06-004891 Boudreau`s Concrete, Inc. vs. Department Of Financial Services, Division Of Workers' Compensation Status: Closed Recommended Order on Friday, June 8, 2007.

Summary: Respondent failed to prove that the concrete company, not its subcontractor, was required to carry workers` compensation insurance on seven employees during the week the penalty was assessed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BOUDREAU’S CONCRETE, INC., ) )

)

Petitioner, )

) Case No. 06-4891

vs. )

)

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS’ )

COMPENSATION, )

)

Respondent. )

RECOMMENDED ORDER

This case was heard, pursuant to notice, on February 12,

2007, and on March 21, 2007, by video teleconference at sites in

Tallahassee and West Palm Beach, Florida, before Administrative

Law Judge Eleanor M. Hunter, of the Division of Administrative

Hearings.

APPEARANCES

For Petitioner: Mary Morris, Esquire

Morris & Morris, P.A.

224 Datura Street, Suite 300

West Palm Beach, Florida 33401

For Respondent: John M. Iriye, Esquire

Department of Financial Services

Division of Workers’ Compensation

200 East Gaines Street

Tallahassee, Florida 32399-4229

STATEMENT OF THE ISSUE

Whether Petitioner failed to secure worker’s compensation

coverage for seven employees who worked from February 28, 2006,

to March 3, 2006, in violation of Chapter 440, Florida Statutes,

and whether, as a result, Petitioner should be assessed a

penalty in the amount of $1,115.52.

PRELIMINARY STATEMENT

The Department of Financial Services, Division of Workers’

Compensation issued a Stop Work Order and Order of Penalty

Assessment against Boudreau’s Contracting, Inc., ordering it to

stop work and cease all business operations in Florida, and to

pay a penalty of $148,277.36 for failing to carry workers'

compensation insurance coverage, as required by law.

Before the final hearing the amount of the penalty was

reassessed and reduced to $1,115.52, for failure to carry

workers' compensation coverage on seven employees for one week.

Without conceding any liability for wrongdoing, Petitioner

agreed to the substitution of the amended assessment at the

beginning of the final hearing.

At the final hearing on February 12, 2007, counsel for

Respondent complained that certain witnesses were not available

at the hearing, one he believed to be avoiding service and

another who had an out-of-state family emergency. To

accommodate those who were in attendance, Respondent presented

the testimony of John Cipyak, Lynn Cornelius, William R. Yocum,

Vance Akins, and Robert Barnes; and, when the hearing reconvened

on March 21, 2007, presented the testimony of Dimas Zelaya,

Thomas Puglis, and Richard Boudreau. Respondent's Exhibits 1

through 9, 10 (pages 55 through 60), 12 through 18, and 20 were

received into evidence.

Petitioner, Boudreau’s Concrete, Inc., presented the

testimony of Richard Boudreau and Petitioner's Exhibit 1 which

was received into evidence.

FINDINGS OF FACT

1. Respondent, Department of Financial Services, Division

of Workers’ Compensation ("the Division"), is the state agency

responsible for enforcing the statutory requirement that

employers provide workers' compensation coverage for their

employees. Subsection 440.107, Florida Statutes (2006).

2. Petitioner, Boudreau Concrete, Inc. (BCI), was, at all

relevant times, an employer and engaged in concrete construction

work in Florida.

3. John Cipyak is a vice president with Builders Plus, a

Boynton Beach Company hired to work on a Westview Office

Building Site, in Port St. Lucie, Florida. Builders Plus

subcontracted with BCI to perform pre-concrete form carpentry

work at the site, including construction of the foundation and

panels into which the concrete slab would be poured.

4. Near the end of February 2006, Mr. Cipyak told

Mr. Boudreau that the Westview project was falling behind

schedule and that BCI needed more laborers on the job.

Mr. Cipyak testified that Mr. Boudreau specifically agreed that

his company, BCI, would hire sufficient additional manpower and

would not use subcontractors. That agreement was not reduced to

writing.

5. In response to the need for additional laborers, the

Division claims that BCI violated the applicable statutes and

the insurance code by hiring seven carpenters, who worked at the

Westview site from February 27, 2006, through March 3, 2006, as

employees of BCI without providing workers' compensation

insurance coverage for them. The seven carpenters are Dimas

Zelaya, Francisco Figueroa, Gerardo Nava, Hector Sevilla,

Jeremias Martinez, Carlos Quevedo and Jesse Hernandez.

6. BCI claims that the seven carpenters were employees of

a subcontractor, J. A. J. Construction Company, owned by Jose

Alfredo Jiminez, and that Mr. Jiminez, BCI believed, carried the

required workers' compensation insurance. The arrangements to

have the additional workers on the project were made during a

telephone call between Mr. Boudreau, Mr. Jiminez and Mr. Zelaya,

who got the other six men to come with him and once they

reported to the job, served as a translator for them.

7. On March 2, 2006, Lynn Cornelius, a manager with

Woodland Construction Company, Inc. (“Woodland”), sent an

e-mail to Thomas Puglis, of the Division, listing the names of

seven former employees of Woodland who had left Woodland’s

employment, on February 24, 2006, to work for a subcontractor on

another project. He named the same seven people who started

work on the Westview site on the following Monday, February 27,

2006.

