06-003261 L And W Plastering And Drywall Services, Inc. vs. Department Of Financial Services, Division Of Workers' Compensation Status: Closed Recommended Order on Friday, March 16, 2007.

Summary: Only the employees leased from the employee leasing company were covered under the workers` compensation policy. The penalty was correctly assessed for the remaining employees.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

L and W PLASTERING AND, )

DRYWALL SERVICES, INC. )

)

Petitioner, )

)

vs. )

) Case No. 06 - 3261

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF )

WORKERS' COMPENSATION, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held pursuant to notice, before Barbara J.

Staros, Administrative Law Judge with the Division of

Administrative Hearings, on December 12, 2006, via video -

teleconference in Jacksonville and Tallahassee, Florida.

APPEARANCES

For Petitioner: Douglas D. Dolan, Esquire

Department of Financial Services

Division of Workers' Compensation

200 East Gaines Street

Tallahassee, Florida 32399

For Re spondent: James J. Egan, Esquire

Law Office of James J. Eagan, P.A.,

4950 Beach Boulevard

Jacksonville, Florida 32207

STATEMENT OF THE ISSUE

The issue is whether The Department of Financial S ervices

properly imposed a Stop - Work Order and Amended Order of Penalty

Assessment pursuant to the requirements of Chapter 440, Florida

Statutes.

PRELIMINARY STATEMENT

On June 6, 2006, the Department of Financial Services,

Division of Workers' Compensati on (Division) issued a Stop - Work

Order and Order of Penalty Assessment to Petitioner, L and W

Plastering and Drywall Services. On June 27, 2006, the Division

issued an Amended Order of Penalty Assessment in the amount of

$553,628.37. Respondent contested th e Stop - Work Order and

Amended Penalty Assessment, and requested an administrative

hearing. The matter was forwarded to the Division of

Administrative Hearings on or about August 29, 2006.

A Notice of Hearing was issued scheduling the hearing for

Nove mber 7, 2006. On November 6, 2006, the Division filed an

unopposed Emergency Motion to Continue Administrative Hearing,

and on November 7, 2006, the Division filed an unopposed Motion

to Amend Order of Penalty Assessment. The Motion to Amend Order

of Pen alty Assessment sought to reduce the Order of Penalty

Assessment to $46,259.07. The hearing commenced as scheduled on

November 7, 2006. At the commencement of the hearing, the

Motion to Amend Order of Penalty Assessment and the Emergency

Motion to Contin ue Emergency Hearing were granted. The hearing

was re - scheduled for December 12, 2006.

At the commencement of the December 12, 2007, hearing,

counsel for Petitioner made an ore tenus motion to withdraw as

counsel. No one from Petitioner's business was pr esent. After

hearing argument of counsel and giving the motion due

consideration, the motion was denied.

At hearing, Petitioner presented no witnesses and did not

offer any exhibits. Respondent presented the testimony of Allen

DiMaria. Respondent offer ed Exhibits numbered 1 through 5, 8,

12 and 13, which were admitted into evidence. Official

Recognition was taken of Chapter 440, Florida Statutes, and

Chapter 69L, Florida Administrative Code. A one - volume

Transcript was filed on January 4 2007. Respon dent timely filed

a Proposed Recommended Order which has been considered in the

preparation of this Recommended Order. Petitioner did not file

any post - hearing submission.

References to statutes are to Florida Statutes (2006)

unless otherwise noted.

FIN DINGS OF FACT

1. The Division is charged with the regulation of workers'

compensation insurance in the State of Florida.

2. Petitioner L and W Plastering and Drywall Services,

Inc., (L and W Plastering) is a corporation located in

Jacksonville, Florida, and is engaged in the business of

providing drywall installation.

3. Allen DiMaria is an investigator employed by the

Division. His duties include making site visits at locations

where work is being conducted and determining whether the

employers in the state are in compliance with the requirements

of the workers' compensation law and related rules.

4. On June 5, 2006, Mr. DiMaria visited a commercial job

site at 9150 Baymeadows Road, Jacksonville, Florida, and

observed 15 individuals at the site.

5. Mr. DiMaria interviewed the individuals and completed a

Field Interview Worksheet, recording the names of the

individuals who identified themselves as employees of L and W.

6. Mr. DiMaria spoke to the foreman of the crew requesting

proof of in surance. He did not receive any such proof on that

date. He also checked the database in the Coverage and

Compliance Automated System, "C - CAS", and found no proof of

coverage nor an exemption for L and W Plastering.

7. After conferring with his super visor, Mr. DiMaria

issued a Stop - Work Order on June 6, 2006.

8. On June 7, 2006, Mr. DiMaria received a certificate of

insurance from Petitioner, naming First Financial Employee

Leasing Company (First Financial) as the insured.

9. First Financial is a professional employee organization

which provides workers' compensation coverage, human resource

identification, and other assistance to their clients.

10. L and W was a client company of First Financial. The

certificate of insurance received by Mr. DiMa ria states that

coverage is extended to the employees leased to L and W.

11. William Yocum is the compliance manager of First

Financial. Mr. Yocum confirmed that L and W entered into a

standard leasing agreement contract with First Financial and

that o nly employees of First Financial leased to L and W

Plastering were covered by the workers' compensation insurance

provided by First Financial.

12. Mr. DiMaria then contacted First Financial, which sent

him a list of employees leased from First Financial t o

Petitioner as of June 5, 2006. He then compared the names on

the list received from First Financial with the names from the

field worksheet he completed at the jobsite. His review

revealed that 10 of the employees listed on his worksheet did

not appear on the list of employees leased by L and W Plastering

from First Financial.

