been uncovered, and calculating a penalty based on how long they were uncovered. There is evidence of one or two gaps in coverage during the relevant two years, but Petitioner has failed to prove such gaps by clear and convincing evidence. One of Petitioner's witnesses testified to a gap of one month "probably" from late January to late February 2015. This witness relied on Petitioner Exhibit 2, but it is completely illegible. Ms. Pedrero testified that Respondent had workers' compensation coverage since 2011, except for a gap, which she thought had occurred prior to August 2014, which is the start date of the current policy. This conflicting evidence does not establish by clear and convincing evidence any gap, and, even if a gap had been proved, no evidence establishes the number of uncovered employees, if any, during such a gap, nor would such a gap justify enlarging the period of noncompliance for Mr. Lee. Ms. Pedrero testified that her mother-in-law, Teresa Marquez cleaned the office and warehouse on an occasional basis, last having worked sometime in 2015. Respondent never secured workers' compensation coverage for Ms. Marquez, but she did no roofing work and appears to have been a casual worker, so her periods of employment during the two-year period covered by the Request would not constitute additional periods for which Respondent failed to secure workers' compensation insurance. Based on the foregoing, Petitioner has proved by clear and convincing evidence only a single day of noncompliance, November 23, concerning one employee, Mr. Lee, within the relevant two-year period for the purpose of calculating the penalty assessment. Likewise, Petitioner has proved by clear and convincing evidence a rate of pay of only $10 per hour for the purpose of calculating the penalty assessment. At no time has Respondent provided payroll records of all its employees for November 23, 2015. Respondent Exhibit E covers payroll for Respondent's employees for a two-week period commencing shortly after November 23, 2015. But the evidence establishes that Mr. Lee's rate of pay was $80 for the day, which, as discussed below, rebuts the statutory presumption of double the AWW.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a final order determining that Respondent has failed to secure the payment of workers' compensation for one employee for one day within the two-year period covered by the Request and imposing an administrative penalty of $1000. DONE AND ENTERED this 19th day of July, 2016, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of July, 2016. COPIES FURNISHED: Jonathan Anthony Martin, Esquire Trevor S. Suter, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed) Daniel R. Vega, Esquire Robert Paul Washington, Esquire Taylor Espino Vega & Touron, P.A. 2555 Ponce De Leon Boulevard, Suite 220 Coral Gables, Florida 33134 (eServed) Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
Findings Of Fact 11. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on March 12, 2009, and the Amended Order of Penalty Assessment issued March 30, 2009, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment and the Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-075-1A, and being otherwise fully advised in the premises, hereby finds that: 1. On March 12, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-075-1A to REGIONAL CONCRETE, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein REGIONAL CONCRETE, INC. was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 2. On March 12, 2009, the Stop-Work Order and Order of Penalty Assessment was served by personal service on REGIONAL CONCRETE, INC. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On March 30, 2009, the Department issued an Amended Order of Penalty Assessment to REGIONAL CONCRETE, IN C. in Case No. 09-075-1A. The Amended Order of Penalty Assessment assessed a total penalty of $122,034.51 against REGIONAL CONCRETE, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein REGIONAL CONCRETE, INC. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty- one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 4. On April 1, 2009, the Amended Order of Penalty Assessment was served by certified mail on REGIONAL CONCRETE, INC. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On April 20, 2009, REGIONAL CONCRETE, INC. filed a petition requesting a formal administrative hearing with the Department. The Department forwarded the petition to the Division of Administrative Hearings on June 8, 2009, and the matter was assigned DOAH Case No. 09-3046. 6. On July 24, 2009, the Department served its discovery requests on REGIONAL CONCRETE, INC., which included interrogatories, requests for admissions, and requests for production. Responses or objections to the discovery were required to be served on the Department within thirty days. REGIONAL CONCRETE, INC. failed to respond to the discovery requests within thirty days. 7. On August 28, 2009, the Department filed a Motion to Compel Discovery. The Honorable P. Michael Ruff, the Administrative Law Judge, entered an Order on Motion to Compel on September 15, 2009, which required REGIONAL CONCRETE, INC. to serve responses to the requests for admission, interrogatories, and requests for production no later than September 18, 2009. 8. On September 25, 2009, the parties filed a Joint Response to Order Granting Continuance wherein the parties agreed REGIONAL CONCRETE, INC. would submit to the Department responses to the discovery requests by October 23, 2009. Since conferring on the Joint Response to Order Granting Continuance, the Department has made several unsuccessful attempts to reach REGIONAL CONCRETE, INC. 9. On November 3, 2009, the Department filed a Motion to Deem Matters Admitted and to Relinquish Jurisdiction Pursuant to Section 120.57(1)(i), Florida Statutes, with the Division of Administrative Hearings after REGIONAL CONCRETE, INC. failed to respond to the discovery request by. October 23, 2009. A hearing on the motion was held on November 20, 2009, during which several’ unsuccessful attempts were made to contact REGIONAL CONCRETE, INC. The Department also attempted to contact REGIONAL CONCRETE, INC. by telephone after the hearing on the motion, but was unsuccessful. After the hearing on the motion, the Honorable James H. Peterson, III, the Administrative Law Judge, entered an Order to Show Cause which ordered REGIONAL CONCRETE, INC. to show good cause within seven days as to why the Motion to Deem Matters Admitted and to Relinquish Jurisdiction Pursuant to Section 120.57(1)(@, Florida Statutes, should not be granted. A copy of the Order to Show Cause is attached hereto as “Exhibit C” and incorporated herein by reference. 10. On December 3, 2009, the Honorable James H. Peterson, II, entered an Order Closing File deeming the admissions contained in the discovery requests admitted. The Order Closing File further concluded that there were no disputed issues of material fact and relinquished jurisdiction of the matter to the Department for final disposition. A copy of the Order Closing File is attached hereto as “Exhibit D” and incorporated herein by reference.
