05-002325 Department Of Financial Services vs. Snyder Martin D/B/A Affordable Fencing Status: Closed Recommended Order on Thursday, September 15, 2005.

Summary: Repondent`s violations were clear and convincingly proven and the penalties are enhanced by the operation of law due to Respondent`s failure to comply with Petitioner`s Stop Work Order. Recommend a fine of $200,954.12.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, )

)

Petitioner, )

)

vs. ) Case No. 05 - 2325

)

SNYDER MARTIN , d/b/a AFFORDABLE )

FENCING, )

)

Respondent. )

)

RE COMMENDED ORDER

Don W. Davis, Administrative Law Judge of the Division of

Administrative Hearings, conducted the final hearing in this

case on August 17, 2005, in Jacksonville, Florida. The

following appearances were entered:

APPEARANCES

For Petit ioner: John M. Iriye, Esquire

Department of Financial Services

Division of Workers' Compensation

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: No Appearance

STATEMENT OF THE ISSUE

The issue to be d etermined is whether Respondent complied

with coverage requirements of the workers' compensation law,

Chapter 440, Florida Statutes. A determination of whether

Respondent functioned as an employer is a preliminary issue to

be resolved.

PRELIMINARY STATE MENT

By Stop Work and Penalty Assessment Order (SWO) issued on

April 27, 2005, the Department of Financial Services, Division

of Workers ’ Compensation (Petitioner), alleged Martin Snyder

(Respondent) failed to secure workers' compensation coverage for

wor kers at a fence construction site in Jacksonville, Florida.

Petitioner also requested business records from Respondent, and

upon Respondent’s failure to produce those records issued an

amended penalty assessment order assessing a penalty in the

amount of $198,954.12 .

By Petition dated June 13, 2005, Respondent disputed the

allegations and requested formal administrative proceedings.

The matter was referred to the Division of Administrative

Hearings on June 28, 2005.

By Notice of Hearing dated July 14 , 2005, final hearing was

scheduled for August 17, 2005.

At the final hearing, Petitioner presented the testimony of

one witness and offered 15 exhibits which were admitted into

evidence. Respondent did not appear and no appearance was made

on his behal f.

No transcript of the final hearing was provided.

Petitioner timely filed a Proposed Recommended Order , which has

been reviewed and utilized where possible in the preparation of

this Recommended Order. Respondent did not file any post -

hearing submis sion.

All references to Florida Statutes are to the 2004 edition

unless otherwise noted.

FINDINGS OF FACT

1. Petitioner is the agency of state government currently

responsible for enforcing the requirement of Section 440.107,

Florida Statutes, that e mployers secure the payment of

compensation for their employees.

2. Respondent works in the fence construction industry and

employs four people.

3. Petitioner's investigator identified three people

preparing a worksite for the erection of a privacy fence at 3000

Majestic Oaks Lane South in Jacksonville, Florida. The

investigator then contacted Respondent and confirmed that the

three identified individuals in addition to Respondent, were

employed by Respondent for a total of four employees.

4. T he investigator determined none of the employees had

workers’ compensation exemptions nor had Respondent secured the

payment of workers’ compensation to his employees.

5. On April 27, 2005, the investigator served a SWO on

Respondent. The SWO required Respondent to cease all business

operations in Florida. At the same time, the investigator

served a Request for Business Records for Penalty Calculation on

Respondent, requesting payroll records from Respondent for the

period April 27, 2002, through Apri l 27, 2005 (the audit period

for penalty calculation).

6. Respondent provided no records to the investigator. On

May 23, 2005, the investigator determined 520 days had passed

between the beginning of the audit period and September 30,

2003, and the pe nalty for noncompliance during this period was

$52,000.00. The investigator also determined that during the

period October 1, 2003, through the end of the audit period, the

statewide average weekly wage paid by employers was $651.38;

Respondent had four ( 4) employees; the imputed weekly payroll

for Respondent’s employees was $320,848.00; using approved

manual rates Respondent should have paid $97,969.40 in workers’

compensation premium; and the penalty for noncompliance during

this period was calculated to be $146,954.12. On May 26, 2005,

Investigator Bowman served the Amended Order of Penalty

Assessment on Respondent. The Amended Order assessed Respondent

with a penalty for the entire audit period in the amount of

$198,954.12.

7. The investigator obt ained records created by Respondent

demonstrating Respondent placed a bid on a job on June 1, 2005,

and Respondent completed the job on July 1, 2005. On July 19,

2005, the investigator served a Corrected Amended Order of

Penalty Assessment on Respondent, which assessed a penalty in

the amount of $3,000.00 for violating the terms of the SWO.

