05-003117 Tak-A-Way, Inc vs. Department Of Financial Services, Division Of Workers' Compensation Status: Closed Recommended Order on Wednesday, March 8, 2006.

Summary: Respondent proved that Petitioner did not have workers` compensation coverage for its employees and that it violated the Stop Work Order. The penalty calculation is incorrect because one risk classification was not supported by the record.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TAK - A - WAY, INC., )

)

Petitioner, )

)

vs. ) Case No. 05 - 3117

)

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS' )

COMPENSATION, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDE R

Pursuant to notice, a formal hearing was held in this case

on January 23, 2006, by video teleconference, with the parties

appearing in Fort Lauderdale, Florida, before Patricia M. Hart,

a duly - designated Administrative Law Judge of the Division of

Admin istrative Hearings, who presided in Tallahassee, Florida.

APPEARANCES

For Petitioner: Young T. Tindall, Esquire

912 South Andrews Avenue

Fort Lauderdale, Florida 33316

For Respondent: David C. Hawk ins, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

STATEMENT OF THE ISSUES

Whether the Petit ioner was required to carry workers'

compensation insurance coverage for its employees, and if so,

the penalty that should be assessed.

Whether the Petitioner violated the Stop Work Order entered

May 18, 2005, and, if so, the penalty that should be assesse d.

PRELIMINARY STATEMENT

On May 18, 2005, the Department of Financial Services,

Division of Workers’ Compensation (“Department”), filed a Stop

Work Order against Tak - A - Way, Inc. (“Tak - A - Way”). The

Department alleged in the Stop Work Order that Tak - A - Way

violated Section 440.107(2), Florida Statutes (2005) 1 , by failing

to secure the payment of workers’ compensation at a work site in

Pompano Beach, Florida. On May 31, 2005, the Department filed

an Amended Order of Penalty Assessment, in which it calculated a

penalty of $44,617.22 for Tak - A - Way's failure to have workers'

compensation insurance coverage for its employees. The

Department added a penalty of $1,000.00 for an alleged one - day

violation of the Stop Work Order, for a total penalty assessment

of $45 ,617.22, pursuant to Section 440.107(7)(c) and (d),

Florida Statutes. Tak - A - Way requested a formal administrative

hearing, and the Department transmitted the matter to the

Department for assignment of an administrative law judge.

On December 19, 2005, the Department filed a Motion to

Amend Order of Penalty Assessment, and the motion was granted in

an order dated January 13, 2006. The Department's Amended Order

of Penalty Assessment was, therefore, superseded by the

Department's Second Amended Order of Pen alty Assessment, in

which it assessed an additional penalty of $73,000.00 based on

Tak - A - Way's alleged continuation of its business operations from

May 17, 2005, through September 21, 2005. Based on this amended

penalty assessment, the Department sought a total penalty of

$117,617.22.

The final hearing was held on January 23, 2006, in Fort

Lauderdale, Florida. At the final hearing, Tak - A - Way presented

the testimony of Donald Oppenheim, the president of Tak - A - Way;

Petitioner’s Exhibit 1 was received into e vidence. The

Department presented the testimony of Shelly Senfeld, an

investigator in the Department's Bureau of Compliance; the

testimony of Charlotte Fieselman was presented by the Department

in the transcript of her deposition taken January 19, 2006, a nd

received into evidence as DWC's Exhibit 14. DWC's Exhibits 1

through 13 were also received into evidence.

The transcript of the proceedings was filed on January 27,

2006, and the Department timely filed its proposed findings of

fact and conclusions of law, which has been considered in the

preparation of this Recommended Order. Tak - A - Way did not file a

post - hearing submission.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the

final hearing and on the entire record of this pro ceeding, the

following findings of fact are made:

1. The Department is the state agency charged with the

responsibility of enforcing the requirement of Section 440.107,

Florida Statutes, that employers in Florida secure workers'

compensation insurance cov erage for their employees.

§ 440.107(3), Fla. Stat.

