15-003839 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Nobles Quality Services, Llc Status: Closed Recommended Order on Wednesday, December 9, 2015.

Summary: Petitioner proved by clear and convincing evidence that Respondent failed to secure workers' compensation insurance coverage for an employee on October 22, 2014. Petitioner failed, however, to properly calculate the penalty owed by Respondent.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS'

COMPENSATION,

Petitioner,

vs. Case No. 15 - 3839

NOBLES QUALITY SERVICES, LLC,

Respondent.

_______________________________/

RECOMMENDED ORDER

Pursuant to notice, a final hearing in this cause was held

by video teleconference between sites in Orlando and Tallahassee,

Florida, on September 10 , 201 5 , before Linzie F. Bogan ,

Administrative Law Judge of the Division of Administrat ive

Hearings.

APPEARANCES

For Petitioner: Christopher Ivey Miller, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

For Respondent: No Appearanc e

STATEMENT OF THE ISSUE

Whether Respondent violated the provisions of chapter 440,

Florida Statutes, by failing to secure the payment of workersÓ

compensation as alleged in the Stop - Work Order and 2nd Amended

Order of Penalty Assessment, and , if so, what penalty is

appropriate.

PRELIMINARY STATEMENT

On October 22, 2014, the Department of Financial Services,

Division of WorkersÓ Compensation (Department), served a Stop -

Work Order and Order of Penalty Assessment on Nobles Quality

Services, LLC (Respondent) , due to an alleged failure to secure

workersÓ compensation insurance coverage for its employees. On

March 3, 2015, the Department issued to Respondent a 2nd Amended

Order of Penalty Assessment , and alleged therein that Respondent

owed a total penalty of $ 61,175.36. On April 27, 2015,

Respondent filed a request for a disputed - fact hearing. The

Department does not challenge the timeliness of RespondentÓs

request for hearing. On July 7, 2015, the Department referred

the case to the Division of Administrati ve Hearings (DOAH) and

requested the appointment of an Administrative Law Judge.

At the final hearing, the Department presented the testimony

of compliance investigator Robert Etheredge (Investigator

Etheredge) and penalty auditor Eric Ruzzo (Auditor Ruzz o).

Department Exhibits 1, 2, and 4 through 10 were received into

evidence. Respondent was properly notified of the disputed - fact

hearing, but elected not to attend.

On November 5, 2015 , the Transcript of the disputed - fact

hearing was filed with DOAH. The Department was allowed 15 days

from the filing of the T ranscript to submit its p roposed

r ecommended o rder . The Department Ós Proposed Recommended Order

was considered by the undersigned in preparation of this

Recommended Order.

FINDING S OF FACT

1. The Department is the state agency responsible for the

enforcement of the workersÓ compensation insurance coverage

requirements established in c hapter 440, Florida Statutes

(2014) . 1/

2. On March 6, 2006, the Florida Department of State,

Division of Corporat ions, issued articles of corporation to

Respondent. RespondentÓs address of record is 4441 Radio Avenue,

Sanford, Florida 32773. RespondentÓs mailing address is 3779

Eagle Preserve P oint , Sanford, Florida 32773.

3 . On October 22, 2014, I nvestigator Eth eredge conducted a

random workers' compensation compliance check at 107 East Circle

Drive, New Smyrna Beach, Florida 32169. During the course of the

compliance check, Investigator Etheredge observed Matthew Nobles

supervising William Boling, who was opera ting a miter saw, and

James Clogston, Jr., who was moving construction materials to the

house. These individuals were building a deck on the house in

question.

4 . Upon questioning by I nvestigator Etheredge ,

Matthew Nobles advised that William Boling and James Clogston

both worked as employees for Respondent. Matthew Nobles further

advised that workersÓ compensation exemptions were in effect for

himself and James Clogston. Matthew Nobles also informed

investigator Etheredge that Respondent did not ha ve a workers'

compensation policy .

5 . Armed with this information, I nvestigator Etheredge

returned to his vehicle and searched the corporate database of

the Florida Department of State, Division of Corporations . The

search revealed that Respondent's cor porate officers are

Matthew S. Nobles, Timothy J . Nobles, and James Clogston.

6 . Investigator Etheredge then consulted the Coverage and

Comp liance Automated System (CCAS). CCAS is the workers Ó

compensation compliance database for the State of Florida.

Through CCAS, insurance companies and employee leasin g companies

submit to the State insurance information regarding new policies,

amendments to existing policies, and cancellations of policies.

CCAS also list s any exemptions currently or previously hel d by

any member of a registered company. 2/

7 . According to Investigator Etheredge, in reviewing the

CCAS database, he did not locate a workers' compensation policy

or employee leasing notice for Respondent. CCAS did show,

however, that Matthew Nobles had a then - current exemption for the

period June 19, 2014 , through June 19, 2016. Prior to this

exemption, CCAS also showed that Matthew Nobles had an exemption

for the period April 3, 2012 , through April 3, 2014.