The Issue Has Respondent failed to secure payment of workers' compensation for his employees, Section 440.107(2), Florida Statutes (2005), justifying the entry of a stop-work order, Subsection 440.107(7)(a), Florida Statutes (2005), and the entry of a financial penalty against Respondent, Subsection 440.107(7)(d), Florida Statutes (2005), as imputed, Subsection 440.107(7)(e), Florida Statutes (2005)?
Findings Of Fact Michael Robinson is an investigator for Petitioner's Bureau of Compliance. His duties include job site visits to determine whether individuals on the site are employees, by whom those persons are employed and whether the employer has secured the payment of workers' compensation by obtaining necessary insurance coverage. Some site visits are made on a random basis. That was the case here. On August 11, 2005, Mr. Robinson went to an address in Lake City, Florida, referred to as 223 NW Sylvi Drive. There he observed three individuals laying sod in the yard of the private residence located at the address. Respondent, a fourth individual, was transporting sod from a trailer to the yard using equipment described as a Bobcat. The sod had been cut in squares and the squares were being matched and placed on the ground in the yard, where it was stepped on to secure it in the ground in a checker board pattern. Approximately three-quarters of the yard had sod placed. Mr. Robinson considered the activities on the site as involving a construction industry, with a classification, according to the National Council on Compensation, Inc. (NCCI), as class code 0042, landscape gardening and drivers, as reflected in Florida Administrative Code Rule 69L-6.021(1)(a). The NCCI classification codes for job descriptions were adopted by the rule. Mr. Robinson observed a permit board erected in the front yard of the property. There was no evidence that he saw which would indicate anyone was living in the home. The garage door was open. There was nothing in the garage. No blinds were on the windows. No evidence of any kind was observed that would indicate the house had been occupied. Altogether four persons were working at the site. Mr. Robinson interviewed each individual. After introducing himself, Mr. Robinson explained to Respondent the reason for the site visit and determined that Respondent was the employer for the other individuals, in addition to working on the job. Respondent told Mr. Robinson that he was a sub-contractor working for Earth Scapes, and had been hired to lay new sod in the yard. Respondent described his position as that of a sole proprietor. Respondent identified two of the other individuals as being his step-sons and the remaining individual was a family friend. Respondent explained that the basis for compensating the other employees was that Respondent "gave them running around money on Friday's." The other individuals indicated that they worked for Respondent part-time when he needed their help. To verify Respondent's statement that he was a sub- contractor assigned to the job, Mr. Robinson contacted the owner of Earth Scapes, who agreed with Respondent's recount of his assignment at the job location. Mr. Robinson was told Earth Scapes is a nursery that lays new sod and plants trees. Mr. Robinson inquired of Mr. Curry concerning workers' compensation coverage for the three employees. The answer was that Respondent did not have workers' compensation coverage through an insurance policy or through a leasing company or temporary labor service. Research into coverage and compliance through a Coverage and Compliance Automated System (CCAS) data base available to Petitioner did not reveal any information concerning Respondent and his business at 1259 SW County Road, 252-B, Lake City, Florida, that would relate to workers' compensation coverage. A similar search of a data base maintained by Petitioner in association with exemptions from the requirement to obtain workers' compensation coverage did not reveal any exemption for Respondent from the need for workers' compensation coverage. Having discovered the activity on the construction site in which work was done without workers' compensation coverage, Mr. Robinson discussed his findings with Robert Lambert, Petitioner's district supervisor in the Bureau of Compliance. Following that conversation Mr. Lambert authorized Mr. Robinson to issue a stop-work order to Respondent. A stop- work order was prepared on August 11, 2005. The stop-work order was served on Respondent on that date. The basis for its entry was the failure to secure payment of workers' compensation in violation of Section 440.107(2), Florida Statutes (2005), by failing to obtain coverage that would meet the requirements set forth in Chapter 440, Florida Statutes, and provisions of the Florida Insurance Code (the Insurance Code). On that same date, an Order of Penalty Assessment was served on Respondent under authority set for in Section 440.107(7)(d), Florida Statutes (2005). The Order of Penalty Assessment also reminded Respondent that the penalty might be amended based upon other information obtained, including the production of business records held by Respondent. These orders advised Respondent that he had the right to contest material facts in the stop-work order by filing a written petition for hearing under Sections 120.569 and 120.57, Florida Statutes (2005). On August 11, 2005, by a written document, Mr. Robinson requested production of business records maintained by Respondent that would assist in the calculation of a penalty assessment for the period August 11, 2002, through August 11, 2005, as contemplated by Section 440.107(7), Florida Statutes. The written request for production reminded Respondent that he must produce those records within five business days after receipt, to allow examination and copying, and that the failure to do so by quality of information sufficient to allow the determination of the payroll for the period in question, would allow the Petitioner to impute weekly payroll for the three employees and Respondent pursuant to the information derived using Section 440.12(2), Florida Statutes (2005), multiplied by 1.5. The document served on Respondent set out the various categories of information requested for production. These categories comport with Florida Administrative Code Rule 69L- 6.015. Respondent did not honor this request at any time.2/ Mr. Robinson not only provided the list of categories of information sought for production, he explained the categories found on the list to Respondent. Examples of information sought and explained included timesheets, time cards, payroll check stubs, check ledgers, income tax returns that would reflect the amount of remuneration paid or payable to each employee. On September 1, 2005, Mr. Robinson served Respondent with an Amended Order of Penalty Assessment that set forth an assessed penalty of $121,039.00, by imputation under Subsection 440.107(7)(d) and (e), Florida Statutes (2005), and by resort to Florida Administrative Code Rule 69L-6.028. That rule allows the imputation of payroll calculations after 15 business days following receipt by the employer of a written request to produce business records and the method will not be set aside after 45 days from receipt. The Amended Order of Penalty Assessment reminded Respondent that the stop-work order would remain in effect unless that order was released by Petitioner's further order. The necessary steps to set aside the stop-work order depended on obtaining coverage under the workers' compensation law and the payment of the penalty assessment. The approach for serving the Amended Order of Penalty Assessment was by certified mail return receipt requested. The receipt was returned following service. The Amended Order of Penalty Assessment provided the Respondent with the opportunity to dispute the material facts associated with the Amended Order of Penalty Assessment under procedures found in Sections 120.569 and 120.57, Florida Statutes (2005). As indicated, Respondent took advantage of the right to contest matters leading to the final hearing. The Amended Order of Penalty Assessment as set forth in Petitioner's Exhibit number six also reflects a worksheet that applies to the overall period in question. It demonstrates the calculations imputed related to Respondent, Tony Joe Brown, Collin Grimes, and Josh Grimes, persons on the job site when the random inspection took place on August 11, 2005. The calculations in the matrix for all parts, were in relation to the four workers under class code 0042, without the benefit of actual information provided by Respondent. The job class codes are derived from the Scopes Manual, an insurance industry publication.
