08-000689 Dionaris Cabrera, D/B/A Florida Sunset Shuttle, Inc., And Florida Sunset Shuttle, Inc., A Dissolved Florida Corporation, And Florida Sunset Shuttles And Charters, Inc., A Florida Corporation vs. Department Of Financial Services, Division Of Workers' Compensation Status: Closed Recommended Order on Monday, December 8, 2008.

Summary: Florida Sunset Shuttles and Charters, Inc., is a successor entity to other named corporation; is subject to workers` compensation laws; no estoppel; and no personal liability; Recommend a penalty of $131.604.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DIONARIS CABRERA, d/b/a FLORIDA )

SUNSET SHUTTLE, INC.; FLORIDA )

SUNSET SHUTTLE, INC., A )

DISSOLVED FLORIDA CORPORATION; )

AND FLORIDA SUNSET SHUTTLES AND )

CHARTERS, INC., A FLORIDA )

CORPORATION, )

)

Petitioners, )

)

vs. ) Case No. 08-0689

)

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS' )

COMPENSATION, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal administrative hearing in this case was held on

July 25, 2008, by video teleconference in Tallahassee and

Orlando, Florida, before Daniel M. Kilbride, a duly-designated

Administrative Law Judge (ALJ) of the Division of Administrative

Hearings (DOAH).

APPEARANCES

For Petitioners: Paul J. Morgan, Esquire

Morgan, Hires & Boynton, LLC

1099 West Morse Boulevard

Winter Park, Florida 32789

For Respondent: Douglas D. Dolan, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399-4229

STATEMENT OF THE ISSUES

Whether Dionaris Cabrera, (hereinafter "Petitioner

Cabrera") the sole stock holder of Florida Sunset Shuttle, Inc.,

a Dissolved Florida Corporation, was correctly assessed a

penalty for violating the workers' compensation laws of Florida,

during the period of 2006 through 2008.

Whether Petitioner, Florida Sunset Shuttle, Inc.,

(hereinafter "the old corporation") is responsible for providing

workers' compensation coverage for its alleged employees, and

whether the old corporation was properly noticed of the

violation.

Whether Petitioners or either one of them, are in violation

of the Workers' Compensation Act during the relevant time period

due to the failure to secure workers' compensation coverage for

its employees.

Whether Florida Sunset Shuttles and Charters, Inc.,

(hereinafter "the new corporation") is a successor entity of

Florida Sunset Shuttle, Inc., or Dionaris Cabrera, d/b/a Florida

Sunset Shuttle, Inc., pursuant to Chapter 440, Florida Statutes,

and/or Florida Administrative Code Chapter 69L-6.

Whether the Stop-Work Orders and amended penalties issued

to Petitioner Cabrera and the old corporation were properly

applied to the new corporation.

Whether the Department of Financial Services, Division of

Workers' Compensation (hereinafter "Respondent") is estopped

from imposing a penalty on the new corporation due to a prior

determination made by the investigator assigned to the file in

2006 and the detrimental reliance upon representations made to

Ruben Cabrera and Jennifer Crain, who were representing the old

corporation in the proceeding.

PRELIMINARY STATEMENT

On November 28, 2007, and again on December 10, 2007,

Respondent issued and served a Stop-Work Order and Order of

Penalty Assessment (hereinafter "Stop-Work Order"), on the old

corporation, and attempted service on Petitioner Cabrera

alleging that Petitioners were not in compliance with the

coverage requirements of Chapter 440, Florida Statutes, and the

Insurance Code. Petitioner Cabrera and the old corporation were

ordered to cease all business operations. On January 3, 2008,

Respondent issued and served an Amended Order of Penalty

Assessment (hereinafter "Amended Order") on the old corporation,

and attempted service on Petitioner Cabrera assessing against

Petitioner Cabrera and the old corporation, a penalty in the

amount of $364,349.58, pursuant to Subsection 440.107(7)(d),

Florida Statutes (2007). 1 On January 28, 2008, Jennifer Crain,

assistant manager of the old corporation, was served a 2nd

Amended Order of Penalty Assessment directed to Petitioner

Cabrera and the old corporation and an Order Applying Stop-Work

Order and Amended Order of Penalty Assessment to Successor

Corporation or Business Entity, directed to the new corporation.