2. Tak - A - Way is a Florida corporation which engages in the

business of performing small jobs such as removing trash and

debris, digging up small driveways, and excavation. Tak - A - Way

owns several dump t rucks, and it maintains a permanent storage

yard for materials and equipment. Tak - A - Way's payroll records

for the period January 2003 through May 2005 establish that

several persons were listed as "Help" and received regular

checks from Tak - A - Way during t his period.

3. Donald Oppenheim is the owner and president of

Tak - A - Way. He is exempted from workers' compensation coverage.

4. On May 18, 2005, during a routine investigation, an

investigator employed by the Department observed two men ripping

up an asphalt driveway and loading the asphalt into a truck at a

private residence in Pompano Beach, Florida. One man was

operating a backhoe, and the other was operating a bobcat. The

equipment and trucks being used at the site displayed the name

“Tak - A - Wa y”, and the two men confirmed that they were employed

by Tak - A - Way.

5. The men were identified as Andy Oppenheim and Kevin

McManus. The Department did not find any record of workers’

compensation insurance in its database for employees of Tak - A -

Way, and Mr. Oppenheim confirmed during a conversation with the

Department’s investigator that Tak - A - Way had no workers'

compensation coverage for any of its employees.

6. The Department's investigator issued a Stop Work Order

against Tak - A - Way on May 18, 2005, be cause it did not have

workers’ compensation coverage for its employees; the Stop Work

Order was hand - delivered to Mr. Oppenheim on the date of issue.

The Stop Work Order required that Tak - A - Way "cease all business

operations in this state" and advised tha t a penalty of

$1,000.00 per day would be imposed if Tak - A - Way were to conduct

any business in violation of the Stop Work Order. Finally, the

Stop Work Order included the following: "This Stop Work Order

shall remain in effect until the Division issues a n order

releasing the Stop Work Order, or until the Division issues an

order of conditional release from Stop Work Order pursuant to

the employer entering into a payment agreement schedule for

periodic payment of penalty."

Penalty Assessment for Failure to Have Workers' Compensation

Insurance Coverage

7. At the same time that she delivered the Stop Work Order

to Mr. Oppenheim, the Department's investigator delivered a

Request for Production of Business Records for Penalty

Assessment Calculation, in which Mr. Oppenheim was directed to

produce business records for the period extending from

November 3, 2003, through May 18, 2005. 2

8. Mr. Oppenheim produced Tak - A - Way's business records as

requested, and the Department's investigator used the payroll

informati on in the records for calculating the penalty to be

assessed for Tak - A - Way's failure to have workers' compensation

insurance coverage for its employees.

9. The Department uses the National Council of

Compensation Insurance, Inc. ("NCCI") Scopes Manual, wh ich

includes risk classifications and definitions used to determine

rates for workers' compensation insurance coverage. The payroll

records provided by Mr. Oppenheim did not indicate the workers'

compensation classification codes assigned to Tak - A - Way's

e mployees, so, in accordance with the NCCI Basic Manual for

Workers Compensation and Employers Liability Insurance ("Basic

Manual"), the Department's investigator assigned all of

Tak - A - Way's operations to what she determined to be the highest -

rated cla ssifications of its business operations.

10. As shown in the worksheets attached to both the

Amended Order of Penalty Assessment and the Second Amended Order

of Penalty Assessment, the Department's investigator classified

all of Tak - A - Way's employees unde r the classification

"Excavation," Code 6217, for the period extending from

November 3, 2003, through December 31, 2004, which had an

approved manual rate of $13.79 per $100.00 in payroll for that

period; she classified all of Tak - A - Way's employees under t he

classification "Concrete," Code 5213, for the period extending

from January 1, 2005, through May 18, 2005, with an approved

manual rate of $24.66 per $100.00 in payroll for that period;

and she classified all of Tak - A - Way's employees under the

classific ation "Erection Permanent Yard," Code 8227, for the

period extending from January 1, 2005, through May 18, 2005,

with an approved manual rate of $9.38 per $100.00 in payroll for

that period.

