08-006412 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. C.S.E. Paving Of South Florida, Inc. Status: Closed Recommended Order on Monday, September 28, 2009.

Summary: Petitioner proved by clear and convincing evidence that Respondent should be assessed a penalty of $13, 487.64 for failure to have workers' compensation coverage in effect during 10 months between 11/05 and 11/08.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS' )

COMPENSATION, )

)

Petitioner, )

)

vs. ) Case No. 08-6412

)

C.S.E. PAVING OF SOUTH FLORIDA, )

INC., )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

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

on August 10, 2009, by video teleconference, with the parties

appearing in West Palm Beach, Florida, before Patricia M. Hart,

a duly-designated Administrative Law Judge of the Division of

Administrative Hearings, who presided in Tallahassee, Florida.

APPEARANCES

For Petitioner: Kristian E. Dunn, Esquire

Justin H. Faulkner, Esquire

Department of Financial Services,

Division of Workers' Compensation

200 East Gaines Street

Tallahassee, Florida 32399-4229

For Respondent: No appearance

STATEMENT OF THE ISSUE

Whether the Respondent committed the violations alleged in

the Second Amended Order of Penalty Assessment filed May 11,

2009, 1 and, if so, the penalty that should be imposed.

PRELIMINARY STATEMENT

On November 25, 2008, the Department of Financial Services,

Division of Workers' Compensation ("Department"), issued a Stop

Work Order directing C.S.E. Paving of South Florida, Inc.

("C.S.E Paving") to immediately stop work and cease all business

operations in Florida because it had failed to obtain workers'

compensation insurance meeting the requirements of Chapter 440,

Florida Statutes (2008), 2 and the Florida Insurance Code. The

Department did not initially receive any business records in

response to a request to C.S.E Paving, and it calculated an

Amended Order of Penalty Assessment, which was issued on

December 22, 2008, and which included an imputed assessment of

$21,290.11 in penalties. C.S.E Paving timely filed its request

for an administrative hearing, and the Department transmitted

the matter to the Division of Administrative Hearings for the

assignment of an administrative law judge. Pursuant to notice,

the final hearing was held on August 10, 2009.

The Department subsequently received business records from

C.S.E Paving, and, on May 11, 2009, the Department filed a

Motion to Amend Order of Penalty Assessment, in which the

penalty assessment was decreased to $13,487.64. No order was

entered on the motion prior to the final hearing, but, in the

absence of a response in opposition to the motion from the

Respondent, the motion is granted, and the Second Amended Order

of Penalty Assessment filed May 11, 2009, is substituted for the

Amended Order of Penalty Assessment dated December 22, 2009.

At the final hearing, the Department presented the

testimony of Germaine Green, and Petitioner's Exhibits 1

through 3, together with their subparts, were offered and

received into evidence. C.S.E Paving did not make an appearance

at the final hearing.

The one-volume transcript of the proceedings was filed with

the Division of Administrative Hearings on December 5, 2008;

this document was mislabeled as the Deposition of Germaine

Green. The Department timely filed proposed findings of fact

and conclusions of law, which have been considered in the

preparation of this Recommended Order.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the

final hearing and on the entire record of this proceeding, the

following findings of fact are made:

1. The Department is the state agency responsible for

enforcing the requirement of Section 440.107, Florida Statutes,

that employers in Florida secure workers' compensation insurance

coverage for their employees. § 440.107(3), Fla. Stat.

2. C.S.E Paving is a Florida corporation located in Delray

Beach, Florida. Stephen Warden is the owner of C.S.E Paving,

which engages in the business of paving.

3. On November 24, 2008, Germaine Greer, a compliance

investigator employed by the Department, observed two workers

repairing and reinstalling concrete brick pavers at a Best

Western Hotel. She learned that these workers were employed by

C.S.E Paving.

4. After her visit on November 24, 2008, the compliance

investigator conducted research through the Coverage and

Compliance Automated System database, which provides information

on workers' compensation insurance coverage and exemptions. The

investigator's research revealed that, during the three-year

period from November 24, 2005, and November 24, 2008, C.S.E

Paving had workers' compensation insurance coverage for its

employees from July 25, 2006, through July 28, 2007; from

July 16, 2007, through July 16, 2008; and from July 16, 2008,

through August 6, 2008, when the policy was cancelled.

Mr. Warden did not have an exemption from the requirement to

have workers' compensation insurance coverage.

5. Mr. Warden provided the compliance investigator with

the payroll and other records requested in the business records

request. Based on these records, the compliance investigator

calculated the penalty to be imposed on C.S.E Paving for its

failure to have workers' compensation insurance coverage during

the approximately six-month period in 2005 and 2006 and the

approximately four-month period in 2008. The penalty assessed

in the Second Amended Order of Penalty Assessment was

$13,487.64, which assessment superseded the $21,290.11 penalty

assessed in the Amended Order of Penalty Assessment dated

December 22, 2008.

