03-000926 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Wood-Hopkins Contracting, Llc Status: Closed Recommended Order on Monday, November 10, 2003.

Summary: Respondent failed to provide its employees with workers` compensation insurance. Petitioner properly assessed a penalty in the amount of $423, 811.72.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS’ )

COMPENSATION, )

)

Petitioner, )

)

vs. ) Case No. 03 - 0926

)

WOOD - HOPKINS CONTRACTING, LLC, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was conducted in this case on September 3,

2003, in Tallahassee, Florida, before Suzanne F. Hood,

Administrative Law Judge with the Division of Administrative

Hearings.

APPEARANCES

For Petition er: John M. Iriye, Esquire

Department of Financial Services

Division of Workers' Compensation

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: D. Andrew Byrne, Esquire

Cooper, Byrne, Blue & Schwartz

1358 Thomaswood Drive

Tallahassee, Florida 32308

STATEMENT OF THE ISSUES

The issues are whether Respondent had workers' compensa tion

insurance coverage for the relevant time period as required by

Sections 440.10(1)(a) and 440.38(1), Florida Statutes, and if

not, what penalty should be imposed.

PRELIMINARY STATEMENT

On or about November 13, 2002, Petitioner, Department of

Financi al Services, Division of Workers' Compensation Insurance

(Petitioner), issued an Amended Stop Work and Penalty Assessment

Order to Respondent Wood - Hopkins Contracting, LLC (Respondent).

The Order stated that Respondent had failed to secure workers'

compen sation insurance for its employees. The Order also

directed Respondent to cease and desist from all operations

until it had complied with the workers' compensation law,

including the payment of the total assessed penalty in the

amount of $425,056.76.

R espondent requested a formal administrative hearing to

challenge the Amended Stop Work and Penalty Assessment Order on

December 6, 2002. Petitioner referred Respondent's request to

the Division of Administrative Hearings on or about March 18,

2003.

The parties filed a Response to Initial Order on March 28,

2003. Administrative Law Judge Stephen F. Dean issued a Notice

of Hearing dated April 10, 2003, scheduling the hearing for

June 12 - 13, 2003.

On May 23, 2003, Petitioner filed an Agreed Motion for

Continuance. On June 11, 2003, Judge Dean issued an Order

granting the motion and rescheduling the hearing for July 17 - 18,

2003.

On July 1, 2003, Petitioner filed an Agreed Motion for

Continuance. On July 2, 2003, Judge Dean issued an Order

granting the motion and rescheduling the hearing for

September 3 - 4, 2003.

On August 29, 2003, the Division of Administrative Hearings

transferred this case to the undersigned.

During the hearing, Petitioner presented the testimony of

two witnesses, Robert Lambert a nd Paul Gilbert. Petitioner

offered Exhibits P1 through P7, all of which were accepted into

evidence.

Respondent presented the testimony of two witnesses, Paul

Gilbert and Robert Allen. Respondent offered Exhibits R1

through R4, R5A, R5B, and R6, all o f which were accepted into

evidence.

The parties offered the three following Joint Exhibits as

transcripts of depositions in lieu of testimony at hearing:

JE 1, deposition of Stephen McMillan; JE 2, deposition of Seth

Hausman; and JE 3, deposition of Mi chael T. Esposito. The

transcripts of these depositions were accepted as offered.

On September 9, 2003, the parties filed a Joint Notice of

Filing Exhibits. As agreed during the hearing, the exhibits are

hereby accepted into the record as exhibits to t he deposition of

Stephen McMillan, JE 1.

On September 25, 2003, Petitioner filed an unopposed Motion

for Extension of Time to File the Proposed Recommended Order.

In an Order dated September 26, 2003, the undersigned granted

the motion. Petitioner and Respondent filed their respective

Proposed Recommended Orders on October 10, 2003.

All references are to Florida Statutes (2002) unless

otherwise indicated.

FINDINGS OF FACT

1. Petitioner is the agency responsible for enforcing the

requirement that empl oyers secure the payment of workers'

compensation insurance for their employees.

2. Respondent is a Florida corporation, incorporated on

October 3, 2001. Paul Gilbert is Respondent's only officer and

the corporation's managing member.

3. Zurich - American Insurance Group (Zurich) issued a

workers' compensation and employer's liability insurance policy

(Policy No. WC 3617144) to Mitchell Construction Company

(Mitchell) in October 1999. Zurich also provided Mitchell with

general liability and business autom obile insurance. At that

time, Paul Gilbert was the risk manager for Mitchell, which was

a large commercial contractor doing business in several states.