8. On March 3, 2006, Mr. Puglis and Lieutenant Vance

Akins, both investigators for the Division, visited the

construction site where the seven former Woodland employees were

working. With the assistance of an interpreter over the

telephone, because no Spanish speaker was available for the site

visit, the investigators instructed the seven workers to fill

out Spanish language questionnaires for public works contractor

licensing, provided by St. Lucie County. The investigators also

tape recorded a statement from the only one of the seven men who

spoke some English, Dimas Zelaya, during which, at best, he

could be understood to have recognized and identified a picture

of Mr. Boudreau.

9. Lieutenant Akins telephoned another Division

investigator Robert Barnes from the work site. Mr. Barnes

testified that he telephoned someone who identified himself as

Todd Freeman, a BCI employee, from whom he got the name of

William Yocum of First Financial Employee Leasing, Inc., as the

leasing company that provided workers' compensation coverage for

BCI.

10. Although he had no personal knowledge about where the

seven carpenters were working from February 27 through March 3,

2006, Mr. Yocum noted that they were not covered on the policy

for BCI and that the failure of BCI to report the names of all

of its employees to the leasing company would violate the

agreement between those two companies.

11. Mr. Boudreau, on behalf of BCI, wrote a check dated

March 10, 2006, to J. A. J. Construction Services, Inc., for

$3860.00, with the notation "7 men - 2/27-3/3." BCI had no

evidence of a written agreement with J. A. J. and the

compensation to J. A. J. was solely for the wages earned by the

carpenters.

12. The Division's case is essentially based on the

inference, without corroborating evidence, that Mr. Boudreau

fabricated the subcontractor relationship and furthered that

deception by writing the check after he knew BCI was being

investigated for failure to secure workers’ compensation

insurance. The Division based its assertion on the fact that Mr.

Boudreau could not name the subcontractor during his first

interviews by Mr. Barnes, saying that he was dealing with the

subcontractor through Mr. Zelaya.

13. The Division also presented evidence to demonstrate

that the nature of the working relationship between BCI and the

seven men was that of employer and employee, not independent

contractors. That evidence was inconclusive. Although

Mr. Boudreau kept their time sheets and personally supervised the

work at the job site everyday from Monday through Thursday, with

the assistance of Mr. Zelaya, as a translator, the carpenters

brought their own tools and used materials and supplies provided

by Builders Plus. The argument that

J. A. J.'s role was administrative in nature is not convincing,

since the same can be said of the leasing company, with which the

Division asserted BCI should have obtained coverage.

14. Mr. Barnes testified that he reviewed records of

J. A. J., that someone from his office questioned Mr. Jiminez,

and that they determined that the seven carpenters were not

covered by J. A. J.'s workers' compensation policy during the

time that they were working for Mr. Boudreau, based on some sworn

statement made by Mr. Jiminez to the investigators. Mr. Jiminez

did not appear as a witness in this case. The Division's

investigator conceded that the Division did not determine whether

or not the seven workers should have been on the J. A. J. policy.

15. Mr. Zelaya testified that he spoke to Mr. Jiminez about

getting more pay and understood that he would ". . . work with

the license and insurance of Jose Jiminez. Mr. Boudreau was

going to pay Jose and Jose was to pay me." Further, he stated

that "Jose gets the workers, Jose makes a dollar off of the pay

that we make. Mr. Boudreau was to give Jose a check, and Jose

was to pay us, but Jose never paid us."

16. Before he paid Mr. Jiminez, Mr. Boudreau requested and

received from J. A. J. a workers' compensation policy, but that

certificate of insurance was dated March 6, 2006, and did not

appear to cover BCI for the prior week. At the same time,

Mr. Boudreau added some of the workers to his own lease company

policy, in an apparent attempt to continue the job, but was

unable to do so after the stop work order was issued.

CONCLUSIONS OF LAW

17. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter of this

proceeding pursuant to Subsections 120.57(1) and 120.569, Florida

Statutes (2006).

18. The Division must prove by clear and convincing

evidence that BCI failed to provide its employees with workers'

compensation insurance coverage and that the penalties assessed

are correct. Department of Banking and Finance Division of

Securities and Investor Protection v. Osborne Stern and Co. , 670

So. 2d 932 (Fla. 1996); Dept. of Financial Services, Division of

Workers’ Compensation v. U & M Contractors, Inc. , Case

No. 04-3041 (DOAH April 27, 2005); See also Triple M Enterprises,

Inc., v. Department of Financial Services, Division of Workers’

Compensation , Case No. 04-2524 (DOAH Jan. 13, 2005).

19. The Division failed to meet its burden of proof by not

presenting evidence to support its determination that it was BCI

that failed to comply with the workers’ compensation law for the

audit period.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Division enter a final order

rescinding the Stop Work Order and Order of Penalty Assessment,

Amended Order of Penalty Assessment, and Second Amended Order of

Penalty Assessment.

DONE AND ENTERED this 8th day of June, 2007, in

Tallahassee, Leon County, Florida.

S

ELEANOR M. HUNTER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 8th day of June, 2007.

COPIES FURNISHED :

John M. Iriye, Esquire

Department of Financial Services

Division of Workers' Compensation

200 East Gaines Street

Tallahassee, Florida 32399-4229

Mary Morris, Esquire

Morris & Morris, P.A.

224 Datura Street, Suite 300

West Palm Beach, Florida 33401

Honorable Alex Sink

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0300

Daniel Sumner, General Counsel

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0307

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.