05-003831 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Christopher Curry, D/B/A Curry Land Service Status: Closed Recommended Order on Wednesday, June 28, 2006.

Summary: Petitioner properly imputed the payroll to determine a penalty.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF )

WORKERS' COMPENSATION, )

)

Petitioner, )

)

vs. ) Case No. 0 5 - 38 31

)

CHRISTOPHER CURRY, )

d/b/a CURRY LAND SERVICE, )

)

Respondent. )

)

RECOMMENDED ORDER

Notice was provided and on M ay 5 , 200 6, a formal hearing

was held in this case. Authority for conducting the hearing is

set forth in Sections 120.569 and 120.57(1), Florida Statutes

(200 5 ). The hearing location was the Department of

Transportation District Office, 1109 South Marion Avenue, Lake

C i ty, Florida. Charles C. Adams, Administrative Law Judge,

conducted the hearing.

APPEARANCES

For Petitioner: H. F. Rick Mann , Esquire

Departm ent of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: Christopher Curry , pro se

1259 Southwest County Road 252B

L a ke City , Florida 32 024

STATEMENT OF THE ISSUE

Has Respondent failed to secure payment of workers'

compensation for his employees, Section 440.107(2), Florida

Statutes (200 5 ), justifying the entry of a stop - work order,

S ubs ection 440.107(7)(a), Flo rida Statutes (200 5 ), and the entry

of a financial penalty against Respondent, S ubs ection

440.107(7)(d), Florida Statutes (200 5 ) , as imputed, S ubs ection

440.107(7)(e), Florida Statutes ( 2005 ) ?

PRELIMINARY STATEMENT

On August 11 , 200 5 , Petitioner s e rv ed a stop - work order on

Respondent for the alleged failure to pay workers' compensation

in violation of Section 440.107(2), Florida Statutes (200 5 ). At

the sa m e time , an Order of Penalty Assessment was served in

accordance with S ubs ection 440.107(7)(d), F lorida Statutes

(200 5 ). Respondent was also noticed of his rights to be h eard

in association with the stop - w ork o rder under procedures set

forth in Section s 120.569 and 120.57, Florida Statutes ( 2005 ),

u pon the filing of a petition in a form consistent wi th Florida

Administrative Code Chapter 28 - 106.

On August 11, 2005 , Petitioner requested that Respondent

produce business records to support its calculation of a penalty

assessment. The request for production was made consistent with

S ubs ection 440.107(7 )(d), Florida Statutes ( 2005 ), with the

various categories of information sought being detailed in the

request for production.

Proceeding without the benefit Respondent 's business

records, Petitioner imputed weekly payroll amounts and

established a penal ty calculation for the period August 11,

2002 , through August 11, 2005 . § 440.107(7)(e), Fla. Stat.

( 2005 ).

On September 1, 2005 , Respondent was notified of the

Penalty Assessment in an Amended Order of Penalty Assessment

totaling $121,039.00 . The serv ice of the Amended Order of

Penalty Assessment on that date informed Respondent of the right

to contest the Amended Order of Penalty Assessment .

Respondent p etition ed for a hearing pursuant to Section

120.57, Florida Statutes ( 2005 ) , and Florida Administr ative Code

Chapter 28 - 106, to challenge the stop - work order and the Amended

Order of Penalty Assessment .

On October 17, 2005 , Petitioner forwarded the pe tition for

formal administrative hearing , requesting the assignment of an

a dministrative l aw j udge to conduct a formal hearing before the

Division of Administrative Hearings (DOAH) , pursuant to Sections

120.569 and 120.57(1), Florida Statutes ( 2005 ). The case became

DOAH Case No. 05 - 3831 , and an a dministrative l aw j udge was

assigned to conduct necessary proceedings. Eventually the

formal hearing was held before the undersigned in substitution

for prior a dministrative l aw j udge s .

Respondent 's counsel moved to withdraw based upon a lack of

cooperation by his client in meeting appointments to produce

info rmation concerning this case. On April 14, 2006 , an order

was entered allowing the withdrawal of counsel. Beyond that

point , Respondent proceeded pro se .

Pending the final hearing in this case , Petitioner sought

production of Respondent 's business reco rds , employing the

Florida Rules of Civil Procedure . Those records were not

produced in response to the discovery request , and order s were

entered requiring production.