Mitchell's offices were located in Vidalia, Georgia.

4. In October 2000, Zurich renewed Mitchell's workers'

compensation policy (Policy No. WC 3617144 - 01) for the period

October 1, 2000 through October 1, 2001. The original and

renewed policies listed other combinable entities as named

insureds.

5. Mitchell owned at least 51 percent of its combinab le

companies, one of which was Wood - Hopkins Contracting Company of

Georgia, LLC. The company was also registered in Florida as

Wood - Hopkins Contracting Company, LLC. The company was located

in Jacksonville, Florida, with a mailing address in Vidalia,

Geo rgia.

6. The type of workers' compensation insurance that Zurich

provided to Mitchell was known as a rolling contractor -

controlled insurance policy (CCIP). It had endorsements for

large deductible reimbursements for paid losses and a set

monthly premiu m based in part on the projected payroll and

experience rating modifiers for Mitchell and its combinable

entities. The CCIP also covered subcontractors that had a

contract with Mitchell for such coverage.

7. The CCIP was renewable on an annual basis. Zurich did

not need to re - underwrite the policy each year because the

policy was created using three - year parameters. Additionally,

Zurich had the option of auditing Mitchell's operations to

determine whether there was a substantial change in the

business .

8. Palmer and Cay of Georgia (Palmer and Cay) was the

producer and the broker of record for Mitchell's original and

renewed CCIP. Stephen McMillan, an associate with Palmer and

Cay at its offices in Savannah, Georgia, was the insurance agent

that helpe d Mr. Gilbert negotiate and service Mitchell's CCIP

with Zurich.

9. In the Fall of 2001, Mr. Gilbert and Mr. McMillan

contacted Zurich about renewing Mitchell's CCIP for the period

October 1, 2001 through October 1, 2002. In a meeting with

Zurich's rep resentatives at its offices in Atlanta, Georgia, Mr.

Gilbert advised Zurich that a company bearing the Wood - Hopkins

name was going to complete Mitchell's then on - going projects.

Zurich's employees believed Mr. Gilbert was referring to Wood -

Hopkins Contrac ting Company, LLC.

10. During the trip to Atlanta, Mr. Gilbert told

Mr. McMillan that he was attempting to form a new company.

However, Mr. Gilbert did not make it clear in the meeting with

the Zurich representatives that he intended to incorporate

Res pondent, an independent company with a similar name to Wood -

Hopkins Contracting Company, LLC, but unrelated to Mitchell.

11. After the meeting in the Fall of 2001, Zurich was

unaware that Mitchell and its combinable entities were or soon

would be out of business as a general contracting group.

Zurich's employees mistakenly believed that Mr. Gilbert

continued to work for Mitchell.

12. Mr. Gilbert resigned his position with Mitchell on

September 1, 2001. After he incorporated Respondent, it

purchased the assets of Mitchell and Wood - Hopkins Contracting

Company, LLC, and hired about 100 of Mitchell's employees.

Respondent planned to complete Mitchell's on - going projects and

then operate primarily as a marine and civil contractor.

Respondent was a new c ompany, smaller than Mitchell, with a

different risk exposure.

13. Mr. Gilbert provided Zurich's underwriters with the

payroll projections and other information necessary to renew

Mitchell's CCIP. The data related to Mitchell's on - going

projects and lo ss history as well as Respondent's planned

projects.

14. Zurich subsequently issued Policy No. WC 3617144 - 02

for the period October 1, 2001 through October 1, 2002. The

policy designated Mitchell as the primary named insured and

Wood - Hopkins Contractin g Company, LLC, as one of the combinable

entities and an additional named insured. The policy listed

Palmer and Cay as the broker of record. The policy did not list

Respondent as a named insured.

15. Mr. Gilbert did not receive a copy of the policy un til

March 2002. However, Mr. Gilbert learned that Zurich had not

added Respondent as a named insured to Mitchell's CCIP at least

by February 2002.

16. After learning that Zurich had not named Respondent as

an insured, Mr. Gilbert continued to operate R espondent as if it

had workers' compensation insurance. He was convinced that

Respondent's assumption of Mitchell's business presented no

additional risk exposure to Zurich. In fact, Mr. Gilbert had a

history of spending sufficient funds on safety to red uce a

company's loss ratio by half. Additionally, Respondent had

suffered no workers' compensation losses. For these reasons,

Mr. Gilbert hoped to persuade Zurich to add Respondent

retrospectively as a named insured on Mitchell's CCIP policy.