6. The compliance investigator looked to the NCCI SCOPES

Basic Manual of Classifications ("SCOPES Manual") for

classification codes attributable to the workplace operations of

the persons working for C.S.E Paving. The classification code

assigned by the compliance investigator to the workmen employed

by C.S.E Paving between November 24, 2005, and November 24,

2006, who engaged in paving activities was Code 5221. According

to the SCOPES Manual and to Florida Administrative Code

Rule 69L-6.021(1)(w), Code 5221 is a code applicable to the

construction industry and covers "Concrete or Cement Work

Floors, Driveways, Yards, and Sidewalks & Drivers."

7. The approved NCCI Manual rate in Florida effective

January 1, 2006, for Code 5221 was $10.37 per $100.00 of

payroll; and the approved NCCI Manual rate in Florida effective

January 1, 2008, for Code 5221 was $6.97 per $100.00 of payroll.

8. The classification code found in the SCOPES Manual

assigned by the compliance investigators to the clerical workers

employed by C.S.E Paving between November 24, 2005, and

November 24, 2006, was Code 8810. According to the SCOPES

Manual, Code 8810 covers "Clerical Office Employees."

9. The approved NCCI Manual rate in Florida effective

January 1, 2006, for Code 8810 was $.58 per $100.00 of payroll;

and the approved NCCI Manual rate in Florida effective

January 1, 2008, for Code 8810 was $.37 per $100.00 of payroll.

10. The classification code assigned by the compliance

investigator to Stephen Warden, the owner of C.S.E Paving, was

Code 5606. According to the SCOPES Manual, Code 5606 covers

"Contractor - Project Manager, Construction Executive,

Construction Manager or Construction Superintendent."

11. The approved NCCI Manual rate in Florida effective

January 1, 2006, for Code 5606 was $3.84 per $100.00 of payroll;

and the approved NCCI Manual rate in Florida effective

January 1, 2008, for Code 5606 was $2.74 per $100.00 of payroll.

12. The compliance investigator calculated the total

penalty attributable to C.S.E Paving's failure to provide

workers' compensation insurance coverage for its employees

during the covered time periods. She obtained the names of each

of the individuals included in her calculations and the amount

of the gross payroll for each individual from the payroll

information provided by Mr. Warden in response to the business

records request.

13. The compliance investigator calculated the penalty as

follows: She listed C.S.E Paving's employees on the Penalty

Worksheet; assigned each employee a classification code based on

the definitions of workplace operations that most closely

described the work they performed for C.S.E Paving; set out the

dates during which C.S.E Paving did not provide workers'

compensation insurance coverage; entered the annual or pro-rated

gross payroll for each employee during the period of non-

compliance; divided the gross payroll for each employee by 100;

set out the approved manual rate for each employee during the

period of non-compliance in accordance with his or her

classification code; determined the premium that C.S.E Paving

would have paid for workers' compensation insurance coverage for

each employee during the period of non-compliance by multiplying

the approved manual rate and one one-hundredth of the gross

payroll for each employee; calculated the penalty attributable

to each employee during the period of non-compliance by

multiplying the premium for each employee by 1.5; and, finally,

calculated the total penalty owed by C.S.E Paving attributable

to its failure to secure workers' compensation insurance

coverage for its employees during the time periods at issue.

CONCLUSIONS OF LAW

14. The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding and of

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

440.107(13), Florida Statutes (2009).

15. The Department seeks to impose an administrative

penalty on C.S.E Paving for its failure to secure workers'

compensation insurance coverage for its employees. Accordingly,

the Department must prove the charges in the Stop-Work Order and

Second Amended Order of Penalty Assessment by clear and

convincing evidence. See Department of Banking & Finance,

Division of Securities & Investor Protection v. Osborne Stern &

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

16. Section 440.38(1), Florida Statutes, provides in

pertinent part that "[e]very employer shall secure the payment

of compensation under this chapter: (a) By insuring and keeping

insured the payment of such compensation with any stock company

or mutual company or association or exchange authorized to do

business in the state." The compensation and benefits required

by Chapter 440, Florida Statutes, must be paid as follows: "The

employer must pay compensation or furnish benefits required by

this chapter if the employee suffers an accidental compensable

injury or death arising out of work performed in the course and

the scope of employment. § 440.09(1), Fla. Stat.

17. The definitions pertinent to this matter are found in

Section 440.02, Florida Statutes, as follows:

(15)(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, oral or

written, whether lawfully or unlawfully

employed, and includes, but is not limited

to, aliens and minors.

(b) "Employee" includes any person who is

an officer of a corporation and who performs

services for remuneration for such

corporation within this state, whether or

not such services are continuous.

* * *

(16)(a) "Employer" means the state and all

political subdivisions thereof, all public

and quasi-public corporations therein, every

person carrying on any employment, and the

legal representative of a deceased person or

the receiver or trustees of any person.