8 . CCAS showed that Timothy Nobles ha d an exemption for the

period March 18, 2014 , through October 24, 2014. For James

Clogston, Jr., CCAS showed an exemption for the period

December 10, 2013 , through December 10, 2015. Finally, for

William E. Boling, CCAS showed an exemption for the perio d

December 10, 2013 , through March 17, 2014.

9 . On October 22, 2014, William Boling was neither covered

by a workers Ó compensation policy, nor exempt from being covered

by the same. Accordingly, o n October 22, 2014, the Department

issued to Respondent a S top - W ork O rder and a written r equest for

copies of RespondentÓs business/payroll records for the two - year

period covering October 23, 2012 , through October 22, 2014.

10 . In response to the DepartmentÓs request for business

records, Respondent provide d approximately a yearÓs worth of

payroll records for the period October 25, 2013, through

October 15, 2014. These payroll records are sufficiently

detailed, as reflected in the summary of payroll records (Ex. 6),

so as to allow the Department to calcula te RespondentÓs weekly

payroll for this period with respect to all employees and

corporate officers other than William Boling.

11 . Florida Administrative Code Rule 69L - 6.028(2) provides

as follows:

The employerÓs period of non - compliance shall

be either the same as the time period

requested in the business records request for

the calculation of penalty or an alternative

period of non - compliance as determined by the

department, whichever is less . The

department shall determine an alternative

period of non - compliance by obtaining records

from other sources, including, but not

limited to, the Department of State, Division

of Corporations, the Department of Business

and Professional Regulation, licensing

offices, building permitting offices and

contracts, tha t evidence a period of non -

compliance different than the time period

requested in the business records request for

the calculation of penalty. For purposes of

this rule, Ðnon - complianceÑ means the

employerÓs failure to secure the payment of

workersÓ compe nsation pursuant to Chapter

440, F.S. ( e mphasis added ).

The payroll records provided by Respondent to the Department

establish October 25, 2013 , through October 22, 2014, as

RespondentÓs period of non - compliance. The Department failed to

offer other evi dence sufficient to establish a period of non -

compliance commencing prior to October 25, 2013. However, since

Respondent did not provide payroll records for the period

October 16, 2014 , through October 22, 2014, wages for this period

shall be imputed for each of RespondentÓs employees and corporate

officers, as appropriate. Accordingly, RespondentÓs penalty

shall be calculated based on the above - established period of non -

compliance.

12 . In support of its 2nd Amended Order of Penalty

Assessment, the Dep artment prepared a penalty calculation

worksheet showing a total penalty owed of $61,175.36. While the

evidence does establish that a penalty amount is owed, the

evidence does not support the total penalty amount claimed by the

Department.

13 . As previo usly noted, CCAS, as to William Boling, showed

an exemption for the period December 10, 2013 , through March 17,

2014. The evidence also established that Mr. Boling was observed

operating a miter saw at the referenced job site on October 22,

2014. Given t hat Mr. BolingÓs exemption expired on March 17,

2014, and that he was observed working for Respondent on

October 22, 2014, Mr. BolingÓs wages should be imputed for the

period March 18, 2014 , through October 22, 2014. The penalty

calculation worksheet cor rectly reflects a penalty, based on

imputed wages, in the amount of $539.58 for Mr. Boling for the

period October 16, 2014 , through October 22, 2014. The worksheet

fails, however, to calculate a penalty for Mr. Boling based on

imputed wages for the period March 18, 2014 , through October 15,

2014. Furthermore, the worksheet entries for Mr. Boling showing

penalties totaling $21,940.16 are not supported by the evidence

as these penalty entries are based on imputed wages for a time

not within the period of Re spondentÓs non - compliance.

1 4 . The entry on the penalty calculation worksheet for

Timothy Nobles and Matthew Nobles correctly reflects a total

penalty of $1,217.92 and $1,004.02 , respectively , based on

information gleaned from RespondentÓs payroll record s.

1 5 . The penalty calculation worksheet entries for Harold

Nobles showing penalties totaling $13,106.38 are not supported by

the evidence as these penalty entries are based on imputed wages

for a time not within the period of RespondentÓs non - compliance .

1 6 . As previously noted, James Clogston had an exemption

for the period December 10, 2013 , through December 10, 2015.

There is no evidence establishing that Mr. Clogston had a

business relationship with Respondent prior to the effective date

of his ex emption. The penalty calculation worksheet entries for

James Clogston showing penalties totaling $21,940.16 are not

supported by the evidence as these penalty entries are based on

imputed wages for a time not within the period of RespondentÓs

non - complian ce.