At hearing , Petitioner presented Michael Robinson , an

investigator for the Petition er 's Bureau of Compliance as its

witness. Petitioner's Exhibits numbered 1 through 6 were

admitted.

Respondent offered Respondent 's Exhibits numbered 1 through

7. Ruling was reserved on Respondent 's Exhibit numbered 1. It

is denied admission. Respond ent 's Exhibits numbered 2 through 7

were denied admission at hearing. Respondent 's Exhibit numbered

2 is a W - 2 wage and tax statement for Co l lin Grimes , the year

2005. Respondent 's Exhibits 3 through 7 are constituted of

Schedule C, Form 1040, the propri etorship of Christopher and

Michelle L. Curry, the year 2003; Schedule C, Form 1040,

proprietorship of Christopher Curry, the year 2004; Schedule C,

Form 1040, proprietorship of Christopher Curry, the year 2005;

Schedule E, Form 1040, proprietorship of Chr istopher and

Michelle L. Curry, the year 2005; and Form 1120S U . S . Income Tax

Return for an S corporation the year 2005 for Curry Land

Services, Inc. 1/

Respondent did not testif y nor present witnesses in his

defense.

At hearing Petitioner requested th at official r ecognition

be made of Florida Administrative Code Rules 69L - 6. 021 and 69L -

6.028. That motion was g ranted. Petitioner 's post - hearing

Motion for Official Recognition of Florida Administrative Code

Rule 69L - 6.015 is also granted.

On May 24 , 200 6 , the hearing transcript was filed with

DOAH. Proposed recommended order s by the parties ha ve been

considered in preparing the Recommended Order.

FINDINGS OF FACT

1. Michael Robinson is a n investigator for Petitioner 's

Bureau of Compliance . His duties include job site visits to

determine whether individuals on the site are employees, by who m

those persons are employed and whether the employer has secured

the payment of workers' compensation by obtaining necessary

insurance coverage. Some site v isits are made on a random

basis. That wa s the case here.

2. On August 11, 2005 , Mr. Robinson went to an address in

Lake City, Florida , referred to as 223 NW Sylvi Drive. There he

observed three individuals laying sod in the yard of the private

resid en ce located at the address.

3. Respondent , a fourth individual, was transporting sod

from a trailer to the yard using equipment described as a

B obcat.

4. The sod had been cut in squares and the squares were

being matched and placed on the ground in the yard , where it was

stepped on to secure it in the ground in a checker board

pattern. Approximately three - quarters of the yard had sod

p lac e d .

5. Mr. Robinson consider ed the activities on the site as

involving a construction industry , with a classifi cation,

according to the National Council on Compensation, Inc. (NCCI) ,

as class code 0042, landscape gardening and drivers , as

reflected in Florida Administrative Code Rule 69L - 6.021 (1) (a).

The NCCI classification code s for job descriptions were adopted

by the rule.

6. Mr. Robinson observed a permit board erected in the

front yard of the property . There was no evidence that he saw

which would indicate anyone was living in the home. The garage

door was open. There was nothing in the garage. No blinds were

on the windows. No evidence of any kind was observed that would

indicate the house had been occupied.

7. Altogether four persons were working at the site.

Mr. Robinson interviewed each individual.

8. After introducing himself , Mr. Robinson expl ained to

Respondent the reason for the site visit and determined that

Respondent was the employer for the other individuals, in

addition to work ing o n the job. Res pondent told Mr. Robinson

that h e was a sub - contractor working for Earth Scapes , and had

bee n hired to lay new sod in the yard. Respondent described his

position as that of a sole proprietor. Respondent identified

two of the other individuals as being his step - sons and the

remaining individual was a family friend. Respondent explained

that the basis for compensating the other employees was that

Respondent "gave them running around money on Friday's." The

other individuals indicated that they worked for Respondent

part - time when he needed their help.

9 . T o verify Respondent's statement that he was a sub -

contractor assigned to the job, Mr. Robinson contacted the owner

of Earth Scapes , who agreed with Respondent's recount of his

assignment at the job location. Mr. Robinson was told Earth

Scapes is a nursery that lays new sod and plants trees.