On February 8, 2008, Respondent received a petition from each

Petitioner challenging the orders and requesting a formal

hearing on the matter. The petition and charging documents were

forwarded to the DOAH on February 8, 2008, where the matter was

assigned to the undersigned ALJ. Following discovery, and the

granting of the Motion to Amend Order of Penalty Assessment, the

final hearing was held on July 25, 2008, by video teleconference

in Tallahassee and Orlando, Florida.

Respondent presented the testimony of Lissette Sierra,

Respondent's investigator, and Ruben Cabrera, as an adverse

witness, and introduced two composite exhibits, which were

admitted into evidence. On behalf of each Petitioner, the

testimony of Jennifer Crain was presented but no exhibits were

introduced.

A Transcript of the formal hearing was filed on

August 11, 2008. The parties timely filed Proposed Recommended

Orders, which have been carefully considered in the preparation

of this Recommended Order.

FINDINGS OF FACT

1. Respondent is the state agency responsible for

enforcing the statutory requirement that employers secure the

payment of workers' compensation for the benefit of their

employees. § 440.107, Fla. Stat.

PARTIES INVOLVED AND RESPONDENT'S ACTIONS

2. Petitioner Cabrera is the sole owner and director of

Petitioner Florida Sunset Shuttle, Inc., (the old corporation) a

Florida Corporation. She founded the company in 2005. At the

time of the hearing and at the time of the imposition of the

Stop-Work Order, she was residing outside the United States,

most likely in the Dominican Republic.

3. At the time of the issuance of the first Stop-Work

Order, the old corporation was administratively dissolved for

failure to file its annual report.

4. During the relevant time period, there is no evidence

that Petitioner Cabrera was actively controlling day-to-day

operations of either the old corporation or the new corporation.

Ruben Cabrera and Jennifer Crain were employed by the old

corporation, with Ruben Cabrera being the manager and Jennifer

Crain being his assistant. Ruben Cabrera also held himself out

as an officer of the old corporation. Ruben Cabrera and

Jennifer Crain were not directors of the old corporation. Ruben

Cabrera had managed the business operations of the old

corporation since its creation in 2005.

5. On November 13, 2007, Respondent's investigator,

Lisette Sierra (Sierra), conducted a compliance check at the old

corporation's worksite, located at 851 East Donegan Avenue,

Kissimmee, Florida, to verify compliance with the workers'

compensation statutes.

6. Upon arrival at the worksite, Sierra observed that it

consisted of a fenced lot with a trailer and several parked

buses. At the worksite, Sierra personally spoke with Jennifer

Crain and Ruben Cabrera. Petitioner Cabrera was not present.

7. On and after November 13, 2007, Petitioner Florida

Sunset Shuttle, Inc., did not carry workers' compensation for

anyone associated with the corporation.

8. On November 13, 2007, Respondent issued a Division of

Workers' Compensation Request for Business Records to the old

corporation. Although two documents were tendered, the records

requested were not produced within the 5 business day time

period specified in the request.

9. On November 28, 2007, Respondent issued a second

Request for Production of Business Records for Penalty

Assessment Calculation (hereinafter "Request") directed to

Petitioners, Cabrera and Florida Sunset Shuttle, Inc. The

Request required Petitioners or either of them, to produce

records related to bus drivers who performed services for the

company during the specified period.

10. On the same date, Respondent issued a "Stop-Work

Order" to Petitioner Cabrera and the old corporation for failure

to meet the requirements of Chapter 440, Florida Statutes, and

the Insurance Code, ordering Petitioner Cabrera and the old

corporation to cease all business operations and assessing a

$1,000.00 daily penalty against Petitioner Cabrera and the old

corporation, pursuant to Subsection 440.107(7)(d), Florida

Statutes, for failure to comply.

11. The Stop-Work Order and Request was posted on the work

site on November 28, 2007.

12. On November 30, 2007, Sierra was unable to serve the

Stop-Work Order on the old corporation, via its registered agent

or an officer. She served the Stop-Work Order and the Request

by hand delivery on Jennifer Crain, Assistant Manager, at the

company offices.

13. On December 10, 2007, Respondent issued a subsequent

Stop-Work Order and Order of Penalty Assessment. It was served

on a representative of counsel for all of the Petitioners.

14. The parties named on the first and second Stop-Work

Order were "Dionaris Cabrera, d/b/a Florida Sunset Shuttle,

Inc., and Florida Sunset Shuttle, Inc., a Dissolved Florida

Corporation." Florida Sunset Shuttle, Inc., was found to be an

administratively dissolved corporation at the time the Stop-Work

Orders were issued.