1 7 . The penalty calculation worksheet for the other listed

employees (Messrs. Lisk, Knudsen, Taylor, Pingerin, Farrar and

Donat (collectively referred to as Ðother employeesÑ)) correctly

reflects penalties totaling $1,427.14 based on information

glea ned from RespondentÓs payroll records.

1 8 . Auditor Ruzzo was assigned by the Department to

calculate the penalty owed by Respondent. Auditor Ruzzo

consulted the classification codes listed in the Scopes® Manual,

which has been incorporated by reference into the DepartmentÓs

rules. Fl a. Admin . Code R . 69L - 6.021 and 69L - 6.031. The

c lassification codes are four - digit numbers assigned to

occupations by the National Council on Compensation Insurance,

Inc. (NCCI) , to assist in the calculation of workers'

com pensation insurance premiums. Auditor Ruzzo correctly

assigned to Mr. Boling, and the other corporate officers and

employees listed on the penalty calculation worksheet, NCCI class

code 5654, which is for the area of carpentry. Auditor Ruzzo

utilized the appropriate formula in calculating the penalty owed

by Respondent for failing to secure the payment of workerÓs

compensation during the determined period of non - compliance.

CONCLUSIONS OF LAW

1 9 . The Division of Administrative Hearings has

jurisdiction o ver the subject matter and parties pursuant to

sections 120.569 and 120.57(1), Florida Statutes (201 5 ).

20 . Petitioner is the agency of the State of Florida

charged, pursuant to section 440.107(3), with the duty to:

[E] nforce workers' compensation cover age

requirements, including the requirement that

the employer secure the payment of workers'

compensation, and the requirement that the

employer provide the carrier with information

to accurately determine payroll and correctly

assign classification codes. In addition to

any other powers under this chapter, the

department shall have the power to:

(a) Conduct investigations for the purpose

of ensuring employer compliance.

(b) Enter and inspect any place of business

at any reasonable time for the purpose of

investigating employer compliance.

(c) Examine and copy business records.

* * *

(g) Issue stop - work orders, penalty

assessment orders, and any other orders

necessary for the administration of this

section.

(h) Enforce the terms of a stop - work order.

(i) Levy and pursue actions to recover

penalties.

(j) Seek injunctions and other appropriate

relief.

21 . Petitioner has the burden of proof in this case and

must show by clear and convincing evidence that Respondent

violated the Workers' Comp ensation Law during the relevant period

and that the penalty assessments are correct. § 120.57(1)(j),

Fla. Stat.; DepÓt of Banking & Fin., Div. of Sec. & Inv. Prot. v.

Osborne Stern & Co. , 670 So. 2d 932 (Fla. 1996); Ferris v.

Turlington , 510 So. 2d 292 ( Fla. 1987); Pou v. DepÓt of Ins. , 707

So. 2d 941 (Fla. 3d DCA 1998). Clear and convincing evidence

Ðrequires more proof than a Òpreponderance of the evidenceÓ but

less than Òbeyond and to the exclusion of a reasonable doubt.ÓÑ

In re Graziano , 696 So. 2d 744, 753 (Fla. 1997).

22 . It is well established that the Department has Ðbroad

powers to investigate employers, to halt any work where employers

are not complying, and to assess penalties on those who do not

comply.Ñ Twin City Roofing Constr. Specialis ts, Inc. v. Dep't of

Fin. Servs. , 969 So. 2d 563, 566 (Fla. 1st DCA 2007).

23 . Pursuant to sections 440.10 and 440.38, every

"employer" is required to secure the payment of workers'

compensation for the benefit of its employees unless exempted or

exclude d under chapter 440. Strict compliance by the employer

is, therefore, required . See , e.g . , Summit Claims Mgmt. v.

Lawyers Express Trucking, Inc. , 913 So. 2d 1182, 1185 (Fla. 4th

DCA 2005); C&L Trucking v. Corbitt , 546 So. 2d 1185, 1186 (Fla.

5th DCA 1989 ).

2 4 . Section 440.02(16)(a) defines ÐemployerÑ to include

Ðevery person carrying on any employment.Ñ

2 5 . Section 440.02(15)(a) defines ÐemployeeÑ to include

Ðany person who receives remuneration from an employer for the

performance of any work or serv ice while engaged in any

employment.Ñ

2 6 . Section 440.02(17) defines ÐemploymentÑ to include Ðany

service performed by an employee for the person employing him or

her,Ñ and includes , for construction employers, Ð[a]ll private

employments in which one or more employees are employed by the

same employer.Ñ

2 7 . Section 440.02(8) defines Ðconstruction industryÑ to

mean Ð for - profit activities involving any building, clearing,

filling, excavation, or a substantial improvement in the size or

use of any structu re or the appearance of any land.Ñ Respondent

performed work in the Ðconstruction industryÑ during the period

of non - compliance.