10 . Mr. Robinson inquired of Mr. Curry concerning workers'

compensation coverage for the three employees. The answer was

that Respondent did not have workers' compensation coverage

through an insurance policy or through a leasing company or

temporar y labor service. Research in to coverage and compliance

through a Coverage and Compliance Automated System (CCAS) data

base available to Petitioner did not reveal any information

concerning Respondent and his business at 1259 SW County Road,

252 - B, Lake Ci ty, Florida, that would relate to workers'

compensation coverage. A similar search of a data base

maintained by Petitioner in association with exemptions from the

requirement to obtain workers' compensation coverage did not

reveal any exemption for Respon dent from the need for workers'

compensation coverage.

11 . Having discovered the activity on the construction

site in which work was done without workers' compensation

coverage, Mr. Robinson discussed his findings with Robert

Lambert, Petitioner's distri ct supervisor in the Bureau of

Compliance. Following that conversation Mr. Lambert authorized

Mr. Robinson to issue a s top - work order to Respondent. A s top -

work order was prepared on August 11, 2005 . The s top - work order

was served on Respondent on that date . The basis for its entry

was the failure to secure payment of workers' compensation in

violation of Section 440.107(2), Florida Statutes (2005), by

failing to obtain coverage that would meet the requirement s set

forth in Chapter 440, Florida Statutes , and provision s of the

Florida Insurance Code (the Insurance Code) . On that same date ,

an Order of Penalty Assessment was served on Respondent under

authority set for in Section 440.107(7)(d), Florida Statutes

(2005). The Order of Penalty Assessment als o reminded

Respondent that the penalty might be amended based upon other

information obtained, including the production of business

records held by Respondent. These orders advise d Respondent

that he had the right to contest material facts in the s top - wor k

order by filing a written petition for hearing under Section s

120.569 and 120.57, Florida Statutes (2005).

12 . On August 11, 2005, by a written document ,

Mr. Robinson requested production of business records maintained

by Respondent that would assist i n the calculation of a penalty

assessment for the period August 11, 2002 , through August 11,

2005, as contemplated by Section 440.107(7), Florida Statutes.

The written request for production reminded Respondent that he

must produce those records within fi ve business days after

receipt , to allow examination and copying , and that the failure

to do so by quality of information sufficient to allow the

determination of the payroll for the period in question , would

allow the Petitioner to impute weekly payroll f or the three

employees and Respondent pursuant to the information derived

using Section 440 .12(2), Florida Statutes (2005), multiplied by

1 .5. The document served on Respondent set out the various

categories of information requested for production. These

categories c omport with Florida Administrative Code Rule 69L -

6.015. Respondent did not honor this request at any time. 2/

13 . Mr. Robinson not only provided the list of categories

of information sought for production , he explained the

categories found on the list to Respondent. Examples of

information sought and explained included timesheets, time

cards, payroll check stubs, check ledgers, income tax returns

that would reflect the amount of remuneration paid or payable to

each employee.

14 . On Sept ember 1, 2005, Mr. Robinson served Respondent

with an Amended Order of Penalty Assessment that set forth an

assessed penalty of $121,039.00 , by imputation under S ubs ection

440.107(7)(d) and (e) , Florida Statutes (2005) , and by resort to

Florida Administrat ive Code Rule 69L - 6.028. That rule allows

the imputation of payroll calculations after 15 business days

f ollowing receipt by the employer of a written request to

produce business records and the method will not be set aside

after 45 days from receipt . Th e Amended Order of Penalty

Assessment reminded Respondent that the s top - work order would

remain in effect unless th at o rder was released by Petitioner's

further order. The necessary steps to set aside the s top - work

order depended on obtain ing coverage und er the workers'

compensation law and the payment of the penalty assessment . The

a pproach for serving the Amended Order of Penalty Assessment was

by certified mail return receipt request ed. The receipt was

returned following service. The Amended Order of Penalty

Assessment provided the Respondent with the opportunity to

dispute the material facts associated with the Amended Order of

Penalty Assessment under procedures found in Sections 120.569

and 12 0.57, Florida Statutes (2005). A s indic ated , Respondent

took advantage o f the right to contest matters leading to the

final hearing.

