04-002264 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Mike Futch, D/B/A Futch Construction Company Status: Closed Recommended Order on Friday, January 28, 2005.

Summary: Respondent`s reliance on his insurance agent to secure workers` compensation insurance which fullfills the requirement of Florida law does not constitute a defense of failure to provide coverage required by law. Recommend penalty of $198,311.82 be upheld.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS’ )

COMPENSATION, )

)

Petitioner, )

)

vs. ) Case No. 04 - 2264

)

MIKE FUTCH d/b/a/FUTCH, INC., )

CONSTRUCTION COMPANY )

)

Re spondent. )

)

RECOMMENDED ORDER

A final hearing was conducted in this case on November 18,

2004, in Tallahassee, Florida, before Florence Snyder Rivas, an

Administrative Law Judge of the Division of Administrative

Hearings .

APPEARANCES

For Petitioner: Joe Thompson, General Counsel

Department of Financial Services

Division of Workers’ Compensation

200 East Gaines Street

Tallahassee , Florida 32399 - 4229

For Respondent: Patrick C. Cork, Esquire

Cork & Cork

700 North Patterson Street

Valdosta, Georgia 31601

STATEMENT OF THE ISSUES

Whether Mike Futch, d/b/a Futc h Construction Company,

(Respondent) violated Sections 440.10 and 440.38, Florida

Statutes, and if so, what penalty should be imposed. References

to sections are to the Florida Statutes (2004).

PRELIMINARY STATEMENT

By Stop Work Order and Penalty Assess ment dated May 12,

2004 (Stop Work Order), Petitioner, the Department of Financial

Services, Division of Workers’ Compensation (Petitioner),

alleged that Respondent failed to secure workers' compensation

coverage for its workers.

An Amended Order of Penalt y Assessment dated May 25, 2004

(Amended Order), which calculated a penalty assessment as

provided by law, was thereafter issued.

Respondent timely requested a formal hearing to contest the

penalty.

The identity of the witnesses and exhibits and attendant

rulings are set forth in the one - volume transcript of the

hearing filed with the Division of Administrative Hearings

(DOAH) on December 20, 2004.

The parties requested and were given an extension of time

to file their proposed recommended orders. The par ties’

Proposed Recommended Orders were filed January 25, 2005, and

have been duly - considered.

FINDINGS OF FACT

1. Petitioner is the state agency responsible for

enforcing provisions of Florida law, specifically Chapter 440,

Florida Statutes, which requi res that employers secure workers’

compensation coverage for their employees.

2. At all times material to this case, Respondent was

engaged in the construction business within the meaning of

Chapter 440, Florida Statutes. Its individual principal, Mike

Futch (Mr. Futch), was responsible for the day - to - day operations

of the business.

3. At all times material to this case, Respondent is an

employer within the meaning of Section 440.02(16)(a), Florida

Statutes.

4. At all times material to this case, R espondent was

legally obligated to provide workers' compensation insurance in

accordance with the provisions of Chapter 440, Florida Statutes,

for all persons employed by Respondent to provide construction

services within Florida. Chapter 440 requires tha t the premium

rates for such coverage be set pursuant to Florida law.

5. It is undisputed that Respondent had not furnished the

required coverage, and that there was no valid exemption from

this requirement.

6. Accordingly, on May 12, 2004, the Stop Work Order was

properly entered.

7. Thereafter, Petitioner reviewed Respondent's payroll

records, which revealed that Respondent employed individuals

whose identities are not in dispute, under circumstances which

obliged Respondent to provide workers' compens ation coverage for

their benefit.

8. Based upon Respondent’s payroll records, Petitioner

correctly calculated the penalty amount imposed by law under all

the circumstances of the case, and issued the Amended Order

imposing a penalty assessment in the amou nt of $198,311.82.

9. Respondent did not persuasively dispute the factual or

legal merits of Petitioner's case. Rather, Respondent suggested

that this forum has some type of general equity powers to lessen

the penalty on the grounds that Respondent made a good faith

effort to provide coverage for its workers.

10. The record does demonstrate that Mr. Futch in good

faith engaged a Georgia insurance agent and instructed him to

obtain workers' compensation coverage which would satisfy the

requirements of F lorida law with respect to Respondent's Florida

operations. The Georgia agent's failure to obtain coverage that

satisfies Florida's requirements is a regrettable circumstance,

but it raises no issue over which this forum has authority.

CONCLUSIONS OF LAW

11. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter.

§§ 120.569, and 120.57(1), Fla. Stat.

12. Petitioner has the burden of proving by a

preponderance of the evidence that Respondent has violated the

wor kers’ compensation law, and that the penalty assessments are

correct under the law. See Department of Labor and Employment

Security, Division of Workers’ Compensation v. Genesis Plumbing,

Inc. , DOAH Case No. 00 - 3749 (Rec. Order, paragraph 32) (Final

Order May 24, 2001); Department of Labor and Employment

Security, Division of Workers’ Compensation v. Eastern Personnel

Servs., Inc. , DOAH Case No. 99 - 2048 (Rec. Order, paragraph 24)

(Final Order, November 30, 1999), appeal dismissed , Case

No. 1D99 - 4839 (Fla. 1st DCA 2000).

13. Section 440.10(1)(a), Florida Statutes, provides in

relevant part:

(1)(a) Every employer coming within the

provisions of this chapter shall be liable

for, and shall secure, the payment to his or

her employees . . . of the compensatio n

payable under ss. 440.13, 440.15, and

440.16. Any 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 this chapter as provided in

s. 440.38.

14. Pursuant to Sections 440.10 and 440.38, Florida

Statutes, Respondent was obliged to secure the payment of

workers' compensation for the benefit of its employees and

failed to do so.

15. Petitioner has fulfilled its burden of proof.

Respondent's good - faith, but mistaken trust in and reliance upon

his out - of - state insurance agent, is not a legal defense, and

cannot be considered in mitigation of the penalty to be

assessed.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law , it is hereby RECOMMENDED that the Department of

Financial Services, Division of Workers’ Compensation, enter a

final order that affirms the Amended Order in the amount of

$198,311.82.

DONE AND ENTERED this 28th day of January, 2005, in

Tallahassee, Leon County, Florida.

S

FLORENCE SNYDER RIVAS

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.f l.us

Filed with the Clerk of the

Division of Administrative Hearings

this 28th day of January, 2005.

COPIES FURNISHED :

Joe Thompson, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

Patrick C. Cork, Esq uire

Cork & Cork

700 North Patterson Street

Valdosta, Georgia 31601

Honorable Tom Gallagher

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

Pete Dunbar, 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 this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.