15. The old corporation continued to operate its business

in violation of both Stop-Work Orders issued by Respondent.

16. On December 17, 2007, Respondent issued an Amended

Order of Penalty Assessment directed to Petitioner Cabrera and

the old corporation, amending the penalty assessed to

$346,349.58, pursuant to the formula listed in Sections 440.107

and 440.10, Florida Statutes. Since no business records were

received from either Petitioner in response to the Request, the

penalty was calculated by imputing the old corporation's gross

payroll.

17. After unsuccessful attempts to serve either Petitioner

Cabrera or the old corporation, Respondent served the Amended

Order, dated December 17, 2007, on an alleged employee of

Petitioner Cabrera and/or the old corporation, name unknown, at

the company offices on January 3, 2008.

18. Petitioner Cabrera is the mother of Ruben Cabrera, the

company manager. She is the sole stockholder, corporate

officer, and registered agent listed for Florida Sunset Shuttle,

Inc., in the Florida Secretary of State's records. There has

not been any contact with Petitioner Cabrera during the course

of Respondent's investigation. It appears that Petitioner

Cabrera does not live in or around Orlando, Florida. According

to Ruben Cabrera, Petitioner Cabrera was living in Santo

Domingo, Dominican Republic, during the entire course of their

investigation and this proceeding.

19. Ruben Cabrera was the manager who operated the old

corporation from its company offices in Kissimmee. He entered

into arrangements to provide shuttle bus services for guests to

tourist destinations with several hotels in the

Kissimmee/Orlando area. While negotiating and signing these

contracts with hotels, he held himself out to be an officer of

the old corporation.

20. It was unclear from the evidence when the old

corporation closed business operations, but it appears to have

done so prior to January 1, 2008.

21. On November 30, 2007, Ruben Cabrera incorporated the

new corporation. He was named the sole owner, corporate

officer, and registered agent. The principal place of business

was the same as the worksite of the old corporation, and the

addresses of the registered agent and corporation's sole officer

were the same as well.

22. On January 30, 2008, Respondent served a 2nd Amended

Order of Penalty Assessment (hereinafter "2nd Amended Order")

directed to Petitioner Cabrera and the old corporation, on

Jennifer Crain, Assistant Manager, at the company office,

assessing a $406,349.58 penalty on these two Petitioners. The

increase in penalty was due to the allegation that the old

corporation continued to operate in violation of the Stop-Work

Order. In addition, none of the parties listed on the Penalty

Worksheet, attached to the 2nd Amended Order, had current, valid

exemptions from workers' compensation coverage.

23. An exemption from workers' compensation allows the

exemption holder to be exempt from having to secure the payment

of workers' compensation on behalf of himself or herself. None

of the persons used to calculate the penalty had workers'

compensation exemptions.

24. The penalty period began on November 20, 2006, because

a prior investigation by Respondent found the old corporation to

be in compliance only up to that date.

25. Utilizing the Scopes Manual published by the National

Council on Compensation Insurance and adopted by Florida

Administrative Code Rule 69L-6.021, as guidance, Respondent

determined that Petitioner Cabrera and/or the old corporation's

activities involved clerical workers and bus drivers. Thus, she

assigned the class codes 8810 and 7382, respectively, to the old

corporation's activities.

26. On January 30, 2008, Respondent also served an Order

Applying Stop-Work Order and Amended Order of Penalty Assessment

to Successor Corporation or Business Entity (hereinafter "Order

Applying") on the new corporation. The Order Applying

transferred the effect of the Stop-Work Order and Amended Order

issued to the old corporation to the new corporation, based on

the allegation that the new corporation was a successor

corporation, pursuant to Subsection 440.107(7)(b), Florida

Statutes.

27. Ruben Cabrera, the owner/operator, transferred

ownership and control of the new corporation to Jennifer Crain

on January 9, 2008. Jennifer Crain became the registered agent,

sole owner, and officer of the new corporation. It hired some

of the drivers who previously worked for the old corporation and

put them on salary under the new corporation. The new

corporation leased new vehicles and served some of the same

routes as the old corporation from the same company location.

28. The new corporation properly carried workers'

compensation insurance when served with the Order Applying.

Therefore, the new corporation was in compliance with Subsection

440.10(1)(a), Florida Statutes, at the time Jennifer Crain took

over ownership and control of the new corporation.

