The Issue The issue in this case is whether Respondent violated the provisions of chapter 440, Florida Statutes, by failing to secure the payment of workers' compensation, as alleged in the Stop-Work Order and 3rd Amended Order of Penalty Assessment, and, if so, what penalty is appropriate.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation for their employees and corporate officers. Respondent, Shriji Krupa, Inc., is a Florida corporation engaged in business operations as a gas station (self-service and convenience-retail) in the State of Florida. Mr. Hemant Parikh, one of Respondent's corporate officers, testified that, on November 20, 2012, Respondent was inspected by Petitioner's Compliance Investigator, Mike Fuller. Mr. Fuller advised Mr. Parikh that Respondent needed to close the store. According to Mr. Hemant Parikh, at the time of inspection, Respondent had two corporate officers and four additional employees. Mr. Parikh explained that, at the time of inspection, Respondent had two store locations with three employees working at each locale. Mr. Shrikant Parikh, another corporate officer, testified that, at the time of inspection, Respondent was operating under the mistaken belief that its corporate officers were exempt from workers' compensation coverage. Pursuant to the record evidence, on November 28, 2012, Mr. Fuller served a Stop-Work Order and Order of Penalty Assessment on Respondent. Pursuant to the Stop-Work Order, Respondent was ordered to cease all business operations for all worksites in the state based on the following: Failure to secure the payment of workers' compensation in violation of sections 440.10(1), 440.38(1), and 440.107(2) F.S., by: failing to obtain coverage that meets the requirements of Chapter 440, F.S., and the Insurance Code. After receiving the Stop-Work Order, on that same date, Respondent obtained workers' compensation coverage with an effective date of November 29, 2012. Respondent has maintained appropriate coverage to date. Following the Stop-Work Order, Respondent submitted various records for Petitioner's review.2/ Petitioner's sole witness was Ms. Lynne Murcia. Ms. Murcia works in Petitioner's Bureau of Compliance wherein she calculates penalties for those employers found in violation of the workers' compensation laws. Ms. Murcia performs approximately 200 penalty calculations per year. Ms. Murcia first became involved with Respondent in January 2013, when she received an assignment to perform a penalty calculation. Ms. Murcia reviewed all records previously submitted by Respondent. From the records received, Ms. Murcia was able to determine that Respondent employed four or more employees on a regular basis. Ms. Murcia explained that "employees" include corporate officers that have not elected to be exempt from workers' compensation. After conducting a search within the Florida Division of Corporations, Ms. Murcia was able to determine that no exemptions existed for Respondent's corporate officers. Ms. Murcia further conducted a proof of coverage search via Petitioner's Coverage and Compliance Automated System ("CCAS"), which is a database that contains all insurance coverage and exemptions for each employer throughout the State of Florida. The search revealed that Respondent possessed appropriate coverage from November 29, 2012, to the present; however, no prior coverage was indicated. Ms. Murcia conducted a penalty assessment for the non- compliance period of November 29, 2009, through November 28, 2012. From the records submitted by Respondent, Ms. Murcia correctly identified Respondent's employees and gross wages paid during the penalty period. All of the individuals listed on the Penalty Worksheet of the 3rd Amended Order of Penalty Assessment, dated August 27, 2014, were "employees" (as that term is defined in section 440.02(15)(a), Florida Statutes) of Respondent during the period of noncompliance listed on the penalty worksheet. From a description of the Respondent's business operations, Ms. Murcia determined Respondent's classification code. She explained that classification codes are established by the National Council of Compensation Insurance ("NCCI"). A classification code is a four-digit code number that is assigned to a specific group of tasks, duties, and responsibilities for a specific grouping of business. Ms. Murcia further testified that the classification codes are associated with a manual rate which is the actual dollar amount of risk associated with a particular code.3/ The manual rates are also established by NCCI. Class Code 8061, used on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment, and as defined by the NCCI Scopes Manual, is the correct occupational classification for Respondent. From the assigned classification code number, 8061, Ms. Murcia calculated the appropriate manual rate for the penalty period. The manual rates used on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment are the correct manual rates. The total penalty of $21,205.19 is the correct penalty for the employees listed on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment.
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 Shriji Krupa, Inc., violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage, and imposing a total penalty assessment of $21,205.19. DONE AND ENTERED this 30th day of October, 2014, in Tallahassee, Leon County, Florida. S TODD P. RESAVAGE 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 30th day of October, 2014.
