03-003204 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Susie Riopelle Status: Closed Recommended Order on Monday, March 29, 2004.

Summary: Respondent failed to obtain workers` compensation for her employees. Recommended confirming and adopting the Corrected Stop Work and Penalty Assessment Order dated August 2003.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS' )

COMPENSATION, )

)

Petitioner, )

)

vs. ) Case No. 03 - 32 04

)

SUSIE RIOPELLE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for formal

proceeding by video teleconference before Fred L. Buckine, a

duly - designated Administrative Law Judge, located in Tallahassee

and the parties located in Orlando, Florida, on Dece mber 9,

2003.

APPEARANCES

For Petitioner: Andrea L. Reino, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: Randall O. Rede r, Esquire

1319 West Fletcher Avenue

Tampa, Florida 33612 - 3310

STATEMENT OF THE ISSUES

At issue in this proceeding is whether Respondent failed to

abide by the coverage requirements of the Workers' Compensation

Law, Chapter 440, Florida Statutes (2002), by not obtaining

workers' compensation insurance for her employees; and whether

Petitioner properly assessed a penalty against Respondent

pursuant to Section 440.107, Florida Statutes (2002).

PRELIMINARY STATEMEN T

Pursuant to the Workers' Compensation Law, Chapter 440,

Florida Statutes (2002), the Department of Financial Services,

Division of Workers' Compensation (Department), seeks to enforce

the statutory requirement that employers secure this payment of

worker s' compensation for their employees.

On August 8, 2003, the Department issued a "Stop Work and

Penalty Assessment Order" (SWPAO - DWC - 03 - 121 - D3) alleging that

Respondent, Susie I. Riopelle, doing business as (d/b/a)

Riopelle Construction, failed to abide by the coverage

requirements of the Workers' Compensation Law on that date. The

order directed Riopelle Construction to cease business

operations and pay associated penalties of $1,100.

Respondent timely filed a Petition for Formal Hearing,

which was forwa rded to the Division of Administrative Hearings

on September 5, 2003, for assignment of an Administrative Law

Judge to conduct a formal administrative hearing. The case was

scheduled for hearing on December 9, 2003, via video

teleconference with the Admin istrative Law Judge located in

Tallahassee and the parties located in Orlando, Florida.

At the hearing, the Department presented the testimony of

Donald Lott, the Department's compliance investigator, and Leo

Canton, at all times material, acting district supervisor. The

parties stipulated to the admission of the Department's

Exhibits 1 through 26, and they were admitted into evidence.

Respondent testified on her own behalf and presented the

testimony of her husband, Edward Riopelle, and Darren McCarty.

Respondent's one exhibit was admitted into evidence.

Respondent's exhibit, statements and documents relating to

Respondent's challenge to the facial constitutionality of

Section 440.170, Florida Statutes (2002), is not given

consideration by the undersi gned because an Administrative Law

Judge does not have jurisdiction over such constitutional

issues. See Communications Workers Local 3170 v. City of

Gainesville , 697 So. 2d 167, 170 (Fla. 1st DCA 1997).

Respondent requested that official recognition be t aken of

Division of Financial Services, Division of Workers'

Compensation v. Susie Riopelle , DOAH Case No. 03 - 1757, heard on

August 27, 2003. At the time of the request, the final order

had not been entered by the Agency. Accordingly, Respondent's

reques t for official recognition is herewith denied.

A Transcript of the final hearing was filed with the

Division of Administrative Hearings on of December 3, 2003. On

January 5, 2004, Respondent requested an extension of time to

file proposed recommended orde rs, and, by Order of January 6,

2004, the requested extension was granted, extending the time to

file proposed recommended orders to February 2, 2004. The Order

granting the extension of time to file proposed recommended

orders waived the time requirement for this Recommended Order.

See Fla. Admin. Code R. 28 - 106.216. Petitioner timely filed its

Proposed Recommended Order.