COMPANY OPERATIONS

29. Drivers for the old corporation submitted applications

for employment to the company, prior to being hired. However,

drivers signed contracts with the old corporation which stated

that they were independent contractors and not employees, and no

deductions were taken out their pay. 1099 Forms were issued at

the end of the year.

30. Drivers for the old corporation did not pay insurance

on the vehicles they used for business purposes.

31. Drivers for the old corporation were not responsible

for the expenditures associated with repair or maintenance of

the vehicles used by the drivers for business purposes. The

corporation paid for the insurance.

32. Drivers for the old corporation did not pay any fees

or charges to the company for use of the vehicles.

33. Drivers for the old corporation paid their own

admission fees for entry into amusement parks, or other

incidental expenses.

34. Drivers for the old corporation wore black pants and a

white shirt as a standard uniform.

35. Drivers for the old corporation were paid according to

the length of time for which they worked each day.

36. Drivers for the old corporation did not own the

vehicles they used for business purposes. They did not pay the

old corporation for use of the vehicles in carrying out the

contracts of the old corporation. The vehicles were leased

under contract by the old corporation.

37. Drivers for the old corporation did not individually

contract with hotels for services, but carried out the contracts

entered into by the old corporation.

38. The old corporation did not submit any invoices for

services rendered by its drivers.

39. There is no evidence that the drivers maintained

separate businesses.

40. Payments to drivers were made to individuals rather

than to their "businesses."

41. Drivers for the old corporation were paid by the full

day or half day, according to the span of time they worked.

42. Ruben Cabrera entered into contracts with clients of

the old corporation. He signed the contracts as either manager

or as president of the old corporation. Drivers for the old

corporation regularly visited the old corporation's clients to

pick-up or drop-off passengers in the course of their

employment.

43. The old corporation's contract with at least one hotel

refers to the old corporation's drivers as "employees."

44. On June 16, 2008, Respondent issued a 3rd Amended

Order of Penalty Assessment directed to Petitioner Cabrera and

the old corporation, reducing the fine assessed to them to

$131,504.60. The penalty was reduced after Respondent received

the old corporation's business records and was able to use them

to calculate a penalty. The old corporation received payment

for its services from multiple businesses in the

Kissimmee/Orlando area. The old corporation's records do not

specify who, if any, of the drivers paid by the old corporation

are independent contractors.

45. The 3rd Amended Order of Penalty Assessment was served

at the DOAH on counsel for the parties. Following a hearing,

the Motion to Amend Order of Penalty Assessment was granted by

the undersigned ALJ, and this matter proceeded to final hearing.

PRIOR INVESTIGATION BY RESPONDENT

46. On September 12, 2006, Respondent initiated an

investigation into the alleged violation of the workers'

compensation laws of Florida by Petitioner, Florida Sunset

Shuttle, Inc. The investigating agent for Respondent, Ray

Reynolds (Reynolds), issued a Stop-Work Order on

September 15, 2006, for failure to obtain coverage for its

employees.

47. It is alleged that in a meeting with Ruben Cabrera,

his attorney at the time, and Jennifer Crain, held on

September 15, 2006, Reynolds reviewed the contracts with the

drivers, and, apparently based on those facts alone, agreed that

the bus drivers who worked for Florida Sunset Shuttle, Inc.,

were independent contractors. He advised the parties of such

findings.

48. However, on September 19, 2006, an Amended Order of

Penalty Assessment was issued assessing the corporation a

penalty of $2,084.09 for the violation.

49. Florida Sunset Shuttle, Inc. did not challenge the

findings of Respondent that a violation had occurred, and

voluntarily paid the fine for failing to provide coverage for

those employees named. It also produced proof of workers'

compensation coverage for nine employees, which included Ruben

Cabrera and Jennifer Crain.

CONCLUSIONS OF LAW

50. The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2008).

51. Respondent is the state agency responsible for

enforcing the requirement of the Workers' Compensation Law that

employers secure the payment of compensation for their

employees.

52. Because an administrative fine deprives the person or

corporation fined of substantial rights in property, such fines

are penal in nature. Respondent has the burden to prove in this

case, by clear and convincing evidence, that Petitioner violated

the Workers' Compensation Law during the relevant period, by

failing to be in compliance with the coverage requirements of

the law, and that the penalty assessments are correct.