Recommendation Upon the consideration of the facts found and the conclusions of law reached, it is RECOMMENDED: That a Final Order be entered keeping the stop-work order in effect pending Respondent's proof that he has obtained necessary workers' compensation coverage and the payment of the Amended Penalty Assessment in the amount of $121,039.00. DONE AND ENTERED this 28th day of June, 2006, in Tallahassee, Leon County, Florida. S CHARLES C. ADAMS 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 June, 2006.
Findings Of Fact 13. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on April 7, 2010, the Amended Order of Penalty Assessment issued on April 19, 2010, the 2" Amended Order of Penalty Assessment issued on June 2, 2010, and the 3K Amended Order of Penalty Assessment issued on September 1, 2010, attached as “Exhibit A”, “Exhibit B”, “Exhibit D”, and “Exhibit E”, respectively, and fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial _ Officer of the State of Florida, or her designee, having considered the record in this case, including the request for administrative hearing received from TOM HINDS, INC., the Stop- Work Order and Order of Penalty Assessment, the Amended Order of Penalty Assessment, the 2nd Amended Order of Penalty Assessment, and the 3" Amended Order of Penalty Assessment, and being otherwise fully advised in the premises, hereby finds that: 1. On April 7, 2010, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 10-169-D3 to TOM HINDS, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein TOM HINDS, INC. was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty- one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 2. On April 7, 2010, the Stop-Work Order and Order of Penalty Assessment was personally served on TOM HINDS, INC. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On April 19, 2010, the Department issued an Amended Order of Penalty Assessment to TOM HINDS, INC. The Amended Order of Penalty Assessment assessed a total penalty of $47,827.66 against TOM HINDS, INC. The Amended Order of Penalty Assessment included a Notice of Rights wherein TOM HINDS, INC. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 4. On August 5, 2010, the Amended Order of Penalty Assessment was filed with the Division of Administrative Hearings. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On May 18, 2010, the Department received a request for administrative hearing (“Petition”) from TOM HINDS, INC. A copy of the Petition is attached hereto as “Exhibit C”. 6. On June 2, 2010, the Department issued a 2°4 Amended Order of Penalty Assessment to TOM HINDS, INC. The 2™ Amended Order of Penalty Assessment reduced the penalty assessed against TOM HINDS, INC. to $5,744.16. 7. On June 19, 2010, the 2"! Amended Order of Penalty Assessment was served by certified mail to TOM HINDS, INC. A copy of the 2nd Amended Order of Penalty Assessment is attached hereto as “Exhibit D” and incorporated herein by reference. 8. On August 5, 2010, the Petition from TOM HINDS, INC. was forwarded to the Division of Administrative Hearings and assigned DOAH Case No. 10-7165. 9. On September 1, 2010, the Department issued a 3° Amended Order of Penalty Assessment to TOM HINDS, INC. The 3 Amended Order of Penalty Assessment reduced the penalty assess against TOM HINDS, INC. to $5,733.10. 10. On September 3, 2010, the Department filed with the Division of Administrative Hearings a Motion to Amend Order of Penalty Assessment. A copy of the 3rd Amended Order of Penalty Assessment is attached hereto as “Exhibit E” and incorporated herein by reference. 1. On October 24, 2010, TOM HINDS, INC. informed the Department that TOM HINDS, INC. did not wish to proceed to an administrative hearing in DOAH Case No. 10-7165. 12. On October 27, 2010, the Department filed a Joint Motion to Relinquish Jurisdiction with the Division of Administrative Hearings. As a result, on November 18, 2010, Administrative Law Judge, R. Bruce McKibben, entered an Order Closing File, relinquishing jurisdiction of this matter to the Department. A copy of the Order Closing File is attached hereto as “Exhibit F”.
The Issue The issues in this case are whether Respondent failed to provide workers' compensation coverage, and, if so, what penalty should be imposed.