11. The worksheets showed the premium calculation for each

class ification to be $19,248.91, $10,130.08, and $365.82,

respectively, for a total premium of $29,744.81. The penalty,

calculated as 1.5 times the premium for each classification, was

shown on the worksheets as $28,873.37, $15,195.12, and $548.73,

respectivel y, for a total penalty for the failure to have

workers' compensation insurance coverage of $44,617.22.

12. The operations included in the NCCI Scopes Manual

classification "Excavation & Drivers," Code 6217, describe most

closely the business operations of Tak - A - Way during the period

of time covered by the penalty assessment for the failure to

have workers' compensation insurance coverage. There is nothing

in the record to indicate that the nature of Tak - A - Way's

operations changed on or about January 1, 20 05, nor did the

Department's investigator provide any explanation for the change

in classification from "Excavation" to "Concrete" effective

January 1, 2005. 3 In the absence of any evidence to support the

change in classification, the Department has faile d to sustain

the $44,617.22 penalty assessment for the failure of Tak - A - Way

to carry workers' compensation insurance coverage from

November 3, 2003, through May 18, 2005. Rather, the premium

calculation for the period from January 1, 2005, through May 18,

2005, should be based on the classification of "Excavation,"

Code 6217, which carried the approved manual rate of $12.77 for

that period, and not on the classification of "Concrete,"

Code 5213. 4

13. Tak - A - Way maintained a permanent storage yard in which

its material and equipment was stored during the times material

to this proceeding. The Department's investigator correctly

included a premium calculation for "Erection Permanent Yard,"

Code 8227, as part of the calculation of the penalty against

Tak - A - Wa y for failure to carry workers' compensation insurance

coverage for its employees.

14. Tak - A - Way obtained workers' compensation insurance

coverage from Florida Citrus, Business & Industry, effective

June 1, 2005.

Penalty Assessment for Violating Stop Work Order

15. On May 24, 2005, the Department’s investigator

observed a Tak - A - Way truck traveling in front of her on the

street and concluded that Tak - A - Way was conducting business in

violation of the Stop Work Order issued May 18, 2005.

16. The Amended Or der of Penalty Assessment against Tak - A -

Way issued on June 1, 2005, included a penalty of $1,000.00 for

Tak - A - Way's violation of the Stop Work Order from May 24, 2005,

to May 25, 2005, for a total penalty of $45.617.22.

17. Tak - A - Way conducted business op erations after the Stop

Work Order was issued. Mr. Oppenheim rented dump trucks owned

by Tak - A - Way to Preston Contractors. Mr. Oppenheim, who was the

only Tak - A - Way employee involved in the business operations at

the time, would drive a truck to one of P reston Contractors'

construction sites, towing his pickup truck. He would park the

truck and leave the site, and employees of Preston Contractors

would fill the truck with construction debris. Mr. Oppenheim

would return to the construction site and drive the truck to the

landfill and dump the load of debris. At times, there were

several Tak - A - Way dump trucks at the Preston Contractors'

construction site.

18. According to invoices maintained by Preston

Contractors, it paid Tak - A - Way for truck rental and dump fees

from February 2005 to September 2005.

19. On November 22, 2005, the Department issued a Second

Amended Order of Penalty Assessment, increasing the penalty for

Tak - A - Way's violation of the Stop Work Order to $73,000.00,

covering the period extend ing from May 19, 2005, through

September 21, 2005, for a total penalty of $117,617.22.

20. Based on the evidence presented, Tak - A - Way was

conducting business operations in violation of the Stop Work

Order during the period for which the penalty was assess ed and

had not obtained either an order releasing the Stop Work Order

or an Order of Conditional Release from Stop Work Order.

CONCLUSIONS OF LAW

21. The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding and of

the parties thereto pursuant to Sections 120.569 and 120.57(1),

Florida Statutes.

22. The Department must prove by a preponderance of the

evidence that Tak - A - Way failed to provide its employees with

workers' compensation insurance coverage and that the civil and

administrative penalties assessed are correct. Department of

Labor and Employment Security, Division of Workers' Compensation

v. Patrick Jackey, d/b/a Bert's World of Color , DOAH Case

No. 98 - 2496, page 5 (Recommended Order December 4,

1998)("Al though violations of Chapter 440, Florida Statutes, 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").