Department of Banking and Finance, Division of Securities and

Investor Protection v. Osborne Stern and Co. , 670 So. 2d 932

(Fla. 1996); Dept. of Financial Services, Division of Workers'

Compensation v. U&M Contractors, Inc. , Case No. 04-3041

(DOAH Recommended Order April 7, 2005) (Final Order

April 27, 2005).

53. Pursuant to Subsection 440.107(3)(g), Florida Statutes

(2008), "The department shall enforce workers' compensation

coverage requirements . . . the department shall have the power

to: Issue stop-work orders, penalty assessment orders, and any

other orders necessary for the administration of this section."

54. Pursuant to Sections 440.10 and 440.38, Florida

Statutes, every "employer" is required to secure the payment of

workers' compensation for the benefit of its employees, unless

exempted or excluded under Chapter 440, Florida Statutes.

Strict compliance with the Workers' Compensation Law is,

therefore, required of the employer.

55. The law defines "employer" in pertinent part as

". . . every person carrying on any employment. . . ."

§ 440.02(16)(a), Fla. Stat.

56. "Employment" is defined, in pertinent part as, "any

service performed by an employee for the person employing him or

her." § 440.02(17), Fla. Stat.

57. Pursuant to Subsection 440.02(17)(b)2., Florida

Statutes, "employment" includes "all private employments in

which four or more employees are employed by the same

employer. . . ."

58. The law defines "employee," in part, as "any person

who receives remuneration from an employer for the performance

of any work or service while engaged in any employment. . . ."

§ 440.02(15)(a), Fla. Stat.

59. The old corporation was an employer, as defined in

Subsection 440.02(16)(a), Florida Statutes, as it carried on

employment by hiring various parties as bus drivers and for

clerical work. According to the old corporation's business

records, the corporation employed 14 persons during the penalty

period.

60. If the old corporation's drivers were independent

contractors as alleged, the old corporation was required to

maintain invoices for services rendered by each bus driver and

submitted for compensation.

61. The old corporation contends that its bus drivers were

independent contractors and has produced contracts with each of

the drivers in an attempt to show this status.

62. Neither party produced any of the drivers at the

hearing to testify as to their status. Respondent attempted to

offer written statements (in Spanish) with a written translation

prepared by Investigator Sierra. These items were not admitted

as they were hearsay. In addition, Respondent's investigator

prepared the translation herself, and, although the undersigned

ALJ is certain the investigator is a professional, these

statements cannot be considered reliable as they are not subject

to cross-examination.

63. Subsection 120.569(2)(g), Florida Statutes, relating

to the Florida Administrative Procedures Act, provides:

Irrelevant, immaterial or unduly repetitious

evidence shall be excluded, but all other

evidence of a type commonly relied upon by

reasonably prudent persons in the conduct of

their affairs shall be admissible, whether

or not such evidence would be admissible in

a trial in the courts of Florida.

64. Subsection 120.57(1)(c), Florida Statutes, provides:

Hearsay evidence may be used for the purpose

of supplementing or explaining other

evidence, but it shall not be sufficient in

itself to support a finding unless it would

be admissible over objection in civil

action.

65. Pursuant to Subsection 440.02(15)(d)1.c., Florida

Statutes, "an individual claiming to be an independent

contractor has the burden of proving that he or she is an

independent contractor for purposes of this chapter." In order

to be considered an independent contractor, that person must

meet at least four criteria set forth in Subsection

440.02(15)(d)1.a. or b., Florida Statutes.

66. Pursuant to Subsection 440.02(15)(d)1.a., Florida

Statutes, four out of six criteria must be met to meet the

definition of independent contractor:

(I) The independent contractor maintains a

separate business with his or her own work

facility, truck, equipment, materials, or

similar accommodations;

(II) The independent contractor holds or

has applied for a federal employer

identification number, unless the

independent contractor is a sole proprietor

who is not required to obtain a federal

employer identification number under state

or federal regulations;

(III) The independent contractor receives

compensation for services rendered or work

performed and such compensation is paid to a

business rather than to an individual;

(IV) The independent contractor holds one

or more bank accounts in the name of the

business entity for purposes of paying

business expenses or other expenses related

to services rendered or work performed for

compensation;

(V) The independent contractor performs

work or is able to perform work for any

entity in addition to or besides the

employer at his or her own election without

the necessity of completing an employment

application or process; or

(VI) The independent contractor receives

compensation for work or services rendered

on a competitive-bid basis or completion of

a task or a set of tasks as defined by a

contractual agreement, unless such

contractual agreement expressly states that

an employment relationship exists.