The Issue The issue is whether Respondent, Department of Financial Services, Division of Workers' Compensation, properly assessed a penalty of $90,590.42 against Petitioner, S.A.C., LLC.
Findings Of Fact The Department is the state agency responsible for enforcing the statutory requirement that employers secure payment of workers' compensation for the benefit of their employees pursuant to Section 440.107, Florida Statutes. At all times relevant to this proceeding, Petitioner, S.A.C., LLC, was a corporation domiciled in Florida. S.A.C.'s 2007 Limited Liability Company Annual Report lists its principal place of business as 626 Lafayette Court, Sarasota, Florida, 34236, and its mailing address as Post Office Box 49075, Sarasota, Florida 34230. At all times relevant to this proceeding, William R. Suzor was the president and managing member of S.A.C. Collen Wharton is an Insurance Analyst II with the Department. In this position, Ms. Wharton conducts inspections to ensure that employers are in compliance with the law. On June 20, 2007, Ms. Wharton conducted a compliance check at 2111 South Osprey Avenue in Sarasota, Florida. During the compliance check, Ms. Wharton observed three males working at that location. The three men were framing a single-family house that was under construction. This type of work is carpentry, which is considered construction. During the compliance check, Ms. Wharton asked David Crawford, one of the men working at the site, who was their employer. Mr. Crawford told Ms. Wharton that he and the other two men worked for S.A.C., but were paid by a leasing company. Mr. Crawford told Ms. Wharton that the company was owned by Mr. Suzor and, in response to Ms. Wharton's inquiry, he gave her Mr. Suzor's telephone number. In addition to Mr. Crawford, the other workers at the site were identified as Terry Jenkins and Frank Orduno. By checking the records the Department maintains in a computerized database, Ms. Wharton determined that S.A.C. did not carry workers' compensation insurance, but had coverage on its employees through Employee Leasing Solutions, an employee leasing company. She also determined, by consulting the Department's database, that none of the men had a workers' compensation exemption. Ms. Wharton telephoned Employee Leasing Solutions, which advised her that two of the workers at the site, Mr. Crawford and Mr. Jenkins, were on the roster of employees that the company maintained. The company advised her that the other worker, Mr. Orduno, was not on its roster of employees. This information was verified by an employee list that the leasing company provided to Ms. Wharton. On June 20, 2007, after determining that one worker at the work site had no workers' compensation coverage, Mr. Wharton prepared a Stop-Work Order. She then telephoned Mr. Suzor, told him that he had one worker at the site who did not have workers' compensation coverage and requested that he come to the work site. During the conversation, Mr. Suzor advised Ms. Wharton that Mr. Crawford was in charge at the work site, that she could give the Stop-Work Order to Mr. Crawford, and that he (Mr. Suzor) would meet her the following day. Ms. Wharton, after she telephoned Mr. Suzor, she conferred with her supervisor and then issued Stop-Work Order No. 07-125-D3, posting it at the work site and serving it on Mr. Crawford. On June 21, 2007, Mr. Suzor met with Ms. Wharton at her office. During that meeting, Ms. Wharton served a copy of Stop-Work Order No. 07-125-D3 on Mr. Suzor. She also served him with a Request for Production of Business Records for Penalty Assessment Calculation ("Request for Business Records"). The Request for Business Records listed specific records that Mr. Suzor/S.A.C. should provide to the Department so that the Department could determine the workers who S.A.C. paid during the period of June 19, 2004, through June 20, 2007. The Request for Business Records notes that the requested records must be produced within five business days of receipt. According to the Request for Business Records, if no records are provided or the records provided are insufficient to enable the Department to determine the payroll for the time period requested for the calculation of the penalty in Subsection 440.107(7)(d), Florida Statutes, "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 1.5." S.A.C. did not respond to the Department's Request for Business Records. On July 17, 2007, the Department had received no records from S.A.C. Without any records, Ms. Wharton had no information from which she could determine an accurate assessment of S.A.C.'s payroll for the previous three years. Therefore, Ms. Wharton calculated the penalty based on an imputed payroll. In her calculations, Ms. Wharton assumed that Mr. Orduno worked from June 21, 2004, through June 20, 2007, and that he was paid 1.5 times the state-wide average weekly wage for the class code assigned to the work he performed for each year or portion of the year. The Department then applied the statutory formula set out in Subsection 440.107(7)(d), Florida Statutes. Based on that calculation, the Department correctly calculated S.A.C.'s penalty assessment as $90,590.42, as specified in the Amended Order of Penalty Assessment dated July 17, 2007. The Amended Order of Penalty Assessment reflecting the correct penalty amount was served on S.A.C.'s attorney, John Myers, Esquire, by hand-delivery, on July 17, 2007.3/ On July 21, 2007, S.A.C., through its former counsel, filed a Petition for Hearing.