23. Every employer is required to secure the payment of

compensation for the benefit of its employees. §§ 440.10(1)(a)

and 440.38(1), Fla. Stat.

24. An "employee means any person who receives

remuneration from an employer for the performance of any work or

service while engaged in any employment . . . ."

§ 440.02(15)(a), Fla. Stat. "Employment . . . means any service

performed by an employee for the person employing him or her."

§ 440.02(17)(a), Fla. Stat. An "employer" is defined as "every

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

25. Tak - A - Way is an employer as defined by Section

440.02(16)(a), Florida Statutes, and it engaged in activities of

employment as that term is defined in Section 440.02(17) (a),

Florida Statutes, between November 3, 2003, and May 18, 2005.

26. The Department has the duty of enforcing the

employer's compliance with the requirements of the workers'

compensation law. § 440.107(3), Fla. Stat.

27. Section 440.107, Florida Statu tes, 5 provides in

pertinent part:

7)(a) Whenever 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 secure the payment of workers'

compens ation required by this chapter or to

produce the required business records under

subsection (5) within 5 business days after

receipt of the written request of the

department, 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 hou rs. The order shall take

effect when served upon the employer or, for

a particular employer worksite, when served

at that worksite. In addition to serving a

stop - work order at a particular worksite

which shall be effective immediately, the

department sha ll immediately proceed with

service upon the employer which shall be

effective upon all employer worksites in the

state for which the employer is not in

compliance. A stop - work order may be served

with regard to an employer's worksite by

posting a copy of the stop - work order in a

conspicuous location at the worksite. The

order shall remain in effect until the

department issues an order releasing the

stop - work order upon a finding that the

employer has come into compliance with the

coverage requirements of this chapter and

has paid any penalty assessed under this

section. The department may issue an order

of conditional release from a stop - work

order to an employer upon a finding that the

employer has complied with coverage

requirements of this chapter and has agreed

to remit periodic payments of the penalty

pursuant to a payment agreement schedule

with the department. . . . .

* * *

(c) The department shall assess a penalty

of $1,000 per day against an employer for

each day that the employer conducts bus iness

operations that are in violation of a stop -

work order.

(d)1. 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 this chapt er a penalty equal to

1.5 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 with in the

preceding 3 - year period or $1,000, whichever

is greater.

28. The Department has adopted "the classification codes

and descriptions that are specified in the Florida Contracting

Classification Premium Adjustment Program, and published in the

Florid a exception pages of the National Council on Compensation

Insurance, Inc. (NCCI), Basic Manual (1996 ed., issued

January 21, 2003)": Excavation, Code 6217, and "Construction or

Erection - Permanent Yard," Code 8227, are included in the

Florida exception p ages of the NCCI Basic Manual. Fla. Admin.

Code R. 69L - 6.021(1). The Department has also adopted the

definitions of the scope of work for each classification set

forth in the NCCI Scopes Manual. Fla. Admin. Code R. 69L -

6.021(2).

29. Based on the findin gs of fact herein, the Department

has proven by a preponderance of the evidence that Tak - A - Way

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

because it did not have workers' compensation insurance coverage

for its employees from November 3, 2003, through May 18, 2005.

Based on the findings of fact herein, the penalty calculation

for Tak - A - Way's failure to have workers' compensation insurance

coverage is correct with respect to the calculation for the

classifications of "Excavation," Code 6217, for the period

extending from November 3, 2003, through December 31, 2004, and

of "Erection Permanent Yard", Code 8227, for the period

extending from January 1, 2005, through May 18, 2005. 6 The

Department's penalty calculation is incorrect, however, with

respect to the penalty assessed under the classification

"Concrete," Code 5213, for the period extending from January 1,

2005, through May 18, 2005, because there is no evidence to

support such a classification. Tak - A - Way's business operations

shoul d be classified as "Excavation," Code 6217, for the period

extending from January 1, 2005, through May 18, 2005.