17. Towa rds the end of 2001 or the beginning of 2002,

Zurich learned that Mitchell was going out of business or was no

longer in business. Michael Esposito, Mitchell's account

manager at Zurich, began to realize that something was wrong

when Zurich received a pre mium payment for Mitchell's CCIP drawn

on Respondent's bank account. At that time, Mitchell was behind

in making deductible and premium payments to Zurich. Mitchell

also was behind in paying Palmer and Cay its fees.

18. On or about January 2, 2002, Mr. Gilbert signed one of

Respondent's checks made payable to Palmer and Cay in the amount

of $28,740.23. The check included a premium payment in the

amount of $3,818.00 for October 2001 workers' compensation

insurance. Mr. Gilbert wrote the check pursuant t o a Palmer and

Cay invoice addressed to The Mitchell Group. The record

indicates that Respondent sent its check to Palmer and Cay's

lockbox in Atlanta, Georgia, and that it was cashed.

19. By letter dated February 7, 2002, Palmer and Cay

advised Mitchell that it resigned as broker of record for The

Mitchell Group. The most persuasive evidence indicates that

Palmer and Cay resigned due to a dispute with Respondent over

fees, not premium payments.

20. By the end of February 2002, Mr. Esposito became awa re

that Mr. Gilbert wanted Zurich to continue Mitchell's CCIP with

Respondent, a totally new company, listed as a named insured.

Mr. Esposito then told Mr. Gilbert that Respondent would have to

pay Mitchell's past - due premiums and provide Zurich with the

necessary information to re - underwrite the policy, reflecting

the change in ownership and operations. There is no persuasive

evidence that Palmer and Cay or Mr. Gilbert ever provided Zurich

with this information.

21. Despite its resignation as broker o f record for

Mitchell's CCIP, Palmer and Cay agreed to continue servicing the

policies until Zurich advised otherwise. For example, on or

about February 22, 2002, Mr. Gilbert asked Palmer and Cay to add

Respondent as a named insured, along with Wood - Hopki ns

Contracting Company, LLC, to Mitchell's railroad protection

policies. Palmer and Cay referred this request to Zurich.

22. Effective February 26, 2002, Zurich issued a Notice of

Cancellation for Mitchell's Policy No. WC 3617144 - 02. The

notice indica tes that the policy was cancelled due to nonpayment

of premium. About that time, Mr. Gilbert began trying to find a

replacement for Palmer and Cay as broker of record.

23. Willis of Florida, an affiliate of Willis of North

America, Inc. (Willis), is an insurance broker with offices

located in Tampa, Florida. Robert Allen is an insurance agent

associated with Willis of Florida. Mr. Allen and Mr. Gilbert

had a social and business relationship for many years prior to

the time frame at issue here.

24. Toward the end of February 2002, Mr. Allen and

Mr. Gilbert had a telephone conference with Mr. Esposito.

During that conversation, Mr. Allen indicated that his company

was not interested in becoming the broker of record for

Mitchell. However, Mr. Allen a greed that, in order to assist

Zurich, Willis would issue Certificates of Liability Insurance

for Respondent. At that time, Mr. Allen was under the

impression that Respondent was a named insured under the

Mitchell CCIP.

25. As authorized by Zurich, Pal mer and Cay issued three

Certificates of Liability Insurance to the Florida Department of

Transportation on March 4, 2002. The certificates indicate that

Zurich provided commercial general liability and railroad

protection insurance for CSX Transportation , Inc., Norfolk

Southern Corporation, and Florida East Coast Railway as the

named insureds. The certificates state that Wood - Hopkins

Contracting Company, LLC, and Respondent were the contractors.

Palmer and Cay issued these certificates for the Beaver St reet

viaduct bridge replacement in Jacksonville, Florida, a project

begun by Wood - Hopkins Contracting Company, LLC, during the time

that Palmer and Cay was acting as Mitchell's broker of record.

26. On or about March 6, 2002, Mr. Gilbert signed one of

R espondent's checks made payable directly to Zurich in the

amount of $24,848.00. The check included premium payments in

the amount of $3,818.00 for Policy No. WC 3617144 - 02 for the

months of February and March 2002. The record indicates that

this check wa s sent to Zurich's lockbox in Chicago, Illinois,

and that it was cashed.