Recommendation Based upon the Findings of Fact and Conclusions of Law, RECOMMENDED that Respondent, Department of Financial Services, Division of Workers' Compensation, enter a final order which affirms the Amended Order of Penalty Assessment issued July 17, 2007, assessing a penalty of $90,590.42, and the Stop-Work Order issued to Petitioner, S.A.C., LLC, on June 20, 2007. DONE AND ENTERED this 25th day of March, 2008, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD 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 25th day of March, 2008.
The Issue The issues in this case are whether Respondent, Doherty Home Repair, Inc., failed to obtain workers’ compensation coverage that meets the requirements of chapter 440, Florida statutes (2017); and, if so, whether the penalty assessed in the 2nd Amended Order of Penalty Assessment was properly calculated.
Findings Of Fact Based on the evidence and stipulated facts, the undersigned makes the following Findings of Fact: Respondent was actively involved in business operations in the state of Florida during the period of January 22, 2014, through January 21, 2016, inclusively. Respondent received the Stop-Work Order and Order of Penalty Assessment from the Department on January 21, 2016. Respondent received the Request for Production of Business Records for Penalty Assessment Calculation from the Department on February 10, 2016. Respondent was an "employer," as defined in chapter 440, throughout the penalty period. Respondent received the Amended Order of Penalty Assessment from the Department on March 10, 2016. Respondent received the 2nd Amended Order of Penalty Assessment from the Department on July 5, 2016. All of the individuals listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment were "employees" of Respondent during the periods of noncompliance listed on the penalty worksheet of the Amended Order of Penalty Assessment. None of the individuals listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment had a valid Florida workers’ compensation coverage exemption at any time during the periods of noncompliance listed on the penalty worksheet of the Amended Order of Penalty Assessment. Respondent did not secure the payment of workers’ compensation insurance coverage, nor have others secured the payment of workers’ compensation insurance coverage, for any of the individuals named on the penalty worksheet of the 2nd Amended Order of Penalty Assessment during the periods of noncompliance listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment. None of the individuals listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment were "independent contractors" hired by Respondent for any portion of the periods of noncompliance listed on the penalty worksheet. Wages or salaries were paid by Respondent to its employees listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment, whether continuously or not, during the corresponding periods of noncompliance listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment. The Request for Production of Business Records for Penalty Assessment Calculation was served on Respondent on April 2, 2016. Respondent failed to provide all of the required business records for the period requested in the Request for Production of Business Records for Penalty Assessment Calculation. The employees on the penalty worksheet of the 2nd Amended Order of Penalty Assessment are classified under the correct class codes, as defined by the National Council on Compensation Insurance, Inc. ("NCCI"), "Scopes® Manual." The approved manual rates used on the penalty worksheet of the 2nd Amended Order of Penalty Assessment, as defined by the NCCI Scopes® Manual, are the correct manual rates for the corresponding periods of noncompliance listed on the penalty worksheets. Doherty Home Repair, Inc., is Respondent’s correct legal name. The Department is the state agency charged with the responsibility to investigate and enforce the workers’ compensation insurance coverage laws in the state under chapter 440 and to ensure that employers secure workers’ compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondent is a private company providing general construction and home repair services. It maintained its primary business records on a computer during the relevant time periods. Ryan Doherty testified that his work computers were stolen during a "break in" at his office. 