67. The old corporation has not provided evidence to show

that four of these criteria exist in relation to each driver.

Although none of the drivers actually testified, the stipulated

undisputed facts show that the vehicles used in carrying out the

business of the old corporation were not owned by the drivers;

there is no evidence that the drivers maintained separate

businesses; and payments from the old corporation to drivers

were made to individuals rather than businesses. In addition,

there is no evidence that any of the drivers held bank accounts

in the name of any other business entity for the purpose of

payment of business expenses or other expenses related to the

work being performed.

68. As at least four out of six of these criteria must be

met, the old corporation has not shown that the drivers met the

statutory definition of independent contractors, pursuant to

Subsection 440.02(15)(d)1.a., Florida Statutes.

69. Further, pursuant to Subsection 440.02(15)(d)1.b.,

Florida Statutes, "If four of the criteria listed in sub-

subparagraph a. do not exist, an individual may still be

presumed to be an independent contractor and not an employee

based on full consideration of the nature of the individual

situation with regard to satisfying any of the following

conditions":

(I) The independent contractor performs or

agrees to perform specific services or work

for a specific amount of money and controls

the means of performing the services or

work.

(II) The independent contractor incurs the

principal expenses related to the service or

work that he or she performs or agrees to

perform.

(III) The independent contractor is

responsible for the satisfactory completion

of the work or services that he or she

performs or agrees to perform.

(IV) The independent contractor receives

compensation for work or services performed

for a commission or on a per-job basis and

not on any other basis.

(V) The independent contractor may realize

a profit or suffer a loss in connection with

performing work or services.

(VI) The independent contractor has

continuing or recurring business liabilities

or obligations.

(VII) The success or failure of the

independent contractor's business depends on

the relationship of business receipts to

expenditures.

70. The drivers did not control the means of performing

the services or the work, as the vehicles were either owned or

leased by the old corporation and were not the property of the

drivers.

71. The drivers did not incur the principal expenses

related to driving the buses, such as insurance, fuel, ownership

or maintenance of the buses, but were only responsible for minor

expenses such as entry into amusement parks.

72. The drivers were not responsible for the satisfactory

completion of the jobs to be performed. No privity existed

between the client hotels and the drivers because all contracts

were between the hotels and the old corporation.

73. The drivers were paid on a time structure rather than

a per-job basis. Drivers were paid for a full or a half day of

work, not by how many trips they made between destinations.

74. Drivers were not able to realize a profit or suffer a

loss in connection with performing duties for the old

corporation, as they were paid by the span of time they worked.

75. The drivers did not have continuing liabilities based

on their employment with the old corporation, as expenses

associated with running the old corporation's business and

maintenance expenses for the vehicles were incurred only by the

company.

76. The success or failure of the drivers' "business" did

not depend on the relationship between business receipts to

expenditures. They were paid the same amount for a span of time

regardless of how many trips they made between destinations or

how many passengers they carried.

77. Applying the statutory definition of "independent

contractor" to the facts of this case, the evidence is clear and

convincing that the old corporation's drivers were employees of

the company and not independent contractors.

78. Regardless of the attempt to circumvent the statutory

definition by requiring the drivers to sign contracts stating

that they were independent contractors, the old corporation was

an employer, carrying on employment, during the penalty period.

79. The Worker's Compensation Law requires employers to

secure the payment of workers' compensation for the benefit

80. Pursuant to Subsection 440.107(2), Florida Statutes,

"'securing the payment of workers' compensation' means obtaining

coverage that meets the requirements of this chapter and the

Florida Insurance Code." Petitioner corporation did not secure

the payment of workers' compensation for the period for which

the penalty was assessed.

81. Petitioner Cabrera and the old corporation have raised

estoppel as a defense against imposition of a penalty against

the old corporation. Petitioners must prove three elements to

estop Respondent from its proposed action in this proceeding.

82. Respondent has objected to the raising of estoppel as

an affirmative defense as not being timely raised. Respondent's

assertion of surprise or prejudice by the two Petitioners

raising, for the first time at the hearing, the defense of

estoppel is rejected. First of all, the exhibit that documented

the investigator's statements were not provided to Petitioner's

counsel until immediately before the hearing. Second, the Third

Amended Order assessing penalty was not entered or approved by

this tribunal until June 16, 2008. Therefore, Petitioner

corporation may raise the defense. See Fla. Admin. Code R.