27. On or about March 7, 2002, Zurich reinstated Policy

No. WC 3617144 - 02 without lapse of coverage. The Notice of

Reinstatement indicates that Mitchell was the named insured and

th at Palmer and Cay was the broker of record.

28. On or about March 20, 2002, Zurich sent Mitchell a

Notice of Cancellation. The notice states that Mitchell's

Policy No. WC 3617144 - 02 would be cancelled effective June 8,

2002, due to a material change in exposures. Mr. Gilbert did

not receive a copy of this cancellation notice. Mr. Gilbert and

Mr. Allen did not learn about the cancellation until November

2002.

29. On or about April 17, 2002, Mr. Gilbert signed one of

Respondent's checks made payable di rectly to Zurich in the

amount of $12,424.00. The check included a premium payment in

the amount of $3,818.00 for Policy No. WC 3617144 - 02 for the

month of April 2002. The record indicates that this check was

sent to Zurich's Illinois lockbox and cashed.

30. On April 25, 2002, Willis issued a Certificate of

Liability Insurance to American Home Assurance with Respondent

as the named insured. The certificate indicates that Zurich

provided commercial general liability, automobile liability, and

workers' co mpensation insurance for Respondent on the Beaver

Street viaduct bridge replacement project with American Home

Assurance and the Florida Department of Transportation as

additional named insureds with respect to the general liability

coverage. Mr. Allen si gned this certificate.

31. On May 6, 2002, Willis issued a Certificate of

Liability Insurance to the University of Georgia Athletic

Association with Respondent as the named insured. The

certificate indicates that Zurich provided commercial general

liab ility, automobile liability, and workers' compensation

insurance for Respondent on an academic achievement center

project. Mr. Allen signed this certificate.

32. On or about June 13, 2002, Mr. Gilbert signed one of

Respondent's checks made payable dire ctly to Zurich in the

amount of $12,424.00. The check included a premium payment in

the amount of $3,818.00 for Policy No. WC 3617144 - 02 for the

month of May 2002. The record indicates that this check was

sent to Zurich's Illinois lockbox and cashed.

33. On July 18, 2002, Willis issued a Certificate of

Liability Insurance to Crowley Maritime Corporation with

Respondent as the named insured. The certificate indicates that

Zurich provided general liability, automobile liability, and

workers' compensation insurance to Respondent for a barge

loading ramp concrete removal and replacement in Jacksonville,

Florida, and that Crowley Maritime Corporation was an additional

named insured with respect to general liability coverage.

Mr. Allen did not know the policy was cancelled when he signed

this certificate.

34. On August 12, 2002, Willis issued a Certificate of

Liability Insurance to Martin K. Eby Construction Company with

Respondent as the named insured. The certificate indicates that

Zurich provided general liability, automobile liability, and

workers' compensation insurance for Respondent on the Wonderwood

Expressway channel excavation with the Jacksonville Transit

Authority and J. E. Sverdrup (Engineer) as additional named

insureds as to general liability c overage. Mr. Allen did not

know the policy was cancelled when he signed this certificate.

35. On or about August 15, 2002, Mr. Gilbert signed one of

Respondent's checks made payable directly to Zurich in the

amount of $12,424.00. The check included a premium payment in

the amount of $3,818.00 for Policy No. WC 3617144 - 02 for the

month of June 2002. The record indicates that this check was

sent to Zurich's Illinois lockbox and cashed.

36. On or about October 1, 2002, Mr. Gilbert signed one of

Respon dent's checks made payable directly to Zurich in the

amount of $12,424.00. The check included a premium payment in

the amount of $3,818.00 for Policy No. WC 3617144 - 02 for the

month of September 2002. The record indicates that this check

was sent to Zuri ch's lockbox in Illinois and cashed.

37. In November 2002, Petitioner issued a Stop Work and

Penalty Assessment Order for failing to secure workers'

compensation insurance. In November and December 2002,

Mr. Gilbert and Mr. Allen attempted to persuade Se th Hausman,

Zurich's regional manager, to provide retroactive coverage for

Respondent under the Mitchell workers' compensation policy, to

reinstate the coverage, and to let the policy continue until it

lapsed at expiration. Mr. Hausman concluded that Zuri ch could

not assume the exposure without an underwriting evaluation.

Mr. Hausman told Mr. Gilbert what information he had to provide

in order for Zurich to conduct such an evaluation.