15 . The Amended Order of Penalty Assessment as set forth

in Petitioner's E xhibit number six also reflects a worksheet

that applies to the overall period in question. It demons t rates

the calculations imputed r elated to Respondent, Tony Joe Brown,

Collin Grimes, and Josh Grimes, persons on the job site when the

random inspection took place on August 11, 2005. The

calculations in the matrix for all parts , were in relation to

the four workers under class code 0042 , without the benefit of

actual information provided by Respondent. The job class codes

are derived from the Scopes Manual, an insurance industry

publication.

CONCLUSIONS OF LAW

1 6 . The Division of Administrative Hear ings has

jurisdiction over the subject matter and parties to this action

consistent with Sections 120.569 and 120.57(1), Florida Statutes

(200 5 ).

17. Having concluded that Respondent failed to secure the

payment of workers' compensation , in that Responde nt did not

obtain coverage meeting the requirements of Chapter 440, Florida

Statutes (2005) and the Insurance Code, Petitioner issued a

s top - work order at the work site described as 223 NW Sylvi

Drive, Lake City, Florida. § 440.107(2) and (3), Fla. Stat.

(2005). Petitioner intends to continue with the s top - work order

in effect , pending compliance by the Respondent with coverage

requirements of Chapter 440, Florida Statutes , and the payment

of a penalty that has been assessed in this case.

§ 440.107(7)(a), Fla. Stat. (2005).

18. Proof that Respondent failed to secure payment of

workers' compensation as required , that authorized issuance of

the s top - work order and the Amended Penalty Assessment , must be

by clear and convincing of evidence. Se e Section 120.57(1)(j),

Florida Statutes (2005) , and Department of Banking and Finance

Division of Secur i ties and Investor Pro tection v. Osborne Stern

and Co. , 670 So. 2d 932 (Fla. 1996) .

19 . The nature of the activities being performed by

Respondent a nd the other workers on the job site in Lake City,

Florida was i n association with the "construction industry" as

defined at Section 440.02(8), Florida Statutes (2005), which

states:

' Construction industry ' means for - profit

activities involving any buildin g, clearing,

filling, excavation, or substantial

improvement in the size or use of any

structure or the appearance of any land.

However, ' construction ' does not mean a

homeowner's act of construction or the

result of a con s tr u ction upon his or her own

pre mises, provided such premises are not

intended to be sold, resold, or leased by

the owner within 1 year after the

commencement of construction. The division

may, by rule, establish standard industrial

classification codes and definitions thereof

which mee t the criteria of the term

'construction industry' as set forth in this

section.

The nature of the construction undertaken by Respondent and his

employees at the job site was landscaping under class code 0042.

Fla. Admin. Code R. 69L - 6.021(1)(a).

20 . Th e persons working with Respondent at the work site

and the Respondent himself , were employees as defined in Section

440.02(15)(a) and (c), Florida Statutes (2005), which states:

(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

appointment or contract for hire or

apprenticeship, express or implied, or 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 perm itted by this chapter,

or has otherwise secured the payment of

compensation coverage as a subcontractor,

. . .

* * *

4. A sole proprietor who engages in the

construction industry and a partner or

partnership that is engaged in the

construction industry.

"Sole proprietor" is defined at Section 440.02(25),

Florida Statutes ( 2005 ).

21 . Respondent was the employer of the other three persons

on the work site as defined in Section 440.02(16)(a), Florida

Statutes (2005), w hich states:

(16)(a) ' Employer ' means . . . every

person carrying on any employment . . .

2 2 . The nature of the activities performed by Respondent

and the other three employees on August 11, 2005, at the work

site , constituted employment as defined in Section 440.02(17)(a)

and (b), Florida Statutes (2005), which states:

(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 employments in which four or

more employees 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 .

* * *

23 . Respon dent and the three persons on the work site are

"persons" as defined in Section 440.02(23), Florida Statutes

(2005), which states:

(23) ' Person ' means individual,

partnership, association, or corporation,

including any public service corporation.

24 . R espondent's liability to provide workers'

compensation coverage for himself and the other employees on the

job site is identified in S ubs ection 440.10(1)(a), Florida

Statutes (2005), which states:

(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, 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 contra ctor 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.

Respondent's obligation is in relation to his work as a

sub contractor on the project he was engaged in on August 11,

2005.

25 . Respondent was obligated to secure the payment for

compensation in the manner described in Section 440.38, Florida

Statutes (2005) . Records review performed by the Petitioner

revealed t hat Respondent had failed to secure payment of

compensation as contemplated by Section 440.38, Florida Statutes

(2005).