After having received Petitioner's Proposed Recommended

Order by fax on February 2, 2004, Respondent filed its Proposed

Recommended Order on February 4, 2004. On February 19, 2004,

Petitioner filed a motion to strike Respondent's Proposed

Recommended Order along with a Notice of Hearing on the pending

motion scheduled for February 23, 2004. The motion to strike

Respondent's proposed order was denied.

FINDINGS OF FACT

Based upon observation of the witnesses and their demeanor

while testifying; documentary materials received in evidence;

stipulations by the parties; evidentiary rulings made pursuant

to Section 120.57, Florida Statutes ( 2003); and the record

evidence submitted, the following relevant and material finding

of facts are made:

1. The Department is the state agency responsible for

enforcing the requirement of the Workers' Compensation Law that

employers secure the payment of workers' compensation for their

employees. § 440.107, Fla. Stat. (2002). 1

2. On August 8, 2003, Respondent was a sole proprietor in

the construction industry by framing single - family homes. On

that day, Respondent was the sub - contractor under contract w ith

Marco Raffaele, general contractor, providing workers on a

single - family home(s) located on Navigation Drive in the Panther

Trace subdivision, Riverview, Florida. It is the responsibility

of the Respondent/employer to secure and maintain workers'

comp ensation coverage for each employee.

3. During the early morning hours of August 8, 2003,

Donald Lott, the Department's workers' compensation compliance

investigator, was in the Panther Trace subdivision checking on

site workers for potential violations o f the workers'

compensation statute.

4. While driving down Navigation Drive in the Panther

Trace subdivision, Mr. Lott approached two houses under

construction. There he checked the construction workers on site

and found them in compliance with the worke rs' compensation

statute. Mr. Lott recognized several of the six men working on

the third house under construction next door and went over to

investigate workers' compensation coverage for the workers. 2

5. At the third house Mr. Lott interviewed Darren M cCarty,

Henry Keithler, and Mike Sabin, all of whom acknowledged that

they worked for Respondent, d/b/a Riopelle Construction.

Mr. Lott ascertained through Southeast Leasing Company

(Southeast Leasing) that three of the six workers,

Messrs. Keithler, Sa bin, and McCarthy were listed on Southeast

Leasing Company's payroll through a valid employee lease

agreement with Respondent as of August 8, 2003. The completed

employee lease agreement provided for Southeast Leasing Company

to provide workers' compensat ion coverage for only those

employees whose names, dates of birth, and social security

numbers are contained in the contractual agreement by which

Southeast Leasing leased those named employees to the employing

entity, Respondent, d/b/a Riopelle Constructi on.

6. Mr. Lott talked with the other three workers on site,

Ramos Artistes, Ryan Willis, and Robert Stinchcomb. Each worker

acknowledged working for (as an employee) Respondent on

August 8, 2003, in the Panther Trace subdivision.

7. In reply to his fa xed inquiry to Southeast Leasing

regarding the workers' compensation coverage status for

Messrs. Artistes, Willis, and Stinchcomb, Southeast Leasing

confirmed to Mr. Lott that on August 8, 2003, Southeast Leasing

did not have a completed employee leasing contractual agreement

with Respondent for Messrs. Artistes, Willis or Stinchcomb.

Southeast Leasing did not provide workers' compensation coverage

for Messrs. Artistes, Willis or Stinchcomb on August 8, 2003. 3

8. Southeast Leasing is an "employee" leasin g company and

is the "employer" of "leased employees." As such, Southeast

Leasing is responsible for providing workers' compensation

coverage for its "leased employees" only.

9. Southeast Leasing, through its account representative,

Dianne Dunphy, inpu t employment applications into their system

on the day such application(s) are received from employers

seeking to lease employees. Southeast Leasing did not have

employment applications in their system nor did they have a

completed contractual employment leasing agreement and,

therefore, did not have workers' compensation coverage for

Messrs. Artistes and Willis at or before 12:08 p.m. on August 8,

2003.