38. In January 2003, Mr. Hausman advised Mr. Gilbert that

Zurich had been unable to collect on a surety bond and that

Mitchell owed Zurich approximately $750,000.00 in uncollected

deductible payments. Mr. Hausman stated that in order to amend

the workers' compensation policy to include Respondent as a

named insured and to rescind the cancellation retroactively to

allow the policy to run full term, Zurich would have to be paid

for all outstanding balances. In that event, Zurich was willing

to talk about extending workers' compensation coverage to

Respondent as requested.

39. When Petitioner issued the Stop Work and Penalty

Assessment Order in November 2002, Respondent had about 20

employees.

40. For the period October 1, 2001 through December 31,

2001, Respondent had the following amounts of payroll by class

code:

Class Code Payroll

5213 $126,739.96

5606 $170,615.31

5610 $5,391.51

6003 $5,777.00

6217 $62,691.54

7335 $73,434.08

8227 $135,572.71

8810 $27,503.88

41. For the period October 1, 2001 through December 31,

2001, the workers' compensation premium rates per $100.00 of

payroll for each relevant class code were as follows:

Class Code Premium Rates

5213 $33.02

5606 $4.76

5610 $18.08

6003 $62.53

6217 $14.27

7335 $25.97

8227 $9.80

8810 $0.59

42. For the period October 1, 2001 through December 31,

2001, the premium Respondent would ha ve paid for workers'

compensation coverage by class codes was as follows:

Class Code Premium

5213 $41,849.53

5606 $8,121.29

5610 $974.79

6003 $3,612.36

6217 $8,946.08

7335 $19,070.83

8227 $13,286.13

8810 $162.27

43. For the period January 1, 2002 through Novemb er 5,

2002, Respondent had the following amounts of payroll by class

code:

Class Code Payroll

5213 $360,825.22

5403 $7,969.23

5606 $355,253.16

5610 $93,981.09

6003 $17,977.19

6217 $237,889.32

7335 $212,654.00

8227 $261,091.70

8810 $162,068.41

44. For the per iod January 1, 2002 through November 5,

2002, the workers' compensation premium rates per $100.00 of

payroll for each relevant class code were as follows:

Class Code Premium Rates

5213 $32.31

5403 $30.39

5606 $4.91

5610 $17.91

6003 $57.57

6217 $13.52

7335 $29.60

8227 $10.80

8810 $0.65

45. For the period January 1, 2002 through November 5,

2002, the premium Respondent would have paid for workers'

compensation coverage by class codes was as follows:

Class Code Premium

5213 $116,582.63

5403 $2,421.85

5606 $17,442.93

5610 $16,832.01

6003 $10,349.46

6217 $32,162.64

7335 $62,945.58

8227 $28,197.90

8810 $1,053.44

46. Respondent was out of compliance with the workers'

compensation law for 398 calendar days between October 1, 2001

and November 5, 2002. Petitioner properly assessed penalty of

$100.00 per day, totaling $39,800.00.

47. Respondent would have paid a premium of $384,011.72 to

secure workers' compensation insurance for its employees and

owes a $39,800.00 penalty fo r the days it operated without

coverage during the period October 1, 2001 through November 5,

2002. Accordingly, Respondent owes a total penalty in the

amount of $423,811.72.

CONCLUSIONS OF LAW

48. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter of this

proceeding pursuant to Sections 120.569 and 120.57(1), Florida

Statutes (2003).

49. Petitioner must prove by a preponderance of the

evidence that Respondent failed to provide his Florida employees

with wo rkers' compensation insurance and that the penalties

assessed are correct. See Department of Labor and Employment

Security, Division Of Workers' Compensation v. Eastern Personnel

Services, Inc ., DLES Case No. 99 - 275 (Final Order, October 12,

1999), adopti ng in toto DOAH Case No. 99 - 2048 (Recommended

Order, October 12, 1999)(Although violations of Chapter 440, can

result in a substantial fine, which may even render an employer

insolvent, the employer nonetheless does not have a license or

property interest at stake so as to raise the standard of proof

to clear and convincing evidence).

50. Section 440.015 states as follows in relevant part:

440.015 Legislative intent. -- It is the

intent of the Legislature that the Workers'

Compensation Law be interprete d so as to

assure the quick and efficient delivery of

disability and medical benefits to an

injured worker and to facilitate the

worker's return to gainful reemployment at a

reasonable cost to the employer.