2/ However, he had possession of the computers containing most of his business records, for one to one and one-half months after the date the original Stop-Work Order was issued. Respondent did provide 2014 tax and other business records to the Department for purposes of (1) investigating alleged violations of the workers’ compensation insurance coverage laws and (2) calculating a penalty. Byron Fichs Active Electric3/ was included in the records provided by Respondent as an employee, for purposes of a penalty calculation. The period of noncompliance was January 23, 2014, through December 31, 2014. Pet. Ex. 6, p. 19. Gross payroll for the audit period for Byron Fichs Active Electric was determined based upon records provided by Respondent and totaled $4,342.27. Pet. Ex. 6, p. 19. Information contained in Respondent’s U.S. Income Tax Return for 2014 indicated that Respondent paid a total of $640,100.00 in labor-related expenses for 2014. Pet. Ex. 10, p. 62. That amount was broken down into essentially two categories in 2014--Subcontractors and Specific employees. Subcontractors: $535,980.00 of the labor-related expenses was for sub-contractors. Pet. Ex. 10, p. 62. Specific Employees: $104,120.00 of the total labor- expenses ($640,100.00) was attributable to specific employees. Pet. Ex. 10, p. 66, Overflow Statement. However, only $503,674.364/ was included by the Department as Gross Payroll for subcontractors in 2014 on the worksheet for purposes of a penalty calculation. Pet. Ex. 6, p. 19. Tax records for 2014 indicated payments totaling $104,120.00 were made to Seth Anthony, Shawn Bronson, Joseph Horucth, Mark Lucas, John Concepcion, Jordan Beene, James Stift, and Jerry Brunnell. Pet. Ex. 10, p. 66. Due to the payments indicated on the tax and business records, the individuals listed above were included as employees for purposes of penalty calculation. Pet. Ex. 6, p. 19. The amounts in the 2014 tax records were prorated to determine gross payroll for each individual for purposes of penalty calculation. The period of noncompliance for each person was January 23, 2014, through December 31, 2014. Pet. Ex. 6, p. 19. Mr. Doherty was listed as an employee for purposes of penalty calculation. The gross wage attributed to Mr. Doherty in 2014 was based upon the average weekly wage ("AWW"), since the records based on income were more than the AWW. Pet. Ex. 6, p. 19. Mr. Doherty’s period of noncompliance during the year 2014 was April 19, 2014, through December 31, 2014. Pet. Ex. 6, p. 19. Significantly, payroll for the remainder of the penalty audit period (January 1, 2015, through December 31, 2015, and January 1, 2016, through January 21, 2016) was imputed by the Department because it properly determined that Respondent did not provide adequate business records to determine Respondent’s actual payroll.5/ Pet. Ex. 6, pp. 19-20. The four employees that were found working on the job site on the day the Stop-Work Order was issued, as well as Mr. Doherty, a corporate officer, were included by the Department as employees for purposes of imputing payroll and calculating the penalty for the remainder of the audit period, January 1, 2015, through January 21, 2016. Pet. Ex. 6, p. 19. The four employees are identified in Respondent’s business records as Dave Mason, Dan, Erick, and Joe. Pet. Ex. 6, p. 19. Based upon the records provided for the period of January 23, 2014, through December 31, 2014, and the imputed payroll established for the period of January 1, 2015, through January 21, 2016, a penalty of $244,964.44 was calculated. Pet. Ex. 6, p. 19. As a result, a 2nd Amended Order of Penalty Assessment was issued assessing a total penalty of $244,964.44. Pet. Ex. 6, pp. 16-17. After the 2nd Amended Order of Penalty Assessment was issued, Respondent provided the Department with a "massive" amount of additional business records. The actual date of delivery of these additional records to the Department was not clear. Nonetheless, it was clear that it was on a date after the 2nd Amended Order of Penalty Assessment was issued. These business records, despite being voluminous, were incomplete, and the Department’s penalty auditor, if required, would have been unable to calculate or recalculate a penalty based on the records delivered by Respondent after the 2nd Amended Order of Penalty Assessment was issued. A large amount of timesheets for various workers were also received after the issuance of the 2nd Amended Order of Penalty Assessment, but again they were incomplete; and there were no wages associated with any of the timesheets, no hourly rates were stated, and no total amount paid to the employees for the week was listed.6/
Recommendation Based on the Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Department of Financial Services, Division of Workers' Compensation, enter a final order finding that Respondent, Doherty Home Repair, Inc., violated the workers’ compensation laws by failing to secure and maintain required workers’ compensation insurance for its employees, and impose a penalty of $244,964.44. DONE AND ENTERED this 27th day of December, 2017, in Tallahassee, Leon County, Florida. S ROBERT L. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of December, 2017.
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 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.