10. After obtaining his supervisor's authorization,

Mr. Lott served a Stop Work and Penalty Assessmen t Order against

Respondent on August 8, 2003, at 12:08 p.m., requiring the

cessation of all business activities and assessing a penalty of

$100, required by Subsection 440.107(5), Florida Statutes, and a

penalty of $1,000, as required by Subsection 440.107 (7), Florida

Statutes, the minimum penalty under the statute. On August 12,

2003, the Department served a Corrected Stop Work and Penalty

Assessment Order containing one change, corrected federal

identification number for Respondent's business, Riopelle

C onstruction.

11. Mr. Stinchcomb, the third worker on the construction

job site when Mr. Lott made his initial inquiry, was cutting

wood. On August 8, 2003, at or before 12:00 p.m.,

Mr. Stinchcomb was not on the Southeast Leasing payroll as a

leased empl oyee covered for workers' compensation; he did not

have individual workers' compensation coverage; and he did not

have a workers' compensation exemption. On that day and at that

time, Mr. Stinchcomb worked as an employee of Riopelle

Construction and was p aid hourly by Riopelle Construction

payroll check(s).

12. Respondent's contention that Mr. Stinchcomb, when he

was working on the construction job site between the hours of

8:00 a.m. and 1:00 p.m. on August 8, 2003, was an independent

contractor fails for the lack of substantial and competent

evidence in support thereof.

13. On August 8, 2003, the Department, through Mr. Lott,

served an administrative request for business records on

Respondent. Respondent failed and refused to respond to the

business rec ord request. An Order requiring Respondent to

respond to Petitioner's discovery demands was entered on

December 1, 2003, and Respondent failed to comply with the

order. On December 8, 2003, Respondent responded that "every

effort would be made to provid e the requested documents by the

end of the day" to Petitioner.

14. Respondent provided no reliable evidence and

Mr. Stinchcomb was not called to testify in support of

Respondent's contention that Mr. Stinchcomb was an independent

contractor as he worked on the site on August 8, 2003.

15. Respondent's evidence, both testamentary and

documentary, offered to prove that Mr. Stinchcomb was an

independent contractor on the date in question failed to satisfy

the elements required in Subsection 440.02(15)(d)1 , Florida

Statutes. Subsection 440.02(15)(c), Florida Statutes, in

pertinent part provides that: "[f]or purposes of this chapter,

an independent contractor is an employee unless he or she meets

all of the conditions set forth in subparagraph(d)(1)."

Sub section 440.02(15)(d)(1) provides that an "employee" does not

include an independent contractor if:

a. The independent contractor maintains a

separate business with his or her own work

facility, truck, equipment, materials, or

similar accommodations;

b . 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 requiremen ts;

c. The independent contractor performs or

agrees to perform specific services or work

for specific amounts of money and controls

the means of performing the services or work;

d. The independent contractor incurs the

principal expenses related to th e service or

work that he or she performs or agrees to

perform;

e. The independent contractor is responsible

for the satisfactory completion of work or

services that he or she performs or agrees to

perform and is or could be held liable for a

failure to complete the work or services;

f. The independent contractor receives

compensation for work or services performed

for a commission or on a per - job or

competitive - bid basis and not on any other

basis;

g. The independent contractor may realize a

profit o r suffer a loss in connection with

performing work or services;

h. The independent contractor has continuing

or recurring business liabilities or

obligations; and

i. The success or failure of the independent

contractor's business depends on the

relatio nship of business receipts to

expenditures.

16. The testimony of Respondent and the testimony of her

husband, Edward Riopelle, was riddled with inconsistencies,

contradictions, and incorrect dates and was so confusing as to

render such testimony unreliab le. Based upon this finding,

Respondent failed to present evidence sufficient to satisfy the

requirement of Subsection 440.02(15)(d)1, Florida Statutes, and

failed to demonstrate that on August 8, 2003, Mr. Stinchcomb was

an independent contractor. Petit ioner proved by a preponderance

of the evidence that on August 8, 2003, Mr. Stinchcomb, while

working on the single - family construction site on Navigation

Drive in the Panther Trace subdivision was an employee of

Respondent and was not an independent contr actor. Petitioner

proved by a preponderance of the evidence that Mr. Stinchcomb

did not have workers' compensation coverage on August 8, 2003.

