08-003545 Tlc Stoneworks, Llc vs. Department Of Financial Services, Division Of Workers' Compensation Status: Closed Recommended Order on Friday, October 24, 2008.

Summary: Contractor operated a single countertop business, and, by operation of Subsection 440.10(1)(b), Florida Statutes, Petitioner was an employee of the contractor because Petitioner did not have workers` compensation coverage.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TLC STONEWORKS, LLC, )

)

Petitioner, )

)

vs. ) Case No. 08-3545

)

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS' )

COMPENSATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Administrative Law Judge (ALJ) Daniel Manry conducted the

final hearing of this case for the Division of Administrative

Hearings (DOAH) on August 26, 2008, in Sarasota, Florida.

APPEARANCES

For Petitioner: Thomas Harvey, pro se

TLC Stoneworks, LLC

5920 Bonaventure Place

Sarasota, Florida 34243

For Respondent: Douglas D. Dolan, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue is whether Petitioner is liable for a penalty for

failure to maintain workers’ compensation insurance in violation

of relevant provisions in Chapter 440, Florida Statutes (2007). 1

PRELIMINARY STATEMENT

On June 4 and 11, 2008, Respondent issued, respectively, a

Stop-Work Order and an Amended Order of Penalty Assessment; the

latter assessing a penalty in the amount of $1,218.52, pursuant

to Subsection 440.107(7)(d), which is the penalty contested in

this proceeding. Petitioner timely requested an administrative

hearing, and Respondent referred the request to DOAH to conduct

the hearing.

At the hearing, Respondent presented the testimony of one

witness and submitted 11 exhibits for admission into evidence.

Petitioner presented the testimony of one witness and submitted

one exhibit. The identity of the witnesses and exhibits and any

associated rulings are reported in the one-volume Transcript of

the hearing that was filed with DOAH on September 10, 2008.

Respondent filed its Proposed Recommended Order (PRO) on

September 22, 2008. Petitioner filed its PRO on September 29,

2008, pursuant to an Order granting Petitioner’s unopposed

request for extension of time to file its PRO.

FINDINGS OF FACT

1. Respondent is the state agency responsible for

enforcing the statutory requirement that employers secure the

payment of workers’ compensation for the benefit of their

employees. § 440.107. Petitioner is a limited liability

company domiciled in Florida and engaged in the sale of stone

countertops.

2. The disputed issues of fact arise from a single,

integrated transaction involving “one and the same business”

includes a contractor, a wholesaler, and two subcontractors, one

of which is Petitioner. The integrated transaction is between

the business and a homeowner.

3. The contractor is identified in the record as Manasota

Land Development (Manasota). The homeowner owns a residence on

Agate Road in Port Charlotte, Florida (the homeowner). The

contractor referred the homeowner to Petitioner for the purpose

of selecting granite countertops. Petitioner’s representative

visited the residence, took measurements, and received the order

for granite from the homeowner. Petitioner placed the order

with the wholesaler, the name of which is not material to this

proceeding. The wholesaler delivered granite to a fabricator

and installer designated by Petitioner and identified in the

record as Granite Exclusive (the installer). The installer

fabricated the countertops and installed them at the residence.

Petitioner visited the residence to ensure customer

satisfaction, and Petitioner paid the wholesaler and installer

from funds provided by Manasota.

4. Petitioner did not collect payment from the homeowner.

Rather, Petitioner agreed with Manasota to a total price of

$7,141.00. Petitioner billed Manasota for $3,570.00, an amount

equal to approximately one-half of the total agreed price, on

May 21, 2008, inferentially when the homeowner placed the order

with Petitioner. Manasota paid Petitioner the 50 percent

deposit. Petitioner billed Manasota for the balance due, in the

amount of $3,571.00, on July 22, 2008, when the work was

completed to the satisfaction of the homeowner, and Manasota

paid the balance due.

5. Petitioner was a sales agent, order processor, and a

collection and payment processor for Manasota. Petitioner paid

the wholesaler and installer from funds provided by Manasota.

The fact-finder draws a reasonable inference from the evidence

that Manasota collected a sum from the homeowner that was equal

to or greater than the price Manasota paid to Petitioner.

6. Petitioner and the installer are subcontractors of

Manasota. Petitioner had no supervisory control over the

installer. Respondent’s claim that a written or oral contract

existed between Petitioner and the wholesaler and installer is

not supported by clear and convincing evidence.

7. It is undisputed that neither the installer nor

Petitioner have workers’ compensation insurance, and the two

subcontractors are, by operation of Subsection 440.10(1)(b), the

employees of Manasota in “one and the same business.” Manasota

is responsible for providing workers’ compensation coverage by

operation of the statute.