2 6 . On August 11, 2005, when Mr. Robinson performed his

random inspection of the job site, he did so under authority set

forth in Section 440.107(3), Florida Statutes (2005). The

subsequent investigation, issuance of a s top - work order ,

issuance of Penalty Assessment Orders and request to examine

Respondent's business records concerning employees a n d the

amount paid to the e mployees were consistent with that

authority.

27 . Knowing that Respondent , as an employer required to

secure payment to him and his employees of workers' compensation

provided for under Chapter 440, Florida Statutes, had failed to

secure that payment , th e s top - work order was issued on

August 11, 2005, under authority set forth in Section

440.107(7)(a), Florida S tatutes (2005). U nder that same

authority the s top - work order remains in effect because

Respondent has yet to demonstrate compliance with the cov erage

requirements for workers' compensation. Similarly, the

outstanding penalty assessment under that provision precludes

the release of the s top - work order .

28 . The penalty assessment in place properly covers the

period August 11, 2002 , through August 11, 2005. This is in

recognition that Respondent had not provided workers'

compensation at any time in that period for his business at 1259

SW County Road 252 - B, Lake City, Florida. As a consequen ce ,

Respondent is subject to the penalty assessment calcu lations

under the formula contemplated in S ubs ection 440.107(7)(d)1. ,

which states:

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 compensatio n as

required by this chapter 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

re quired by this chapter within the

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

is greater.

2 9 . The calculations must also take into account the

expectation for periods prior to October 1, 2003, representing

August 11, 2002 , through September 30, 2003, o f a $100 dollar

per diem for each day in that period pursuant to Section

440.107(5), Florida Statues (2002) , and they did .

3 0 . Respondent did not timely comply with the r equest to

p roduce necessary business records. § 440.107(5), Fla. Stat.

( 2005 ) , and Fla. Admin. Code R . 69L - 6.015 and 6.028. In fact,

Respondent never produced the business records sufficient to

enable Petitioner to determine Respondent's payroll for the

period in question. This led Petitioner to impute the amount

pursuant to Florida Ad ministrative Code Rule 69L - 6.028 and

Section 440.107(7)(e), Florida Statutes (2005), which states:

When an employer fails to provide business

records sufficient to enable the department

to determine the employer's payroll for the

period requested for the c alculation of the

penalty provided in paragraph (d), for

penalty calculation purposes, the imputed

weekly payroll for each employee, corporate

officer, sole proprietor, or partner shall

be the statewide average weekly wage as

defined in s. 440.12(2) multip lied by 1.5.

31 . Respondent's argument that Petitioner sho uld have

issued a Notice of Non - Compliance, as if this case represents a

minor violation of an agency rule is unpersuasive . § 120.695,

Fla. Stat. (2005). The violation here is fundamental and h a s

been recognized by the Legislature as serious. A Notice of Non -

Compliance would not be appropriate.

RECOMMENDATION

Upon the consideration of the facts found and the

conclusions of law reached, it is

RECOMMENDED:

That a Final Order be entered kee ping the stop - work order

in effect pending Respondent's proof that he has obtained

necessary workers' compensation coverage and the payment of the

Amended Penalty Assessment in the amount of $121,039.00 .

DONE AND ENTERED this 28 th day of June , 200 6 , in

T allahassee, Leon County, Florida.

S

___________________________________

CHARLES C. ADAMS

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

Division of Administrative Hearings

this 2 8 th day of June , 200 6 .

ENDNOTE S

1/ The exhibits were denied admission as untimely, incomplete,

and in the case of Respondent 's nu mbered 2, irrelevant. See

§ 440.107(3)(c) , (5) and (7), Fla . Stat . ( 2005 ), and Fla . Admin .

Code R . 69L - 6.015.

2/ Information which Respondent attempted to present at hearing

was not of a ki nd to enable Petitioner to determine his payroll

for the period in question.

COPIES FURNISHED :

H. F. Rick Mann , Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

Christopher Curry

1259 Southwest County Road 252B

Lake City, Florida 32024

Honorable Tom Gallagher

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

Carlos G. Mu ? niz, 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 agen cy that

will issue the final order in this case.