07-004903 Extraordinaire Home Improvements, Inc. vs. Department Of Financial Services, Division Of Workers' Compensation Status: Closed Recommended Order on Friday, June 27, 2008.

Summary: Petitioner was actively involved in business operations in violation of Order Reinstating Stop-Work Order. Recommend that the amount of fine for time spent on personal residence be reduced.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

EXTRAORDINAIRE HOME )

IMPROVEMENTS, INC. )

)

Petitioner, )

)

vs. )

) Case No. 07-4903

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 May 1, 2008, via video-

teleconference in Jacksonville and Tallahassee, Florida.

APPEARANCES

For Petitioner: Mark K. Eckels, Esquire

Boyd & Jenerette, P.A.

201 North Hogan Street, Suite 400

Jacksonville, Florida 32202

For Respondent: Colin M. Roopnarine, Esquire

Department of Financial Services

Division of Workers' Compensation

200 East Gaines Street

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue is whether the Department of Financial Services

properly assessed a penalty on Petitioner for working in

PRELIMINARY STATEMENT

On October 20, 2004, Respondent, Department of Financial

Services, Division of Workers' Compensation (Division), issued a

Stop-Work Order and Order of Penalty Assessment to Petitioner,

Extraordinaire Home Improvements, Inc. On October 29, 2004, the

Division issued an Amended Order of Penalty Assessment in the

amount of $8,079.29. On the same date, the parties entered into

a Payment Agreement Schedule for Periodic Payment of Penalty,

and the Division issued an Order of Conditional Release.

Petitioner did not remit the payments, and on July 27,

2006, the Division issued an Order Reinstating Stop-Work Order

for non-payment of the periodic payment agreement.

On September 28, 2007, the Division issued an Order

Assessing Penalty for working in violation of the reinstated

Stop-Work Order and assessed a penalty of $406,000.00.

Petitioner contested this and timely requested an administrative

hearing. The matter was forwarded to the Division of

Administrative Hearings on or about October 26, 2007.

A Notice of Hearing was issued scheduling the hearing for

January 24, 2008. A motion for continuance was granted. On

April 18, 2008, the Division filed an unopposed Motion to Amend

Order of Penalty Assessment. The Motion to Amend Order of

Penalty Assessment sought to reduce the Order of Penalty

Assessment to $100,000.00. The motion was granted, and the

Second Amended Order of Penalty Assessment was the subject of

the final hearing in this case. The hearing was ultimately

conducted on May 1, 2008.

At hearing, Petitioner presented the testimony of Khalil

"Charlie" Sakakini. Respondent presented the testimony of Tasha

Carter and Mr. Sakakini. Respondent offered Exhibits lettered A

through H, which were admitted into evidence. A one-volume

Transcript was filed on May 15, 2008. Proposed recommended

orders were due to be filed on May 27, 2008. The Division

timely filed a Proposed Recommended Order. On May 29, 2008,

counsel for Petitioner requested an extension of time to file

Petitioner's proposed recommended order. Based upon the

representations made in that request, the request is granted.

The parties' Proposed Recommended Orders have been considered in

the preparation of this Recommended Order. 1/

References to statutes are to Florida Statutes (2007)

unless otherwise noted.

FINDINGS OF FACT

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

compensation insurance in the State of Florida.

2. Petitioner, Extraordinaire Home Improvements, Inc.

(Extraordinaire Homes), is a corporation located in

Jacksonville, Florida, and is engaged in the business of

building construction, primarily roofing. Charlie Sakakini is

the owner of Extraordinaire Homes.

3. On October 20, 2004, the Division issued a Stop-Work

Order and Order of Penalty Assessment.

4. On October 29, 2004, the Department issued an Amended

Order of Penalty Assessment to Petitioner in the amount of

$8,079.29.

5. Also on October 29, 2004, the parties entered into a

Payment Agreement Schedule for Periodic Payment of Penalty

wherein Mr. Sakakini agreed to remit monthly payments on behalf

of Extraordinaire Homes to the Division in the amount of $589.95

for 11 months. The payment schedule informed Petitioner that

failure to comply with the terms of the agreement would result

in the immediate reinstatement of the Stop-Work Order.

6. The Division issued an Order of Conditional Release

from Stop-Work Order the same day the agreement was signed.