2 8 . Section 440.107(7)(a) provides, in part , as follows :

[ W ] henever the depa rtment determines that an

employer who is requ ired to secure the

payment to his or her employees of the

compensation provided for by this chapter has

failed to secure the payment of workers'

compensation required by this chapter . . .

such failure shall be deemed an immediate

serious danger to public health, safety, or

welfare sufficient to justify service by the

department of a stop - work order on the

employer, requiring the cessation of all

business operations. If the department makes

such a determination, the department shall

issue a stop - work order within 72 hours.

On October 22, 2014, Respondent had at least one uninsured

employee in the construction industry. Thus, the Stop - Work Order

issued herein was not only justified, it was required.

2 9 . As for the assessment of penalties against Responde nt,

section 440.107(d)(1) provides , in part , that :

[ I ]n addition to any penalty, stop - work

order, or injunction, the department shall

assess against any employer who has failed to

secure the payment of compensation as

required by this chapter a penalty equ al to 2

times the amount the employer would have paid

in premium when applying approved manual

rates to the employer's payroll during

periods for which it failed to secure the

payment of workers' compensation required by

this chapter within the preceding 2 - year

period or $1,000, whichever is greater.

30 . Rule 69L - 6.028(3) provides, in part, as follows:

When an employer fails to provide business

records sufficient to enable the department

to determine the employerÓs payroll for the

time period requested in the business records

request for purposes of calculating the

penalty provided for in Section

440.107(7)(d), F.S., the imputed weekly

payroll for each employee, corporate officer,

sole proprietor or partner shall be

calculated as follows:

(a) For each employee, other than corporate

officers, identified by the department as an

employee of such employer at any time during

the period of the employerÓs non - compliance,

the imputed weekly payroll for each week of

the employerÓs non - compliance for each such

em ployee shall be the statewide average

weekly wage as defined in section 440.12(2),

F.S., that is in effect at the time the stop -

work order was issued to the employer,

multiplied by 2.

31 . Petitioner has established by clear and convincing

evidence that Respondent failed to secure the payment of workers'

compensation as required by chapter 440 and that the Department

was justified in the issuance of the Stop - Work Order .

32 . T he 2nd Amended Order of Penalty Assessment was , in

part, improperly calculated because the Department did not

correctly identify RespondentÓs period of non - compliance. The

clear and convincing evidence establishes combined penalties of

$3,649.08 for Timothy Nobles, Matthew Nobles, and the Ðother

employees.Ñ The clear and convincing evidence also establishes a

penalty of $539.58 for William Boling for the period October 16,

2014 , through October 22, 2014.

33 . Consistent with the Findings of Fact established above,

the Department, with respect to William Boling, should calculate

a p enalty on imputed wages for the period March 18, 2014 , through

October 15, 2014, and incorporate the same in the f inal o rder

issued herein.

3 4 . The Department failed to satisfy its burden of proof

with respect to the following:

(a) Penalties totaling $ 21,940.16 for William Boling as the

penalties are based on imputed wages for a time not within the

period of RespondentÓs non - compliance;

(b) Penalties totaling $13,106.38 for Harold Nobles as the

penalties are based on imputed wages for a time not withi n the

period of RespondentÓs non - compliance; and

(c) Penalties totaling $21,940.16 for James Clogston as the

penalties are based on imputed wages for a time not within the

period of RespondentÓs non - compliance.

RECOMMENDATION

Based on the Findings of Fac t and Conclusions of Law set

forth herein, it is

RECOMMENDED that the Department of Financial Services,

Division of WorkersÓ Compensation, enter a final order finding

that Respondent, Nobles Quality Services, LLC, violated the

provisions of chapter 440 b y failing to secure the payment of

workersÓ compensation and assessing against Respondent a penalty

in an amount consistent with the above Findings of Fact and

Conclusions of Law .

DONE AND ENTERED this 9th day of December , 2015 in

Tallahassee, Leon County, Florida.

S

LINZIE F. BOGAN

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 9th day of December , 2015 .

ENDNOTE S

1/ All statutory references are to 2014 Florida Statutes, unless

otherwise indicated.

2/ An exemption allows an officer of a corporation , or a member

of a limited liability company , to exempt himself from the

insurance coverage requirements of Florida's Workers'

Compensation Law. § 440.05 , Fla. Stat. (2014) .

COPIES FURNISHED:

Alexander Brick, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

(eServed)

Matthew Nobles

Nobles Quality Services, LLC

3779 Eagle Preserve Point

Sanford, Florida 32773 - 4347

Christopher Ivey Miller, Esquire

Department of Financial Services

200 East Gaines Street

Tallahas see, Florida 32399

(eServed)

Julie Jones, CP, FRP, Agency Clerk

Division of Legal Services

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right t o 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.