Respondent violated the SWO on two separate days, the day of the

bid and the day the work was completed. No competent

substantial evidence was presented regarding int ervening

business operations.

CONCLUSIONS OF LAW

8. The Division of Administrative Hearings has

jurisdiction over the subject matter. §§ 120.569 and 120.57(1),

Fl a. Stat.

9. Petitioner has the burden of proof in this case.

Petitioner must show by a preponderance of the evidence that

Respondent violated the Workers' Compensation Law during the

audit period, that he engaged in business operations in

violation of the SWO, and that the penalty assessments are

correct. Department of Labor and Employment Security, Division

of Workers' Compensation v. Bobby Cox, Sr., d/b/a C H Well

Drilling , DOAH Case No. 99 - 3854 (Recommended Order para.

34)(adopted in part by Final Order June 7, 2000); Department of

Labor and Employment Security, Division of Workers' Comp ensation

v. Eastern Personnel Services, Inc. , DOAH Case No. 99 - 2048

(Recommended Order para. 24)(adopted by Final Order Nov. 30,

1999), appeal dismissed , Case No. 1D99 - 4839 (Fla. 1st DCA April

10, 2000).

10. Respondent employed four people as “employees” within

the definition of Section 440.02(15)(a) and (c), Florida

Statutes, which reads:

(a) 'Employee' means any person who

receives remuneration from an employer for

the performance of any work or service while

engaged in any employment under any

appoin tment or contract for hire or

apprenticeship, express or implied, oral or

written, whether lawfully or unlawfully

employed, and includes, but is not limited

to, aliens and minors.

* * *

(c) 'Employee' includes:

* * *

2. All persons who are being paid by a

construction contractor as a subcontractor,

unless the subcontractor has validly elected

an exemption as permitted by this chapter,

or has otherwise secured the payment of

compensation coverage as a su bcontractor,

consistent with s. 440.10, for work

performed by or as a subcontractor.

11. Respondent was an employer within the definition

contained in Section 440.02(16)(a), Florida Statutes, which

states in pertinent part:

'Employer' means the state an d all political

subdivisions thereof, all public and quasi -

public corporations therein, every person

carrying on any employment, and the legal

representative of a deceased person or the

receiver or trustees of any person.

'Employer' also includes employme nt

agencies, employee leasing companies, and

similar agents who provide employees to

other persons. . . .

12. Respondent was required to secure the payment of

workers’ compensation to his employees pursuant to Section

440.10(1)(a), Florida Statutes (200 4), which states:

Every employer coming within the provisions

of this chapter shall be liable for, and

shall secure, the payment to his or her

employees, or any physician, surgeon, or

pharmacist providing services under the

provisions of s. 440.13, of the compensation

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.

13. As an employer, Respondent was required to maintain

records pursuant to Section 440.107(5), Florida Statutes, the

specifics of which Petitioner has set forth in Florida

Administrative Code Rule 69L - 6.015. As a consequence of

Respondent’s fa ilure to produce records sufficient to enable

Petitioner to determine Respondent’s payroll for each employee,

Petitioner was required to impute payroll to each employee based

upon the average weekly wage paid by employers subject to the

Florida Unemploymen t Compensation Law. § 440.107(e), Fla. Stat.

14. Since Petitioner identified four employees and

Respondent produced no records, Petitioner was required to

assess $100.00 per day from the beginning of the audit period

until September 30, 2003, and to ca lculate a penalty based on

imputed payroll to all four employees from October 1, 2003,

until the end of the audit period. Petitioner properly

calculated a penalty pursuant to Florida Administrative Code

Rule 69L - 6.028, which states:

(1) In the event an e mployer fails to

provide business records sufficient for the

department to determine the employer’s

payroll for the period requested for the

calculation of the penalty pursuant to

section 440.107(7)(e), Florida Statutes, the

department shall impute payroll at any time

after the expiration of fifteen business

days after receipt by the employer of a

written request to produce such business

records.