30. Based on the findings of fact herein, the Department

has met its burden of proving by a preponderance of the evidence

that Tak - A - Way viola ted the Stop Work Order issued June 1, 2005,

by continuing to engage in business operations while the Stop

Work Order was still in effect. The Department, therefore,

correctly assessed a penalty against Tak - A - Way in the amount of

$1,000.00 per day for eac h day Tak - A - Way violated the Stop Work

Order, as prescribed in Section 440.107(7)(c), Florida Statutes.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Financial

Services, Division of Workers' Compensation, enter a final

order:

1. Finding that Tak - A - Way, Inc., failed to have workers'

compensation insurance coverage for its employees, in violation

of Sections 440.10(1)(a) and 440.38(1), Florida Statutes;

2. Finding that Tak - A - Way, Inc ., engaged in business

operations during the pendency of a Stop Work Order, in

violation of Section 440.107(7)(a), Florida Statutes;

3. Assessing a penalty against Tak - A - Way, Inc., equal to

1.5 times premium based on the approved manual rate for the

class ification "Excavation," Code 6217, for the period extending

from November 3, 2003, through May 18, 2005, and on the approved

manual rate for the classification "Construction & Erection -

Permanent Yard," Code 8227, for the period extending from

January 1, 2005, through May 18, 2005 as provided in

Section 440.107(7)(a) and (d), Florida Statutes; and

4. Assessing a penalty of $73,000.00, against Tak - A - Way,

Inc., for engaging in business operations in violation of the

May 18, 2005, Stop Work Order, as provid ed in

Section 440.107(7)(a) and (c), Florida Statutes.

DONE AND ENTERED this 8th day of March, 2006, in

Tallahassee, Leon County, Florida.

S

___________________________________

PATRICIA M. HART

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 t he Clerk of the

Division of Administrative Hearings

this 8th day of March, 2006.

ENDNOTES

1 / All references to the Florida Statutes herein are to the 2005

edition unless otherwise indicated.

2 / According to the Department's investigator, November 3, 2003,

was the "start - up" date for Tak - A - Way.

3 / The "Concrete Construction NOC" classification, Code 5213, is

described in the NCCI Scopes Manua l as including "foundations or

the making, setting up or taking down of forms, scaffolds, false

work or concrete distributing apparatus"; "all commercial types

of concrete building construction, self - bearing floors,

foundations, piers, culverts, silos, gra in elevators, etc.";

"guniting or waterproofing operations by means of any type of

pressure spray gun"; "cleaning or renovation of building

exteriors by various methods"; and "the wrecking of concrete or

concrete encased buildings or structures." The Depa rtment

included in its proposed findings of fact a proposed finding

that Tak - A - Way's business operations "included demolishing rooms

of concrete buildings," but there is no support for this

proposed finding in the record. The Department cites the

Division 's Request for Admissions and Tak - A - Way's responses to

the Division's Request for Admissions numbered 1 and 2 to

support the proposed finding; Tak - A - Way, however, specifically

denied in its response to the Division's Request for Admissions

numbered 2 that it engaged in any "concrete construction."

4 / The Department's suggestion in its proposed Conclusions of

Law that the Department's investigator could have assigned the

classification "Concrete" to Tak - A - Way's business activities for

the period extending from January 1, 2005, to May 18, 2005, but

"showed leniency by assigning the lower rated classifications of

Excavation (code 6217) and Erection Permanent Yard (code 8227)"

is rejected as not supported by the record.

5 / The provisions of Section 440.107(7 ), Florida Statutes

(2005), are the same in all material respects as the provisions

of that section effective in 2003 and 2004, except that, in

2003, the Department did not have the authority to issue Orders

of Conditional Release from Stop Work Order.

6 / It is noted that, for some reason not disclosed in the

record, a penalty was assessed for Code 8227 only for this

period of time.

COPIES FURNISHED:

David C. Hawkins , Esquire

Department of Financial Services

Division of Legal Service s

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

Young T. Tindall, Esquire

912 South Andrews Avenue

Fort Lauderdale, Florida 33316

Carlos G. Muñiz, General Counsel

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Flori da 32399 - 0300

Tom Gallagher, Chief Financial Officer

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 d ays 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.