17. On August 8, 2003, Mr. Willis was a laborer on the

single - family construction site on Navigation Drive in the

Panther Trace subdivision as an employee of Respondent, who paid

him $7.00 per hour. Mr. Willis was not listed on the employee

list maintained by Southeast Leasing, recording those employees

leased to Respondent. Mr. Willis did not have independent

workers' compensation coverage on August 8, 2003. Mr. Willis

had neither workers' compensation coverage nor a workers'

compensation exemption on August 8, 2003. Petitioner proved by

a preponderance of the evidence that Mr. Willis did not have

workers' co mpensation coverage on August 8, 2003.

18. On August 8, 2003, Mr. Artises was a laborer on the

single - family construction site on Navigation Drive in the

Panther Trace subdivision and was an employee of Respondent.

Mr. Artises had been in the employment of Respondent for

approximately one week before the stop work order. Mr. Artises

did not have independent workers' compensation coverage on

August 8, 2003. Mr. Artises did not have a workers'

compensation coverage exemption on August 8, 2003. Petitione r

proved by a preponderance of the evidence that Mr. Aristes did

not have workers' compensation coverage on August 8, 2003.

CONCLUSIONS OF LAW

19. The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parties to this

pr oceeding. § 120.57(1), Fla. Stat.

20. Employers are required to secure payment of

compensation for their employees. §§ 440.10(1)(a) and

440.38(1), Fla. Stat.

21. "Employer" is defined, in part, as "every person

carrying on any employment." § 440.02(16 ), Fla. Stat.

"Employment . . . means any service performed by an employee for

the person employing him or her" and "with respect to the

construction industry, [including] all private employment in

which one or more employees are employed by the same empl oyer."

§ 440.02(17)(a) and (b)(2), Fla. Stat.

22. "'Employee' means any person engaged in any employment

under any appointment or contract for hire or apprenticeship,

express or implied, oral or written, whether lawfully or

unlawfully employed. . . ." § 440.02(15)(a), Fla. Stat.

23. The Department has the burden of proving by a

preponderance of the evidence that an employer violated the

Workers' Compensation Law and that the penalty assessments were

correct under the law. Department of Labor and Employ ment

Security, Division of Workers' Compensation v. Genesis

Plastering, Inc. , Case No. 00 - 3749 (DOAH) April 27, 2001,

Para. 32) (Adopted by Final Order May 25, 2001); Department of

Labor and Employment Security, Division of Workers' Compensation

v. Bobby Cox, Sr., d/b/a CH Well Drilling , Case No. 99 - 3854

(DOAH March 20, 2000, Para. 34) (adopted, in part, by a Final

Order June 8, 2000).

24. The Department established by a preponderance of the

evidence that Messrs. Artistes, Willis, and Stinchcomb were not

"independent contractor[s]" nor were they "leased employee[s]."

The burden then shifted to Respondent to establish that

Messrs. Artistes, Willis, and Stinchcomb either were independent

contractors or leased employees. Respondent was in a unique

positio n to bring forth evidence regarding each worker; but the

belated documentation she presented was inconsistent,

insufficient, and unreliable. The testimony and documentary

evidence presented by Respondent and her witnesses were

unconvincing. In the absenc e of appropriate and reliable

documentation to establish that the workers in questions met the

criteria to be considered "independent contractors," the workers

must be considered "employees."

25. Subsection 440.107(5), Florida Statutes, provided:

Whe never the department determines that an

employer who is required to secure the

payment to his or her employees of 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, requiring the

cessation of all business operations at the

place of employment or job site. If the

department makes such a determination, the

departmen t shall issue a stop - work order

within 72 hours. The order shall take

effect upon the date of service upon the

employer, unless the employer provides

evidence satisfactory to the department of

having secured any necessary insurance or

self - insurance and p ays a civil penalty to

the department, 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.

26. The evidence presented at the hearing established that

the Department correctly assessed a penalty of $100, pursuant to

Subsection 440.107(5), Florida Statutes.