7. Petitioner, through its owner, Mr. Sakakini, failed to

make the payments required by the agreed payment schedule.

8. Accordingly, the Division issued an Order Reinstating

Stop-Work Order (Reinstatement Order) on July 27, 2006. The

Reinstatement Order informed Petitioner that it must cease all

business operations in the State of Florida until an order

releasing the Reinstatement Order was issued.

9. Mr. Sakakini acknowledges that Petitioner was actively

conducting business operations, i.e., roofing work, on 100 days

in the Fall of 2007, despite the Reinstatement Order having been

issued.

10. On September 28, 2007, the Division issued an Order

Assessing Penalty for Working in Violation of Reinstated

Stop-Work Order assessing a penalty of $406,000.00.

11. The amount of the assessed penalty was reduced to

$100,000.00 in a Second Amended Order of Penalty Assessment as a

result of an Order Granting Motion to Amend Order of Penalty

Assessment entered by the undersigned on April 28, 2008.

12. Of the 100 days worked during the pendency of the

Reinstatement Order, 25 of those days involved work on

Mr. Sakikini's personal residence. During this time, business

was slow, and he was trying to give his workers "something to do

so that they can make some money." Mr. Sakikini continues to

live in the home where this work took place.

13. Mr. Sakikini paid the workers who worked on his

personal residence with checks from the business account of

Extraordinaire Homes.

14. Mr. Sakikini considers the amount of the penalty,

i.e., $1,000.00 per day of violation, to be excessively harsh

when applied to a small businessman like himself.

CONCLUSIONS OF LAW

15. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter of this

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

Statutes.

16. 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.

17. Subsection 440.10(1), Florida Statutes, requires every

employer coming within the provisions of Chapter 440, Florida

Statutes, to secure coverage under that chapter.

18. Section 440.02, Florida Statutes, reads in pertinent

part as follows:

440.02. Definitions.--

(8) "Construction industry" means for-

profit activities involving any building,

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 construction upon his or her own

premises, provided such premises are not

intended to be sold, resold, or leased by

the owner within 1 year after the

commencement of construction. . . .

* * *

(16)(b) A homeowner shall not be considered

the employer of persons hired by the

homeowner to carry out construction on the

homeowner's own premises if those premises

are not intended for immediate lease, sale,

or resale.

19. Section 440.107, Florida Statutes, authorizes the

Division to issue stop-work orders and penalty assessment orders

in its enforcement of workers' compensation coverage

requirements, and reads 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'

compensation required by this chapter . . .,

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. . . 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. . . .

* * *

(c) The department shall assess a penalty

of $1,000 per day against an employer for

each day that the employer conducts business

operations that are in violation of a stop-

work order.

20. The Division has proved clearly and convincingly that

Petitioner engaged in construction work in violation of the

Reinstatement Order. While Mr. Sakakini's use of Extraordinaire

Homes' business account to pay the workers gave the appearance

that the workers worked in a capacity of an employee of the

construction company, the facts established in this de novo

hearing support the conclusion that the work performed on

Mr. Sakikini's personal residence does not come within the

relevant definitions found in Subsection 440.02(8) and (16),

Florida Statutes. Accordingly, the amount of the penalty

imposed should be reduced to $75,000.00.

21. As for Mr. Sakikini's belief that a $1,000.00 per day

fine is excessive, it is not within the authority of the

undersigned to change the amount of a statutorily created fine.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is,

RECOMMENDED that Respondent, Department of Financial

Services, Division of Workers' Compensation, enter a final order

amending the Second Amended Order of Penalty Assessment,

assigning a penalty of $75,000.00.

DONE AND ENTERED this 27th day of June, 2008, 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

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 27th day of June, 2008.

ENDNOTE

1/ When filing Petitioner's Proposed Recommended Order, counsel

for Petitioner made reference in a cover letter to alternative

proposed orders being submitted at my request. No such request

was made.

COPIES FURNISHED :

Colin M. Roopnarine, Esquire

Department of Financial Services

Division of Workers' Compensation

200 East Gaines Street

Tallahassee, Florida 32399

Mark K. Eckels, Esquire

Boyd & Jenerette, P.A.

201 North Hogan Street, Suite 400

Jacksonville, Florida 32202

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 32399-0307

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.