51. Section 440.03 states as follows:

440.03 A pplication. -- Every employer and

employee as defined in s. 440.02 shall be

bound by the provisions of this chapter.

52. Section 440.02 states as follows in pertinent part:

(15)(a) ‘Employee’ means any person engaged

in any employment under any appointmen t or

contract of hire or apprenticeship, express

or implied, oral or written, whether

lawfully or unlawfully employed, and

includes, but is not limited to, aliens and

minors.

* * *

(16) ‘Employer’ means . . . every person

carrying on any employment. . . .

* * *

(17)(a) ‘Employment,’ subject to the other

provisions of this chapter, means any

service performed by an employee for the

person employing him or her.

(b) ‘Employment’ includes:

* * *

2. All private employment in which four or

more emplo yees are employed by the same

employer or, with respect to the

construction industry, all private

employment in which one or more employees

are employed by the same employer.

53. Section 440.10(1)(a) states as follows in relevant

part:

(1)(a) . . . An y contractor or

subcontractor who engages in any public or

private construction in the state shall

secure and maintain compensation for his or

her employees under the chapter as provided

in Section 440.38.

54. Section 440.38 requires employers to secure payment of

compensation for their employees. The statute allows employers

to insure the payment of such compensation through an insurance

carrier or by acting as a self - insurer. See Section 440.38(1).

55. Petitioner has the duty of enforcing the employe r's

compliance with the requirements of the workers' compensation

law. Section 440.107(1).

56. Section 440.107(5) states as follows:

(5) Whenever the department determines that

an employer who is required to secure the

payment to his or her employees o f the

compensation provided for by this chapter

has failed to do so, 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, requiri ng the

cessation of all business operation at the

place of employment or job site. . . . The

order shall take effect upon the date of

service upon the employer, unless the

employer provides evidence satisfactory to

the division of having secured any neces sary

insurance or self - insurance and pays a civil

penalty to the division, to be deposited by

the department into the Workers'

Compensation Administration Trust Fund, in

the amount of $100 per day for each day the

employer was not in compliance

with this chapter.

57. Section 440.107(7) states as follows in pertinent

part:

(7) In 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 th is chapter, a penalty in the

following amount:

(a) An amount equal to at least the amount

that the employer would have paid or up to

twice the amount the employer would have

paid during periods it illegally failed to

secure payment of compensation in the

preceding 3 - year period based on the

employer's payroll during the preceding 3 -

year period; or

(b) One thousand dollars, whichever is

greater. Any penalty assessed under this

subsection is due within 30 days after the

date on which the employer is not ified,

except that, if the department has posted a

stop - work order or obtained injunctive

relief against the employer, payment is due,

in addition to those conditions set forth in

this section, as a condition to relief from

a stop - work order or an injuncti on.

Interest shall accrue on amount not paid

when due at the rate of 1 percent per month.

The division shall adopt rules to administer

this section.

58. In this case, the preponderance of the evidence

indicates that Respondent did not have workers' com pensation

insurance in place between October 1, 2001 and November 5, 2002.

Therefore, Respondent failed to abide by the coverage

requirement of the workers' compensation law.

59. Respondent owes $39,800.00 under Section 440.107(5),

and $384,011.72 unde r Section 440.107(7). The total assessed

penalty is $423,811.72. 1/

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED:

That Petitioner enter a final order affirming the Amended

Stop Work Penalty Assessment Ord er and directing Respondent to

pay a penalty in the amount of $423,811.72.

DONE AND ENTERED this 10th day of November, 2003, in

Tallahassee, Leon County, Florida.

S

SUZANNE F. HOOD

Administrative Law Judge

Division of A dministrative 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 10th da y of November, 2003.

ENDNOTE

1/ The fact that Mr. Gilbert, in the interest of Respondent,

sent checks to Zurich, does not create a defense nor establish

an offset against the administrative fine. When the fact and

law are considered, any opportunity t hat Respondent might have

to seek legal recourse against third parties is not at issue

here.

COPIES FURNISHED :

D. Andrew Byrne, Esquire

Cooper, Byrne, Blue & Schwartz

1358 Thomaswood Drive

Tallahassee, Florida 32308

John M. Iriye, Esquire

Department of Financial Services

Division of Workers’ Compensation

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

Honorable Tom Gallagher

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 030 0

Mark Casteel, General Counsel

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 t his Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the final order in this case.