Findings Of Fact The Department is the state agency responsible for enforcing section 440.107. That section mandates, in relevant part, that employers in Florida secure workers' compensation insurance coverage for their employees. § 440.107(3), Fla. Stat. At all times relevant, All Florida was a Florida corporation engaged in the business of well drilling for water, a construction business, with its principal office located at 2250 Havana Avenue, Fort Myers, Florida. On August 3, 2010, Amy Thielen (Ms. Thielen), a compliance investigator for the Department, conducted an on-site investigation at a work site located at 129 Montrose Street, Fort Myers, Florida. Ms. Thielen observed a parked truck with the All Florida logo on it at this work site and an individual working nearby. After identifying herself to the individual, the individual identified himself as Edward Perez (Mr. Perez), an employee of and working for All Florida at that time. Ms. Thielen then consulted the Department's Coverage and Compliance Automated System (CCAS) database to determine if All Florida had workers' compensation coverage. The insurance companies report any workers' compensation coverage to the Department through this CCAS database, which is kept current. The CCAS showed that All Florida had two periods in which its workers' compensation coverage lapsed: March 3, 2009, through October 24, 2009, and a second period when the workers' compensation policy was cancelled from January 9, 2010, to August 3, 2010. Ms. Thielen contacted All Florida's last workers' compensation carrier and was informed that there was no workers' compensation policy in place. There was no workers' compensation coverage in effect on August 3, 2010, when Ms. Thielen confirmed that Mr. Perez was working for All Florida. Ms. Thielen testified that any construction company could obtain an exemption from having workers' compensation coverage through an application to the Department. All Florida did not have an exemption for any corporate officers.2/ Ms. Thielen checked the Department of State, Division of Corporations', records and learned that Robert Henshaw (Mr. Henshaw) was the president and only officer of All Florida. Based on her investigation, Ms. Thielen determined that All Florida did not have the requisite workers' compensation coverage at that time. After consulting with her supervisor, Ms. Thielen issued a Stop-Work Order to All Florida on August 11, 2010. A stop-work order is an enforcement action issued against employers that forces the employer to cease all business operations in Florida until they obtain the requisite workers' compensation coverage and return to full compliance. At the time Ms. Thielen served All Florida with the Stop-Work Order, she also served a request for production of business records for penalty assessment calculation to All Florida. This document requests certain business records from the employer for a three-year period in order for an audit to be performed to properly calculate the penalty assessment. All Florida produced the requested business records to the Department. Melissa Geissler (Ms. Geissler), a penalty calculator for the Department's Bureau of Compliance, calculated the penalty assessment based on All Florida's business records. Based on a review of the produced business records, the initial penalty assessment was $18,216.73. On September 8, 2010, Mr. Henshaw, acting on behalf of All Florida, executed a "payment agreement schedule for periodic payment of penalty" with the Department. Mr. Henshaw paid ten percent of the penalty assessment, put the remainder of the penalty assessment in a payment plan, and obtained the requisite worker's compensation coverage. The Department then issued an "Order of Conditional Release from Stop-Work Order," thus allowing All Florida to continue to operate while paying the remaining penalty assessment in specific increments. After the original penalty assessment order was issued, All Florida submitted additional business records, and the Department sought to and did revise the penalty assessment amount downward. As the case was already at the Division, the Department, with All Florida's consent, requested that a second amended order of penalty assessment be issued, reducing the penalty amount to $13,267.24. On October 20, 2010, the Division issued an Order allowing the second amended order of penalty assessment to be issued. In April 2011, after still more business records were delivered to the Department, the Department issued a third amended order of penalty assessment. This time the penalty assessment was reduced to $12,721.73. On August 24, 2011, the Department filed a motion to amend order of penalty assessment. There was insufficient time for All Florida to respond to the motion, and, at hearing, All Florida, through its president, Mr. Henshaw, voiced no objection to the reduction in the penalty assessment amount. Ms. Geissler's duties at the Department include reviewing financial documentation from employers, identifying payroll transactions, and verifying workers' compensation coverage. Ms. Geissler testified that she utilizes the CCAS database to confirm whether any employer has secured workers' compensation coverage. When she finds a payroll transaction that reflects such coverage, that transaction is not used in the penalty assessment calculation; otherwise, the transaction is used in calculating the coverage cost amount. Ms. Geissler also testified that she utilizes the penalty worksheet authorized in Florida Administrative Code Rule 69L-6.027 to aid in the penalty calculation process. Ms. Geissler conducted an audit of All Florida based on the business records it provided to the Department. Ms. Geissler determined the amount of workers' compensation premium that All Florida would have paid had it been in compliance with Florida law between August 12, 2007, and August 11, 2010 (excluding October 25, 2009, through January 8, 2010, when there was coverage). Ms. Geissler testified that, during this three-year period, All Florida was an active construction based employer. It was confirmed that there were four employees (including Mr. Henshaw) of All Florida. In order to calculate the appropriate penalty, Ms. Geissler took 1/100th of the gross payroll and multiplied that figure by the approved manual rate applicable to class code 6204 (the class code designated to specialist contractors engaged in drilling work as found in the approved Scopes Manual3/). The approved manual rates are determined by the National Council on Compensation Insurance, adopted by the Florida Office of Insurance Regulation, and represent the recent trends in workers' compensation loses associated with each individual class code. After reviewing all of the business records submitted by All Florida, and using the applicable formula, Ms. Geissler credibly testified that the final penalty assessment was $12,721.73. Ms. Geissler's calculations for the penalty assessment were performed in accordance with the requirements of section 440.107(7) and rule 69L-6.027. Mr. Henshaw did not provide any testimony during the proceeding, but rather made the statement that there was no point in fighting the allegation, "everything is correct."