Findings Of Fact 11. — The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on February 3, 2009, and the Fourth Amended Order of Penalty Assessment issued on February 5, 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 Fourth Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-014-D2, and being otherwise fully advised in the premises, hereby finds that: 1. On February 3, 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. 09-014-D2 to ASSOCIATED WINDOW AND DOOR, INC. (ASSOCIATED). The Stop-Work Order and Order of Penalty Assessment included a Notice of rights wherein ASSOCIATED 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 3, 2009, the Stop-Work Order and Order of Penalty Assessment was served via personal service on ASSOCIATED. 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 10, 2009, the Department issued an Amended Order of Penalty Assessment to ASSOCIATED in Case No. 09-014-D2. The Amended Order of Penalty Assessment assessed a total penalty of $99,761.78 against ASSOCIATED. The Amended Order of Penalty Assessment included a Notice of Rights wherein ASSOCIATED 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 ASSOCIATED by personal service on April 13, 2009. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On April 30, 2009, the Department issued a Second Amended Order of Penalty Assessment to ASSOCIATED in Case No. 09-014-D2. The Second Amended Order of Penalty Assessment assessed a total penalty of $76,081.13 against ASSOCIATED. The Second Amended Order of Penalty Assessment contained a Notice of Rights wherein ASSOCIATED was advised that any request for an administrative proceeding to challenge or contest the Second Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Second Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 6. The Second Amended Order of Penalty Assessment was served on ASSOCIATED by personal service on May 1, 2009. A copy of the Second Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and is incorporated herein by reference. 7. On May 22, 2009, ASSOCIATED 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- 3044. . 8. On February 5, 2010, the Department issued a Fourth Amended Order of Penalty Assessment to ASSOCIATED in Case No. 09-014-D2. The Fourth Amended Order of Penalty Assessment assessed a total penalty of $1,256.24 against ASSOCIATED. The Fourth Amended Order of Penalty Assessment was served on ASSOCIATED through the Division of Administrative Hearings. A copy of the Fourth Amended Order of Penalty Assessment is attached hereto as “Exhibit D” and is incorporated herein by reference. 9. ‘On February 10, 2010, ASSOCIATED filed a Motion to Close File Due to Settlement in DOAH Case No. 09-3044. A copy of the Motion to Close File Due to Settlement filed by ASSOCIATED. is attached hereto as “Exhibit E.” 10. On February 10, 2010, Administrative Law Judge Errol H. Powell entered an Order Closing File, relinquishing jurisdiction to the Department. A copy of the February 10, 2010 Order Closing File is attached hereto as “Exhibit F.”
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes, by failing to secure payment of workers’ compensation coverage, as alleged in the Second Amended Order of Penalty Assessment; and, if so, the appropriate penalty.
Findings Of Fact Jurisdiction The Department is the state agency responsible for enforcing the requirement of chapter 440 that employers in Florida secure workers’ compensation coverage for their employees and corporate officers, pursuant to section 440.107. Patrick Hoffman was the owner and sole corporate officer for American. At all times material to this proceeding, American sold materials for window screens, patio sliding doors, screws, and spline screening; and it provided window and screen installation services. Investigation On June 29, 2016, the Department commenced an investigation following the observation of Patrick Hoffman and Timothy Barnett (also known as Adam Barnett) performing window installation services at a residential property. Kent Howe, an investigator in the Department’s compliance division, conducted an investigation regarding American’s operation of its business without proper workers’ compensation coverage. On June 29, 2016, Mr. Howe personally served a Stop-Work Order requiring American to cease all business operations and Order of Penalty Assessment on Mr. Hoffman. On June 29, 2016, Mr. Howe also served Mr. Hoffman with a Request for Production of Business Records for Penalty Calculation, requesting records to enable the Department to calculate the appropriate penalty for the period of June 30, 2014, through June 29, 2016. On June 30, 2016, the Department issued a conditional release from the Stop-Work Order. The conditional release required Respondent to pay $1,000, and agree to pay the penalty assessment within 28 days after the penalty calculation. American paid the $1,000 payment but it disputed the calculated penalty amount. An employer is required to maintain workers’ compensation coverage for employees unless there is an exemption from coverage. In the construction industry, a company must maintain coverage if it employs one or more persons. In the non-construction industry, a company is required to maintain coverage if it employs three or more persons. A contractor serving as a corporate officer in the construction industry may obtain an exemption from coverage requirements. See § 440.05, Fla. Stat. A contractor must demonstrate compliance with the workers’ compensation requirements or produce a copy of an employee leasing agreement or exemption for each employee. If an employee is a subcontractor without their own workers’ compensation coverage or an exemption, the individual is considered an employee of the contractor. American did not dispute that Timothy Barnett and Roger Wilson were employees of the company. American