"Employer" also includes employment

agencies, employee leasing companies, and

similar agents who provide employees to

other persons. If the employer is a

corporation, parties in actual control of

the corporation, including, but not limited

to, the president, officers who exercise

broad corporate powers, directors, and all

shareholders who directly or indirectly own

a controlling interest in the corporation,

are considered the employer for the purposes

of ss. 440.105, 440.106, and 440.107.

* * *

(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.

18. Based on the findings of fact herein and the

definitions set out above, C.S.E Paving is an employer and the

workmen, clerical employees, and project manager/owner receiving

payment for services performed for C.S.E Paving are employees in

the employment of C.S.E Paving. C.S.E Paving is, therefore,

required to provide workers' compensation insurance coverage for

its employees.

19. Section 440.107, Florida Statutes, provides in

pertinent part:

(1) The Legislature finds that the failure

of an employer to comply with the workers'

compensation coverage requirements under

this chapter poses an immediate danger to

public health, safety, and welfare.

(2) For the purposes of this section,

"securing the payment of workers'

compensation" means obtaining coverage that

meets the requirements of this chapter and

the Florida Insurance Code. . . .

(3) The department shall enforce workers'

compensation coverage requirements,

including the requirement that the employer

secure the payment of workers' compensation,

and the requirement that the employer

provide the carrier with information to

accurately determine payroll and correctly

assign classification codes. In addition to

any other powers under this chapter, the

department shall have the power to:

(a) Conduct investigations for the purpose

of ensuring employer compliance.

(b) Enter and inspect any place of business

at any reasonable time for the purpose of

investigating employer compliance.

(c) Examine and copy business records.

(d) Administer oaths and affirmations.

(e) Certify to official acts.

(f) Issue and serve subpoenas for

attendance of witnesses or production of

business records, books, papers,

correspondence, memoranda, and other

records.

(g) Issue stop-work orders, penalty

assessment orders, and any other orders

necessary for the administration of this

section.

(h) Enforce the terms of a stop-work order.

(i) Levy and pursue actions to recover

penalties.

(j) Seek injunctions and other appropriate

relief.

* * *

(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 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 hours. 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 shall 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 . . . 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. . . .

(b) Stop-work orders and penalty assessment

orders issued under this section against a

corporation, partnership, or sole

proprietorship shall be in effect against

any successor corporation or business entity

that has one or more of the same principals

or officers as the corporation or

partnership against which the stop-work

order was issued and are engaged in the same

or equivalent trade or activity.

(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.

(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 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 within the

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

is greater.

20. Based on the findings of fact herein, the penalty for

C.S.E Paving's failure to secure workers' compensation insurance

coverage for its employees, as set out on the Penalty Worksheet

attached to the Second Amended Order of Penalty Assessment, was

calculated in conformance with the requirements of

Section 440.107(7)(d)1., Florida Statutes, on the form required

by Florida Administrative Code Rule 69L-6.027. The Department

has, therefore, proven by clear and convincing evidence that

C.S.E Paving was properly assessed $13,487.64 as the penalty for

its failure to secure workers' compensation insurance coverage

for its employees during the time periods at issue.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Financial Services

enter a final order finding that C.S.E Paving of South Florida

Inc., failed to secure workers' compensation insurance coverage

for its employees in violation of Section 440.38(1), Florida

Statutes, from January 1, 2006, through July 25, 2006, and from

August 6, 2008, through November 24, 2008, and imposing a

penalty in the amount of $13,487.64 for the failure to provide

the required workers' compensation insurance coverage.

DONE AND ENTERED this 28th day of September, 2009, in

Tallahassee, Leon County, Florida.

___________________________________

PATRICIA M. HART

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 28th day of September, 2009.

ENDNOTES

1 / Please see discussion of Second Amended Order of Penalty

Assessment in the Preliminary Statement below.

2 / All references herein to the Florida Statutes are to the 2008

edition unless indicated otherwise.

COPIES FURNISHED:

Kristian E. Dunn, Esquire

Department of Financial Services

Division of Workers' Compensation

200 East Gaines Street

Tallahassee, Florida 32399-4229

Evan B. Plotka, Esquire

Coral Springs Financial Centre

210 North University Drive, Suite 209

Coral Springs, Florida 33071

Stephen J. Warden

C.S.E. Paving of South Florida, Inc.

1395 Northwest 17th Avenue, Number 114

Delray Beach, Florida 33445

Alex Sink, Chief Financial Officer

Department of Financial Services

The Capitol, Plaza level 11

Tallahassee, Florida 32399-0300

Benjamin Diamond, General Counsel

Department of Financial Services

The Capitol, Plaza level 11

Tallahassee, Florida 32399-0300

Tracey Beal, Agency Clerk

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399-0390

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.