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that All Florida failed to secure workers' compensation coverage and assessing a penalty of $12,721.73 against All Florida. DONE AND ENTERED this 5th day of October, 2011, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of October, 2011.
The Issue The issues in this case are whether XKLUCIV Investment Group, LLC, (Respondent) violated the provisions of chapter 440, Florida Statutes (2014),1/ by failing to secure workers’ compensation coverage as alleged in the Stop-work Order issued against Respondent by the Department of Financial Services, Division of Workers’ Compensation (Petitioner) on August 28, 2014, and, if so, what penalty is appropriate.
Findings Of Fact The Department of Financial Services, Division of Workers’ Compensation (Petitioner) is the state agency responsible for enforcing the statutory requirement that employers secure workers’ compensation insurance coverage for the benefit of their employees and corporate officers. Robert Feehrer has been a compliance investigator with Petitioner since April 2011. Mr. Feehrer has participated in over 1,000 site visit inspections during his tenure with Petitioner. The primary purpose of a site inspection is to ensure that employers have workers’ compensation coverage for their employees. On August 28, 2014, Mr. Feehrer conducted a site inspection at a residence located at 15772 85th Road, Loxahatchee, Florida. The residence was being remodeled (the subject job). For approximately ten minutes, Mr. Feehrer watched two men paint the exterior of the residence. When he approached the men, he learned that one was Anthony Lucombe and the other was a man named Wesley Roper. Mr. Lucombe, who appeared to be in charge of the project, told Mr. Feehrer that he was “running this job.” Mr. Feehrer was not able to ascertain any information from Wesley Roper because Mr. Roper did not want to get involved. Mr. Roper refused to provide any form of identification to Mr. Feehrer or to otherwise cooperate. Mr. Lucombe told Mr. Feehrer that he had been working on the subject job for two days, that he did not know how much he would be paid for the job, and that he had agreed to pay Mr. Roper $100.00 for one day’s work. Mr. Lucombe credibly testified that he had not worked with Mr. Roper before or after the subject job. Mr. Lucombe told Mr. Feehrer that he had been hired by a man with the last name of Diamond who did business as Diamond Painting.2/ After Mr. Lucombe had worked a day, Diamond Painting walked off the job without paying Mr. Lucombe. Mr. Lucombe told Mr. Feehrer that he had no company, and that he was hired by the general contractor to finish painting the house after Diamond Painting walked off the job. A Georgia entity named Master Craft was the general contractor for the remodeling project. After talking to Mr. Lucombe and after talking by telephone to Jay York, an employee of Master Craft, Mr. Feehrer asked Mr. Lucombe whether he had a company. In response to that question, Mr. Lucombe truthfully answered in the affirmative and gave Mr. Feehrer the name XKLUCIV Investment Group, LLC. Based on that information, Mr. Feehrer concluded that the corporate Respondent had subcontracted to paint the residence after Diamond Painting walked off the job. Mr. Lucombe never told Mr. Feehrer that he was working as an employee of his company. Respondent was organized as a limited liability company pursuant to the provisions of chapter 608, Florida Statutes (2012), for “any and all lawful business” effective July 22, 2012, by Mr. Lucombe, a cousin (Rosemond Lucombe), and his wife (Cryselda Lucombe). Mr. Lucombe was designated the manager of the company. Mr. Lucombe credibly testified that the corporation was formed for the purposes of making investments in real estate. Mr. Lucombe also credibly testified that due to the state of the economy, the company had lost its investments and that he worked odd jobs as a handyman. Mr. Lucombe posted his availability to work as a handyman on Craig’s List and worked various jobs, including house painting, for persons who responded to the posting. Petitioner failed to establish by clear and convincing evidence that the corporate Respondent acted as a painting subcontractor on August 28, 2014.3/ While at the job site, Mr. Feehrer determined that the corporate Respondent had no workers’ compensation coverage and that Mr. Roper and the three principals of the corporate Respondent had no exemption from the workers’ compensation coverage requirements. Mr. Feehrer, on Petitioner’s behalf, issued a Stop-work Order 14-325-D2 (Stop-work Order) to the corporate Respondent on August 28, 2014, pursuant to section 440.107, Florida Statutes, for its failure to comply with Florida’s Workers’ Compensation Law. The Stop-work Order contained an order of penalty assessment that described how the penalty assessment would be calculated without stating the amount of the penalty assessment.4/ While Mr. Feehrer was preparing the Stop-work Order, Mr. Lucombe and Mr. Roper packed up the painting equipment, loaded them in Mr. Lucombe’s truck, and left the worksite in Mr. Lucombe’s truck. Mr. Lucombe appeared to be in charge of the painting equipment. Mr. Feehrer thereafter posted the Stop-work Order at the jobsite. On September 12, 2014, Mr. Lucombe went to Petitioner’s district office where he was personally served with the Stop-work Order and with a request for production of business records for penalty assessment calculation (request to produce). Both the Stop-work Order and the request to produce were directed to Respondent. In response to the request to produce, Mr. Lucombe produced certain bank records pertaining to Respondent’s bank accounts. Eric Ruzzo, an experienced penalty calculator employed by Petitioner, reviewed the bank records produced by Mr. Lucombe. The bank records were insufficient to determine Respondent’s payroll for the applicable penalty period. The two-year penalty period for this matter started August 29, 2012, and ended August 28, 2014. Based on Mr. Ruzzo’s calculations, Petitioner issued an Amended Order of Penalty Assessment against the corporate Respondent on October 13, 2014. The amount of the assessment totaled $106,003.26. Mr. Ruzzo calculated this penalty by imputing Respondent’s payroll during the penalty period. The calculation assumed that Respondent’s three principals would have been paid as painters during the penalty period. On December 5, 2014, Petitioner entered its Second Amended Order of Penalty Assessment, which assessed a total penalty in the amount of $141,337.68. Mr. Ruzzo calculated this penalty by imputing Respondent’s payroll during the penalty period. The calculation assumed that Respondent’s three principals and Mr. Roper would have been paid as painters during the penalty period.