13. On June 7, 2006, Mr. DiMaria also sent Petitioner a

request for business records for the purpose of calculating a

penalty for lack of coverage.

14. Petitioner did not prod uce business records as

requested.

15. On June 27, 2006, Mr. DiMaria issued an Amended Order

of Penalty Assessment to Petitioner for $553,628.37.

16. On November 6, 2006, Mr. DiMaria issued a second

Amended Order of Penalty Assessment in the amount o f $46,259.07.

17. The amount of the penalty was imputed using the

statewide weekly average wage that was in effect at t he time of

the issuance of the S top - W ork O rder. Through imputation of

payroll for the ten employees, he calculated a penalty for the

ti me period beginning March 1, 2006, the date Petitioner

incorporated. Using rates from an approved manual, Mr. DiMaria

assigned a class code to the type of work performed by

Petitioner and multiplied the approved manual rate with the

imputed payroll per on e hundred dollars, then multiplied all by

1.5. Penalties are calculated by determining the premium amount

the employer would have paid based on his or her Florida payroll

and multiplying by a factor of 1.5.

CONCLUSIONS OF LAW

18. The Division of Admin istrative Hearings has

jurisdiction over the parties and subject matter of this

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

Statutes (2006).

19. Administrative fines are penal in nature. Department

of Banking and Finance, Division of Securities and Investor

Protection v. Osborne Stern, Inc. , 670 So. 2d 932 (Fla. 1996).

Therefore, the Division bears the burden of proof herein by

clear and convincing evidence.

20. Section 440.10(1), Florida Statutes, requires every

employer coming wi thin the provisions of Chapter 440 to secure

coverage under that chapter.

21. An "employer" is defined as "every person carrying on

employment. . . ." An " employee " is defined as "any person who

receives remuneration from an employer for the performance of

any work or service while engaged in any employment."

§ 440.02(15) and (16), Fla. Stat.

22. Section 440.107, Florida Statutes, authorizes the

Division to issue stop - work orders and penalty assessment orders

in its enforcement of workers' com pensation coverage

requirements, and reads in pertinent part:

(2) For purposes of this section, 'securing

the payment of workers' compensation' means

obtaining coverage that meets the

requirements of this chapter and the Florida

Insurance C ode. . . .

* * *

(7)(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 chapter a penalty equal

to 1.5 time s 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 within the

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

is greater.

* * *

(e) 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

calculation 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) multiplied by 1.5.

23 . Florida Administrative Code Rule 69L - 6.028 reads in

pertinent part:

(1) In the event an employer 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 pursu ant to

Section 440.107(7)(e), F.S., 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 employer's

payroll for the period requested for

purposes of calculatin g the penalty p rovided

for in Section 440.107(7)(d), F.S., the

imputed weekly payroll for each employee,

corporate officer, sole proprietor or

partner for the portion of the period of the

employer's non - compliance occurring on or

after October 1, 2003, shall be calculated

as follows:

(a) . . . [F]or . . . each employee

identified by the department as an employee

of s uch employer at any time during the

period 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 . . . that is in effect at the

time th e stop work order was issued to the

employer, multiplied by 1.5. Employees

include sole proprietors and partners in a

partnership.

* * *

(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.

24 . Section 468.520, Florida Statutes, reads in pertinent

part as follows:

468.520. Definitions. --

(4) 'Employee le asing' means an arrangement

whereby a leasing company assigns its

employees to a client and allocates the

direction of and control over the leased

employees between the leasing company and

the client. . . .

(5) 'Employee leasing company' means a sole

pr oprietorship, partnership, corporation, or

other form of business entity engaged in

employee leasing.

(6) 'Client company' means a person or

entity which contracts with an employee

leasing company and is provided employees

pursuant to that contract.

25 . Petitio ner was an employer engaged in the construction

industry which was not in compliance with the requirements of

Chapter 440, Florida Statutes, of securing workers' compensation

insurance for all of its employees. Petitioner was a client

company of an employee leasing company, First Financial. Only

the employees leased from First Financial were covered under

First Financial's workers' compensation coverage. Since several

of Petitioner's workers were not covered under First Financial's

workers' comp ensation coverage, Respondent properly applied the

statutorily required penalty.

RECOMMENDATION

Based upon the Findings of Fact and Conclusions of Law, it

is,

RECOMMENDED:

That the Division of Workers' Compensation enter a Final

Order upholding the Am ended Order of Penalty Assessment issued

November 6, 2006, assigning a pena lty of $46,259.07, and the

Stop - Work Order issued to Petitioner on June 6, 2006.

DONE AND ENTERED this 16th day of March, 2007, in

Tallahassee, Leon County, Florida.

S

BARBARA J. STAROS

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 1 6 th day of March, 2007.

COPIES FURNISHED :

Douglas D. Dolan, Esquire

Department of Financial Services

Division of Workers' Compensat ion

200 East Gaines Street

Tallahassee, Florida 32399

James J. Egan, Esquire

Law Office of James J. Egan, P.A.

4950 Beach Boulevard,

Jacksonville, Florida 32207

Honorable Alex Sink

Chief Financial Officer

Department of Financial Services

The Capitol , Plaza Level 11

Tallahassee, Florida 32399 - 0300

Daniel Y. Sumner, General Counsel

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties hav e 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.