28-106.203 and 28-106.211 . See , e.g. , Abilities, Inc. v.

Department of Education, Division of Vocational Rehabilitation ,

Case No. 04-2053 (DOAH Recommended Order, paragraph 135,

May 9, 2005)(Final Order July 12, 2005).

83. In order to succeed in its estoppel defense,

Petitioner must show: (1) a representation by an agent of the

state as to a material fact that is contrary to a later asserted

position; (2) reasonable reliance on the representation; and

(3) a change in position detrimental to the party claiming

estoppel caused by the representation and reliance thereon.

State Department of Revenue v. Anderson , 403 So. 2d 397, 400

(Fla. 1981); Warren v. Department of Administration , 554 So. 2d

568, 570 (Fla. 5th DCA 1989) (record supported finding of

estoppel).

84. Each of the elements of estoppel has not been met.

Assuming, arguendo , that Respondent's investigator made the

representations asserted by Petitioners, Petitioner Cabrera

and/or the old corporation could not reasonably rely on a verbal

representation of an agent for Respondent that the company's bus

drivers were independent contractors. Only three days after the

meeting between the parties, Respondent issued an Amended Order

of Penalty Assessment, and the old corporation paid the penalty

without protest. In addition, it produced proof of workers'

compensation coverage which covered nine employees and the

Stop-Work Order was released. However, the policy was cancelled

in November 2006. A penalty could properly be assessed against

the old corporation for the time period that Respondent

attempted to impose.

85. A penalty could properly be assessed against the old

corporation for failure to secure coverage for its employee bus

drivers, during the time period October 18, 2006, through

January 28, 2008.

86. There is no basis for an Order of Penalty Assessment

to be assessed directly against Petitioner Cabrera. Respondent

has failed to demonstrate by clear and convincing evidence that

Petitioner Cabrera operated a business as a sole proprietorship

and should be personally subjected to either the Stop-Work Order

or any of the other Orders of Penalty Assessment. On

November 28, 2007, Respondent served a person who appeared to be

an employee of the old corporation with a copy of a Stop-Work

Order naming Petitioner Cabrera as an employer doing business as

the old corporation, who was in violation of the Workers'

Compensation Law. This is insufficient to give Petitioner

Cabrera notice and a clear point of entry into the

Stat.; Fla. Admin. Code R. 28-106.109; see Varney v. Florida

Real Estate Commission , 515 So. 2d 383 (Fla. 5th DCA 1987); see

also Henry v. State, Department of Administration, Division of

Retirement , 431 So. 2d 677, 679-680 (Fla. 1st DCA 1983). There

is no evidence that Petitioner Cabrera was in any way connected

with Florida Sunset Shuttles and Charters, Inc.(the new

corporation). As such, Subsection 440.107(7)(b), Florida

Statutes, is inapplicable to Petitioner Cabrera.

87. However, pursuant to Subsection 440.107(7)(b), Florida

Statutes, "Stop-work orders and penalty assessment orders issued

under this section against a corporation, partnership, or sole

proprietorship shall be in effect against any successor

corporation or business entity that has one or more of the same

principals or officers as the corporation or partnership against

which the stop-work order was issued and are engaged in the same

or equivalent trade or activity."

88. As stated in Subsection 440.05(15), Florida Statutes,

"[a] stop-work order and penalty assessment shall be in effect

against any such affiliated person. As used in this subsection,

the term "affiliated person" means: . . . Any officer, director,

trustee, partner, owner, manager, joint venturer, or employee of

such other person or a person performing duties similar to

persons in such positions."

89. A Stop-Work Order and Order of Penalty Assessment was

issued against the old corporation for noncompliance with the

Workers' Compensation Law of Florida. Ruben Cabrera was the

general manager and fulfilled the duties of, and held himself

out to be, president of the old corporation although he was not

a director or stockholder.

90. On November 30, 2007, Ruben Cabrera incorporated

Petitioner Florida Sunset Shuttles and Charters, Inc. Ruben

Cabrera was the sole owner, officer, and registered agent for

the new corporation as listed with the Florida Secretary of

State.

91. The old corporation and the new corporation are

engaged in the same or equivalent trade or activity of

transporting persons between hotels and tourist attractions.