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 rescind both the Stop-work Order issued August 28, 2014, and the Second Amended Order of Penalty Assessment issued December 5, 2014. DONE AND ENTERED this 13th day of February, 2015, in Tallahassee, Leon County, Florida. S CLAUDE B. ARRINGTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of February, 2015.
The Issue Whether Respondent violated chapter 440, Florida Statutes (2017), by failing to secure payment of workers’ compensation coverage, as alleged in the Stop-Work Order (“SWO”) and Amended Order of Penalty Assessment (“Amended Penalty Assessment”); 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 requires employers to secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. The Department is also responsible for conducting random inspections of jobsites and investigating complaints concerning potential violations of workers’ compensation rules. At all times material to this matter, Native Cuts was a for-profit limited liability company engaged in business in the State of Florida. Native Cuts was organized as a business on January 19, 2010, and engaged in the business of construction and landscaping. Earl Lee, Jr. and Virginia Brown are Respondent’s managers. Earl Lee, Jr. is Respondent’s registered agent, with a mailing address of 316 North Lake Avenue, Leesburg, Florida 34748. Investigation On July 27, 2017, the Department’s investigator, Chuck Mays, conducted a random workers’ compensation compliance inspection at 27746 Cypress Glen Court, Yalaha, Florida 34797. At that time, Mr. Mays observed three men performing work. Mr. Mays testified that one man was observed operating a Bobcat utility vehicle (small tractor) to transport dirt from the front to the back of the structure, which was under construction. The two other men were removing debris, e.g., cut tree limbs, from the jobsite. Mr. Mays approached the man on the Bobcat and identified himself as an investigator. Mr. Mays began interviewing the Bobcat driver who reported that he and the other two workers at the jobsite were employees of Native Cuts, which the two men confirmed. Mr. Mays ultimately identified the three men at the jobsite as Rodolfo Ramirez, Mitchel Pike, and Dave Herrington. Based on his observations, Mr. Mays determined that the three men were performing construction-related work. Mr. Mays called Respondent’s manager, Mr. Lee, who identified the three men working at the jobsite as his employees. Mr. Mays asked Mr. Lee about the rate of pay and the length of employment for the employees and Mr. Lee referred Mr. Mays to Virginia Brown to obtain the information. Ms. Brown confirmed the three employees, and a fourth employee who was not present at the jobsite. Following the interviews on July 27, 2017, Mr. Mays researched the Division of Corporations system and established that Native Cuts was an active business. He then conducted a search of the Department’s Coverage Compliance Automated System (“CCAS”) and found Respondent did not have workers’ compensation coverage for its employees. Mr. Mays also conducted a further search of CCAS and discovered that Mr. Lee previously had an exemption, which expired on October 30, 2016. Based on his investigation and after consultation with his supervisor, Mr. Mays issued SWO No. 17-246-D4, and posted it at the jobsite. On July 28, 2017, Mr. Mays met with Ms. Brown at her home and personally served the SWO and Request for Production of Business Records for Penalty Assessment Calculation (“Business Records Request”). The Business Records Request directed Respondent to produce business records for the time period of July 28, 2015, through July 27, 2017 (“Audit Period”), within 10 business days from the receipt of the Business Records Request. On August 11, 2017, Respondent provided business records, including bank statements, checks, and receipts. The records were deemed sufficient to apply a 25-percent discount to Respondent for timely production of records. Penalty Calculation Generally, the Department uses business records to calculate the penalty assessment. Lynne Murcia, a Department penalty auditor, was assigned to review the calculation of the penalty assessment for Respondent. To calculate the penalty assessment, the Department uses a two-year auditing period looking back from the date of the SWO, July 27, 2017, also known as the look-back period. Penalties for workers' compensation insurance violations are based on doubling the amount of insurance premiums that would have been paid during the look-back period. § 440.107(7)(d), Fla. Stat. Ms. Murcia testified as to the process of penalty calculation. Ms. Murcia reviewed the business records submitted by Respondent, as well as notes, worksheets, and summaries from the original auditor.1/ Based on her review of the records, Ms. Murcia identified the individuals who received payments from Respondent as employees during the Audit Period. Ms. Murcia deemed payments to each of the individuals as gross payroll for purposes of calculating the penalty. In the penalty assessment calculation, the Department consulted the classification codes and definitions set forth in the SCOPES of Basic Manual Classifications (“Scopes Manual”) published by the National Council on Compensation Insurance (“NCCI”). The Scopes Manual has been adopted by reference in Florida Administrative Code Rule 69L-6.021. Classification codes are assigned to occupations by the NCCI to assist in the calculation of workers' compensation insurance premiums. Rule 69L-6.028(3)(d) provides that "[t]he imputed weekly payroll for each employee . . . shall be assigned to the highest rated workers' compensation classification code for an employee based upon records or the investigator's physical observation of that employee's activities." Based on Mr. Mays’ observations at the jobsite, the Department assigned either NCCI classification (“class”) code 0042, entitled “Landscaping, Gardening, & Drivers” or class code 9102, entitled “Lawn Maintenance-Commercial or Domestic & Drivers.” The class code 0042 “applies to work involving new landscaping installations whereas class code 9102 applies to work involving maintenance of existing landscaping and/or lawn maintenance.” Mr. Mays testified that class code 0042 is considered construction work, whereas class code 9102 is considered nonconstruction work for workers’ compensation purposes. Generally, if a business provides proper payroll records to support a division, the appropriate code and correlating rate would apply based on the work performed. If the payroll records are not maintained to support the division of the work performed between class code 0042 and class code 9102, the highest rate of the two classifications is applied to the employee. Ms. Murcia testified that class code 0042 and class code 9102 were