27. Subsection 440.107(7), Florida Statutes, provided in

relevant part:

In addition to any penalty, stop - work

orde r, 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 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. . . .

28. The evidence presented at the hearing established that

the Department correctly assessed a penalty of $1,000, pursuant

to Subsection 440.107(7), Florida Statutes.

29. Subsection 440.10(1)(f), Florida Statutes, provided:

If an employer fails to secure

compensation as required by this chapter,

the department may assess against the

employer a penalty not to exceed $5,000 for

each employee of that employer who is

classified by the employer as an independent

contra ctor but who is found by the

department to not meet the criteria for an

independent contractor that are set forth in

s. 440.02. The department shall adopt rules

to administer the provisions of this

paragraph.

30. The Department has adopted Florida Administrative Code

Rule 69L - 6.018 to implement Subsection 440.10(1)(f), Florida

Statutes, providing:

(1) An employer who fails to secure

compensation as required by Sections

440.10(1) and 440.38(1), F.S., for each

employee classified by the employer as an

independent contractor but who does not meet

the criteria of an independent contractor

specified in Section 440.02, F.S., shall be

assessed a penalty in the following amount:

(a) $2500 per misclassified employee for

the first two misclassified employees per

site.

(b) $5,000 per misclassified employee

after the first two mi sclassified employees

per site.

(2) The Division shall determine that an

employer has misclassified an employee as an

independent contractor, if:

(a) The employer in any way reports that

a worker who is any employee pursuant to

Section 440.02(15), F.S. is an independent

contractor;

(b) The employer maintains records

identifying the worker as an independent

contractor; or

(c) The employer holds out the employee

as an independent contractor for federal tax

purposes.

31. The evidence presented at the hearing established that

the Department correctly assessed a penalty pursuant to Section

440.107, Florida Statutes, and Florida Administrative Code Rule

69L - 6.018 for the misclassified employees.

RECOMMENDATION

Having considered the foregoing Findi ngs of Fact,

Conclusions of Law, the evidence of record, the candor and

demeanor of the witnesses, and the pleading and arguments of the

parties, it is, therefore,

RECOMMENDED that a final order be entered by the Department

of Financial Services, Division of Workers' Compensation,

affirming and adopting the Corrected Stop Work and Penalty

Assessment Order dated August 12, 2003.

DONE AND ENTERED this 29th day of March, 2004, in

Tallahassee, Leon County, Florida.

S

FRED L. BUCKINE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

D ivision of Administrative Hearings

this 29th day of March, 2004.

ENDNOTES

1/ All citations will be to Florida Statutes (2002), unless

otherwise indicated. Chapter 2003 - 412, Laws of Florida, enacted

significant changes to the statutory provisions relev ant to this

proceeding. However, the events at issue in this case occurred

before the effective date of Chapter 2003 - 412, Laws of Florida.

2/ This witness made initial contact with Respondent and

Messrs. Ramos, Willis, and Stinchcomb through his involve ment in

a prior case: Division of Financial Services, Division of

Workers' Compensation v. Susie Riopelle , DOAH Case No. 03 - 1757,

heard on August 27, 2003. (No Final Order entered by the

Department as of the date of this Recommended Order).

3/ Inquiry was made of Southeast Leasing Company between the

hours of 9:00 a.m. through 11:00 a.m . The SWOPAO was secured,

signed, and served on Respondent at 12:08 p.m. on August 8,

2003. At the time the SWOPAO was served, Messrs. Willis and

Aristes were not on th e Southeast Leasing Company's list of

contractually leased employees.

COPIES FURNISHED :

Randall O. Reder, Esquire

1319 West Fletcher Avenue

Tampa, Florida 33612 - 3310

Andrea L. Reino, Esquire

Department of Financial Services

200 East Gaines Street

Tallah assee, Florida 32399 - 4229

Honorable Tom Gallagher

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

Mark Casteel, General Counsel

Department of Financial Services

The Capitol, Plaza Lev el 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 th e agency that

will issue the Final Order in this case.