(2) When an employer fails to provide

business records sufficient to enable the

department to determine the emp loyer’s

payroll for the period requested for

purposes of calculating the penalty provided

for in section 440.107(7)(d), Florida

Statutes, the imputed weekly payroll for

each employee, corporate officer, sole

proprietor or partner for the portion of the

per iod of the employer’s non - compliance

occurring on or after October 1, 2003 shall

be calculated as follows:

(a) For employees other than corporate

officers, for each employee identified by

the department as an employee of such

employer at any time during the pe riod of

the employer’s non - compliance, the imputed

weekly payroll for each week of the

employer’s non - compliance for each such

employee shall be the statewide average

weekly wage as defined in section 440.12(2),

Florida Statutes, that is in effect at the

t ime the stop work order was issued to the

employer, multiplied by 1.5. Employees

include sole proprietors and partners in a

partnership.

(b) If the employer is a corporation, for

each corporate officer of such employer

identified as such on the records of th e

Division of Corporations at the time of

issuance of the stop - work order, the imputed

weekly payroll for each week of the

employer’s non - compliance for each such

corporate officer shall be the statewide

average weekly wage as defined in section

440.12(2), Florida Statutes, that is in

effect at the time the stop work order was

issued to the employer, multiplied by 1.5.

(c) If a portion of the period of non -

compliance includes a partial week of non -

compliance, the imputed weekly payroll for

such partial week of non - compliance shall be

prorated from the imputed weekly payroll for

a full week.

(3) If subsequent to imputation of weekly

payroll pursuant to section (2) herein, but

before the expiration of forty - five calendar

days from the receipt by the employer of

written request to produce business records,

the employer provides business records

sufficient for the department to determine

the employer’s payroll for the period

requested for the calculation of the penalty

pursuant to section 440.107(7)(e), Florida

Statutes, the department shall recalculate

the employer’s penalty to reflect the

payroll information provided in such

business records.

(4) Where periods of the employer’s non -

compliance occurred prior to October 1,

2003, and the employer fails to provide

business records sufficient to enable the

department to determine the employer’s

payroll for periods of non - compliance prior

to October 1, 2003, for purposes of

calculating the penalty to be assessed

against the employer for periods of non -

compliance prio r to October 1, 2003, the

department shall assess against the employer

a penalty of $100 per day for each and every

calendar day in the period of non - compliance

occurring prior to October 1, 2003 the

employer was not in compliance, pursuant to

section 440. 107(5), Florida Statutes (2002).

15. Petitioner properly determined the classification code

applicable to Respondent pursuant to Florida Administrative Code

Rule 69L - 6.021, and accurately relied on the appropriate rates

for penalty calculation.

16. Pe titioner is required to assess Respondent with a

$1,000.00 penalty for every day Respondent conducted business

operations in violation of the SWO. § 440.107(7)(c), Fla. Stat.

Respondent conducted business operations in violation of the SWO

on two separat e days. Thus, Petitioner is required to assess an

additional $2,000.00 penalty, which is in addition to any

penalty properly assessed under S ection 44.107(7)(d) and (e),

Florida Statutes.

17. Respondent engaged in business operations, employed

four peopl e, failed to secure the payment of workers’

compensation to his employees, failed to produce required

records, and engaged in business in violation of the SWO. Under

these circumstances, Petitioner properly issued the Stop Work

Order and Order of Penalty Assessment, Amended Order of Penalty

Assessment, and Corrected Amended Order of Penalty Assessment

pursuant to Section 440.107(7)(a), (c), (d) and (e), Florida

Statutes.

18. Petitioner properly assessed a penalty in the amount

of $198,954.12. Petitioner satisfied its burden of proof that

Respondent engaged in business operations in Florida in

violation of the terms of the SWO on two separate dates,

necessitating additional penalty in the amount of $2,000.00.

RECOMMENDATION

Based on the Findings of Fact an d Conclusions of Law, it is

RECOMMENDED that Petitioner enter a final order affirming

the Stop Work Order and Order of Penalty Assessment, Amended

Order of Penalty Assessment, and Corrected Amended Order of

Penalty Assessment, requiring Respondent to pay a penalty in the

amount of $200,594.12 to Petitioner, and requiring Respondent to

cease all business operations in Florida.

DONE AND ENTERED this 1 5 th day of September , 2005 , in

Tallahassee, Leon County, Florida.

S

DON W. DAVIS

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

Divi sion of Administrative Hearings

this 1 5 th day of September , 2005 .

COPIES FURNISHED :

John M. Iriye, Esquire

Department of Financial Services

Division of Workers Compensation

200 East Gaines Street

Tallahassee, Florida 32399 - 422

Martin D. Snyder

10367 Allene Road

Jacksonville, Florida 32219

Honorable Tom Gallagher

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

Carols G. Muniz, 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.