applied to Native Cuts employees due to the mixed work performed (Landscaping and Lawn Maintenance) by Respondent. However, class code 9102 was applied to most of the employees. Utilizing the statutory formula for penalty calculation specified in section 440.107(7)(d)1. and rule 69L- 6.027, the total penalty was calculated based on periods of non- compliance for employees based on the dates they received payments from Respondent and were not covered for workers’ compensation. Since Mr. Lee’s exemption expired on October 30, 2016, the calculation for his work performed was limited to the period after the expiration of his exemption, November 1, 2016, through July 27, 2017. Regarding records designated as cash payments, the Department determined that the Native Cuts’ records and receipts did not validate the payroll and expenses that corresponded with the company’s cash withdrawals. Pursuant to rule 69L- 6.035(1)(k), the Department included 80 percent of cash withdrawals as wages or salaries to employees. Penalty Calculation for Imputed Payroll The Department determined the calculated penalty for Rudolfo Ramirez, David Harrington, and Mitchel Pike, the workers who were identified at the jobsite as employees on July 27, 2017. Mr. Lee was also included in the calculation of penalty for the imputed payroll. The Department maintains that the business records submitted by Respondent were insufficient to determine Respondent’s payroll for these employees during the investigation period, thus, the Department used the statutory formula to impute payroll to these employees. The Department correctly assigned a class code of 0042 and calculated a penalty of $149.20 against Respondent for failure to secure payment of workers’ compensation insurance for each of these employees. The Department also calculated the penalty for Ms. Brown, who was not at the jobsite but participated in the investigation on July 27, 2017. The Department applied a classification code 9102 to Ms. Brown. However, the evidence presented at hearing demonstrated Ms. Brown maintained records for the business and was the person identified as maintaining the wage rate information for employees. The evidence of record does not support a finding that Ms. Brown provided any landscaping or construction services to Respondent. Ms. Brown’s work, at best, could be described as clerical work. The Department introduced no evidence of an appropriate NCCI class code for Ms. Brown. Thus, the Department did not prove by clear and convincing evidence that the imputed payroll related to Ms. Brown should be included for purposes of calculating the penalty. The Department did not prove by clear and convincing evidence that the penalty in the amount of $19.60 attributed to Ms. Brown should be included in the penalty assessment. Penalty Calculation for Uninsured Labor Ms. Murcia testified that the class code 0042 was applied to the general category of uninsured labor, as the work performed could not be determined from the payroll records. Thus, the highest rate, class code 0042, of the two classifications for work performed by Native Cuts, is applied to these individuals. The Department correctly calculated a penalty of $17,015.10 for these employees. Penalty Calculation for Remaining Employees In addition to the penalty calculated for the imputed payroll (excluding Ms. Brown) and uninsured labor, the Department applied the appropriate class code for the work performed and correctly calculated the penalty for Native Cut employees2/ in the amount of $52,350.10. Total Penalty Calculation Ms. Murcia calculated a total penalty of $69,534.34 against Respondent for failure to secure payment of workers’ compensation insurance for each of its employees during the audit period. The amount of the penalty should be reduced by the amount attributed to Ms. Brown in the amount of $19.60. Thus, the total penalty amount that should be assessed against Native Cuts is $69,514.40. Mr. Lee paid a $1,000.00 down payment for the penalty assessed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, assessing a penalty of $68,514.74 against Native Cuts Property Management, LLC. DONE AND ENTERED this 31st day of May, 2019, 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 31st day of May, 2019.
Findings Of Fact 10. The factual allegations in the Stop- Work Order and Order of Penalty Assessment issued on January 28, 2009, and the Second Amended Order of Penalty Assessment issued on January 22, 2010, 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 Second Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-005- D5, and being otherwise fully advised in the premises, hereby finds that: 1. On January 28, 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. 09-005-D5 to LAZARO DELIVERY CORPORATION (LAZARO). The Stop-Work Order and Order of Penalty Assessment included a Notice of rights wherein LAZARO 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 January 28, 2009, the Stop-Work Order and Order of Penalty Assessment was served via personal service on LAZARO. 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 18, 2009, the Department issued an Amended Order of Penalty Assessment to LAZARO in Case No. 09-005-D5. The Amended Order of Penalty Assessment assessed a total penalty of $181,479.49 against LAZARO. The Amended Order of Penalty Assessment included a Notice of Rights wherein LAZARO 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 LAZARO by personal service on February 18, 2009. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On February 18, 2009, LAZARO entered into a Payment Agreement Schedule for Periodic Payment of Penalty (Periodic Payment Agreement), pursuant to which the Department entered a Conditional Release of Stop-Work Order which would remain in effect for so long as LAZARO complied with the conditions of the Periodic Payment Agreement. 6. On March 11, 2009, LAZARO 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. 09-1607. 7. On January 22, 2010, the Department issued a Second Amended Order of Penalty Assessment to LAZARO in Case No. 09-005-D5. The Second Amended Order of Penalty Assessment assessed a total penalty of $7,184.55 against LAZARO. The Second Amended Order of Penalty Assessment was served on LAZARO through the Division of Administrative Hearings. A copy of the Second Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and is incorporated herein by reference. 8. On February 12, 2010, LAZARO filed a Notice of Voluntary Dismissal in DOAH Case No. 09-1607. A copy of the Notice of Voluntary Dismissal filed by LAZARO is attached hereto as “Exhibit D.” 9. On February 12, 2010, Administrative Law Judge R. Bruce McKibben entered an Order Closing File, relinquishing jurisdiction to the Department. A copy of the February 12, 2010 Order Closing File is attached hereto as “Exhibit E.”