also did not dispute that it did not have workers’ compensation coverage for the employees as required by chapter 440. As a corporate officer, Mr. Hoffman elected to be exempted from workers’ compensation coverage. Penalty Calculation The Department assigned Eunika Jackson, a Department penalty auditor, to calculate the appropriate penalty for American. Ms. Jackson conducts penalty audits for construction and non-construction employers. Ms. Jackson testified that workers’ compensation coverage penalties are calculated based on a statutory formula in which the auditor calculates two-times the amount of the insurance premium the employer would have paid for each employee over the two-year period preceding the Stop-Work Order. The two-year period is commonly referred to as the look-back period. The penalty calculation is based on the employer’s payroll, the classification code for the industry of operation during the audit period, and the manual rate assigned to that classification code. To determine the appropriate code, the auditor uses the classification code in the Scopes® Manual, which has been adopted by Petitioner through Florida Administrative Code Rules 69L-6.021 and 69L-6.031. Ms. Jackson used business records Mr. Hoffman provided to determine the appropriate industry code and the penalty amount for each employee. Ms. Jackson reviewed bank statements to determine the gross payroll paid to Mr. Wilson and Mr. Barnett during the two-year non-compliance period. The records demonstrated that Roger Wilson received payment during the period of June 30, 2014, through December 31, 2015. Timothy (Adam) Barnett received payment during the period of January 1, 2015, through June 29, 2016. Ms. Jackson determined that American operated in the construction industry and initially assigned each employee a classification code of 5102. On August 11, 2016, the Department issued the Amended Order that assessed a total penalty of $10,785.04. The Amended Order was personally served on Mr. Hoffman on August 16, 2016. In response to the Amended Order, Respondent disputed the classification code assigned to Mr. Wilson. Mr. Hoffman testified that Mr. Wilson did not perform construction work, but rather worked as a retail employee selling merchandise in the store front. Mr. Hoffman further testified that contractors purchased items at American for use in their businesses. Mr. Hoffman’s description of Mr. Wilson’s job responsibilities and description of merchandise sold at American clearly demonstrates that Mr. Wilson did not perform construction work. Ms. Jackson correctly determined that the classification code 8018, which applies to retail and wholesale salespersons, was the appropriate code for Mr. Wilson. The classification code change resulted in a manual rate reduction and a reduced assessment applied to Mr. Wilson. On November 18, 2016, the Department filed a Motion for Leave to Amend Order of Penalty Assessment, which the undersigned granted. The Second Amended Order reduced the penalty assessment to $6,818.00. During the hearing, American continued to dispute the calculation of the penalty for Mr. Hoffman because he maintained an exemption as a corporate officer. The Department ultimately agreed to remove Mr. Hoffman from the penalty assessment worksheet and reduced the penalty assessment to $6,764.96. At hearing, there was no dispute regarding the penalty assessment related to Mr. Barnett. However, Respondent argued in the post-hearing statement for the first time that Timothy Barnett had an exemption. There was no evidence to support Respondent’s assertion. Therefore, Ms. Jackson correctly included payment to Mr. Barnett as payroll for purposes of calculating the penalty. Regarding Mr. Wilson, Mr. Hoffman argued that Mr. Wilson had an exemption from workers’ compensation coverage when he began working for American.1/ However, Mr. Hoffman could not produce a copy of the exemption and Mr. Wilson was not present at the hearing for testimony. Ms. Jackson conducted research using the Coverage Compliance Automated System (“CCAS”), a database used by the Department to maintain information regarding workers’ compensation policies, employee leasing plans, and exemptions for employees. Ms. Jackson found no record of an exemption for Mr. Wilson in CCAS. While Ms. Jackson did not exhaust all efforts to locate an exemption for Mr. Wilson, it was American’s burden to produce evidence of an exemption. Mr. Hoffman’s testimony with nothing more was insufficient to demonstrate that Mr. Wilson had an exemption and as such, Ms. Jackson appropriately included payments to Mr. Wilson as payroll to calculate the penalty. The calculation of the penalty for Mr. Wilson in the amount of $2,784.58 is correct. However, the penalty calculation for Mr. Barnett is incorrect. The amount should be $3,872.27. Therefore, the amount of the penalty should be reduced to $6,656.85. Ultimate Findings of Fact American was actively involved in business operations within the construction industry during the audit period of June 30, 2014, through June 29, 2016. Based upon the description of American’s business and the duties performed, Mr. Wilson was properly classified with a code 8018. Ms. Jackson used the correct manual rates and methodology to determine the appropriate penalty.
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, American Aluminum Concepts, Inc., violated the requirement in chapter 440, by failing to secure workers’ compensation coverage for its employees; and Imposing a total penalty assessment of $6,656.85. DONE AND ENTERED this 16th day of December, 2016, 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 16th day of December, 2016.
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 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 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”.