92. Respondent alleges that because Ruben Cabrera

performed the duties of a manager and held himself out to be

president of the old corporation, and then was owner/director of

the new corporation, that the two corporations shared Ruben

Cabrera as an "affiliated person." Under the statute cited

above and the facts of this case, that is correct. The new

corporation is therefore a successor entity of the old

corporation, pursuant to Chapter 440, Florida Statutes, and

Florida Administrative Code Chapter 69L-6. The fact that Ruben

Cabrera later sold the company to Jennifer Crain is irrelevant.

93. When Ruben Cabrera incorporated the new corporation,

the old corporation was a dissolved Florida corporation. When

Respondent drafted and served the "Order Applying Stop-Work

Order and Order of Penalty Assessment to Successor Corporation

or Business Entity," on January 28, 2008, Jennifer Crain was the

sole owner/director of the company. At that time, all of the

bus drivers were covered under workers' compensation insurance,

and the buses were leased by her as president/owner and not

through the prior company; nevertheless, the status of the new

corporation did not change, it was the successor entity of the

old corporation. Therefore, under Subsection 440.107(7)(b),

Florida Statutes, the stop-work orders and orders of penalty

assessment issued against the old corporation were proper and

were properly applied against the successor corporation.

94. Based on the Findings of Fact above, Respondent has

met its burden of proving by clear and convincing evidence that

Petitioner, Florida Sunset Shuttles and Charters, Inc., is

subject to an enforceable stop-work order and penalty

assessment.

95. Respondent has adopted industry classification codes

contained in the Basic Manual (Scopes Manual) published by the

National Council on Compensation Insurance. Fla. Admin.

Code R. 69L-6.021. Florida Administrative Code Rule 69L-6.021

references Subsection 440.02(8), Florida Statutes, as specific

authority and implementation.

96. The classification codes of 7382 and 8810 for bus

drivers and clerical staff, respectively, were correctly

assigned to the old corporation's employees duties while

employed by the old corporation.

97. Respondent "shall assess against any employer who has

failed to secure the payment of compensation as required by this

chapter a penalty equal to 1.5 times the amount the employer

would have paid in premium when applying approved manual rates

to the employer's payroll during periods for which it failed to

secure the payment of workers' compensation required by this

chapter within the preceding 3-year period or $1,000, whichever

is greater." § 440.107(7)(d)1., Fla. Stat. (2008).

98. Applying the appropriate approved manual rates to the

periods for which penalty was assessed, the third amended

penalty was correctly assessed by Respondent at $131,604.60.

99. Petitioner has raised the constitutionality of the

statutes under which Petitioner has been assessed a penalty. It

is well-settled law that the administrative process cannot

resolve a constitutional challenge to a statute, rule or

regulation. See Florida Hospital v. Agency for Health Care

Administration , 823 So. 2d 844, 849 (Fla. 1st DCA 2002);

Carrollwood State Bank v. Lewis , 362 So. 2d 110, 113-12 (Fla.

1st DCA 1978). However, such issue is preserved in the event of

an appeal under Section 120.68, Florida Statutes.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that:

(1) The Department of Financial Services, Division of

Workers' Compensation, enter a final order dismissing the "Stop-

Work Order and Order of Penalty Assessment" directed to Dionaris

Cabrera, d/b/a Florida Sunset Shuttle, Inc.;

(2) The Department of Financial Services, Division of

Workers' Compensation, enter a final order upholding the "Stop-

Work Order and Order of Penalty Assessment" and its successor

orders directed against Petitioner Florida Sunset Shuttle, Inc.,

a dissolved Florida corporation; and that

(3) The Department of Financial Services, Division of

Workers' Compensation, enter a final order upholding the "Order

Applying Stop-Work Order and Amended Order of Penalty Assessment

to Successor Corporation or Business Entity" against Florida

Sunset Shuttles and Charters, Inc., and imposing a penalty of

$131,604.60.

DONE AND ENTERED this 8th day of December in Tallahassee,

Leon County, Florida.

S

DANIEL M. KILBRIDE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 8th day of December, 2008.

ENDNOTE

1/ All references to Florida Statutes are to Florida

Statutes (2007), unless otherwise indicated.

COPIES FURNISHED :

Douglas D. Dolan, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

Paul J. Morgan, Esquire

Morgan, Hires & Boynton, LLC

1099 West Morse Boulevard

Winter Park, Florida 32789

Honorable Alex Sink

Chief Financial Officer

Florida Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0300

Daniel Y. Sumner, General Counsel

Florida Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.