Findings Of Fact 19. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on March 25, 2008, the Amended Order of Penalty Assessment issued on April 3, 2008, the 2°4 Amended Order of Penalty Assessment issued on April 11, 2008, the 34 Amended Order of Penalty Assessment issued on July 8, 2008, the 4" Amended Order of Penalty Assessment issued on August 12, 2008, and the 5 Amended Order of Penalty Assessment issued on September 24, 2008, which are attached hereto as Exhibit A, Exhibit B, Exhibit C, Exhibit D, Exhibit E and Exhibit F, respectively, and fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment, the Amended Order of Penalty Assessment, the 2"! Amended Order of Penalty Assessment, the 3 Amended Order of Penalty Assessment, the 4" Amended Order of Penalty Assessment and the 5 Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 08-1 17-1A, and being otherwise fully advised in the premises, hereby finds that: 1. On March 25, 2008, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued to JOHN BICKNAS LLC a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 08-117-1A. The Stop-Work Order and Order of Penalty Assessment included.a Notice of Rights wherein JOHN BICKNAS LLC was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 2. On March 25, 2008, the Stop-Work Order and Order of Penalty Assessment was served by personal service on JOHN BICKNAS LLC. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. JOHN BICKNAS LLC failed to answer the Stop-Work Order and Order of Penalty Assessment or request a proceeding in accordance with Sections 120.569 and 120.57, Florida Statutes. 4. On April 3, 2008, the Department issued an Amended Order of Penalty Assessment to JOHN BICKNAS LLC in Case No. 08-117-1A. The Amended Order of Penalty Assessment assessed a total penalty of $117,098.93 against JOHN BICKNAS LLC. The Amended Order of Penalty Assessment included a Notice of Rights wherein JOHN BICKNAS LLC 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. 5. On April 3, 2008, the Amended Order of Penalty Assessment was served on JOHN BICKNAS LLC by personal service. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 6. JOHN BICKNAS LLC failed to answer the Amended Order of Penalty Assessment or request a proceeding in accordance with Sections 120.569 and 120.57, Florida Statutes. 7. On April 11, 2008, the Department issued a 2" Amended Order of Penalty Assessment to JOHN BICKNAS LLC in Case No. 08-117-1A. The 2"? Amended Order of Penalty Assessment assessed a total penalty of $59,861.05 against JOHN BICKNAS LLC. 8. On April 11, 2008, the 2"! Amended Order of Penalty Assessment was served on JOHN BICKNAS LLC by personal service. A copy of the 2™4 Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and incorporated herein by reference. 9. On May 2, 2008, JOHN BICKNAS LLC requested a proceeding based upon the 2™ Amended Order of Penalty Assessment, in accordance with Sections 120.569 and 120.57, Florida Statutes. 10. On May 8,-2008, the Department referred the matter to the Division of Administrative Hearings (hereinafter “DOAH”) for appointment of an administrative law judge, who would conduct a formal hearing. The case was assigned DOAH Case No. 08-2236. 11. On July 8, 2008, the Department issued a 3rd Amended Order of Penalty Assessment to JOHN BICKNAS LLC in Case No..08-117-1A. The 3rd Amended Order of Penalty Assessment assessed a total penalty of $74,362.20 against JOHN BICKNAS LLC. 12. On August 12, 2008, the Administrative Law Judge permitted the Department to amend the penalty assessment. As a result, the 3rd Amended Order of Penalty Assessment was entered in this matter. A copy of the 3rd Amended Order of Penalty Assessment is attached hereto as “Exhibit D” and incorporated herein by reference. 13. On August 12, 2008, the Department issued a 4th Amended Order of Penalty Assessment to JOHN BICKNAS LLC in Case No. 08-117-1A. The 4th Amended Order of Penalty Assessment assessed a total penalty of $169,896.64 against JOHN BICKNAS LLC. 14. On August 21, 2008, the Administrative Law Judge permitted the Department to amend the penalty assessment. As a result, the 4th Amended Order of Penalty Assessment was entered in this ection. A copy of the 4"" Amended Order of Penalty Assessment is attached hereto as “Exhibit E” and incorporated herein by reference. 15. On September 24, 2008, the Department issued a 5" Amended Order of Penalty Assessment to JOHN BICKNAS LLC in Case No. 08-117-1A. The 5" Amended Order of Penalty Assessment assessed a total penalty of $20,054.97 against JOHN BICKNAS LLC. 16. On September 25, 2008, this 5 Amended Order of Penalty Assessment was filed in DOAH Case’No. 08-2236. A copy of the 5"" Amended Order of Penalty Assessment is attached hereto as “Exhibit F” and incorporated herein by reference. 17. On September 25, 2008, based upon the 5" Amended Order of Penalty Assessment, JOHN BICKNAS LLC filed a Notice of Withdrawal of Claim in Division of Administrative Hearings case number 08-2236, attached hereto as “Exhibit G” and incorporated herein by reference. | 18. On September 29, 2008, the Administrative Law Judge issued an Order Closing File in Division of Administrative Hearings case number 08-2236, attached hereto as “Exhibit H” and incorporated herein by reference. |