8. Petitioner mistakenly believed, in goof faith, that it

was exempt from the requirements of Chapter 440. A company

officer of Petitioner obtained an exemption certificate and,

reasonably, concluded that the exemption was for Petitioner and

both of Petitioner’s officers or employees. Such an exemption

was the officer’s stated purpose when she entered the local

state office responsible for issuing exemption certificates.

The state employee represented that the exemption certificate

actually issued achieved the officer’s stated purpose. The

express terms of the exemption certificate provide that the

exemption is for the person “and” company named in the

certificate. However, Subsection 440.05 makes clear that an

exemption covers only the company officer named in the

certificate and that each of the two officers must be named in

the certificate or that each officer must obtain a separate

certificate.

9. Petitioner did not engage in the business of

fabricating or installing the stone countertop. Petitioner made

a sale of the granite countertop and placed an order with a

wholesaler. The wholesaler shipped the countertop to a the

installer designated by Petitioner based on proximity to the

project site. The fabricator installed the countertop.

Petitioner did not supervise the fabrication or installation of

the countertop.

10. The fact-finder has considered and weighed conflicts

in the evidence pertaining to the issue of whether Petitioner

engaged in the business of fabricating and installing the stone

countertop and has resolved any evidential conflicts in favor of

Petitioner. The testimony of Petitioner’s witness, describing

the nature and scope of Petitioner’s business, is consistent

with Article 5 in Petitioner’s Articles of Incorporation which

states:

The general purpose for which the Company is

organized is to engage in the business of

natural stone countertop sales. . . .

11. On June 3, 2008, Respondent’s investigator, conducted

a compliance check at 8206 Agate, South Gulf Cove, Florida, to

verify compliance with the workers’ compensation statutes.

At the worksite, Respondent’s investigator observed three men

installing a stone countertop for the installer.

12. Installation of stone countertops is part of the

construction industry and is assigned Class Code 5348 in the

Scopes Manual, published by the National Council on Compensation

Insurance and adopted in Florida Administrative Code

Rule 69L-6.021.

13. The investigator interviewed the three men and

requested proof of compliance with the workers’ compensation

law. One of the three men, neither furnished proof of an

election to be exempt from workers’ compensation nor showed that

he had secured workers’ compensation coverage.

14. Utilizing the Department of Financial Services’

Coverage and Compliance Automated System (CCAS), the

investigator was unable to determine that the employee of the

installer was exempt from the requirements of the workers’

compensation law or that Petitioner had secured the payment of

workers’ compensation.

15. On June 4, 2008, the investigator issued a Stop-Work

Order and Order of Penalty Assessment against Petitioner for

failure to meet the requirements of Chapter 440. Respondent

ordered Petitioner to cease all business operations and assessed

a $1,000.00 penalty against Petitioner pursuant to Subsection

440.107(7)(d).

16. On June 4, 2008, the investigator issued a Division of

Workers’ Compensation Request for Production of Business Records

for Penalty Assessment Calculation. Petitioner complied with

the Request and provided the required records. Based on

Petitioner’s business records, the investigator issued an

Amended Order of Penalty Assessment on June 11, 2008, in the

amount of $1,218.52.

17. Mr. Thomas Harvey, a company officer of Petitioner,

did not posses an election to be exempt from workers’

compensation. Ms. Leslie Lockett, the other company officer had

applied for and obtained an exemption from workers’ compensation

coverage.

18. Ms. Lockett’s exemption from workers’ compensation

lists the scope of business or trade as countertops, pursuant to

instructions from the agency employee who issued the

certificate. Ms. Lockett’s exemption from workers’ compensation

is a construction industry exemption. Ms. Lockett applied for a

Notice of Election to be Exempt as a member of a limited

liability company in the construction industry pursuant to the

instructions previously described.

19. In the transaction at issue in this proceeding,

Petitioner collected payment for materials and installation of a

stone countertop from Manasota. Petitioner did not collect

payment from the homeowner and had no control or authority over

either the wholesaler or the installer.

CONCLUSIONS OF LAW

20. DOAH has jurisdiction over the parties to and subject

(2008). DOAH provided the parties with adequate notice of the

final hearing.

21. An administrative fine deprives Petitioner of

substantial rights in property and are punitive in nature.

Respondent has the burden of proof. Respondent must show by

clear and convincing evidence that Petitioner violated the

Workers’ Compensation Law and the reasonableness of the proposed

penalty assessment. 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); Triple M Enterprises, Inc. v.

Department of Financial Services, Division of Workers’

Compensation , Case No. 94-2524 (DOAH January 13, 2005).

22. Manasota was a contractor that operated a single

countertop business, within the meaning of Subsection

440.10(1)(b), and, by operation of the same statute, Petitioner

and the installer were employees of Manasota because neither

Petitioner nor the installer had secured workers’ compensation

coverage. Manasota sublet part of the countertop business to

Petitioner and the installer.

In case a contractor sublets any part or

parts of his or her contract work to a

subcontractor or subcontractors, all of the

employees of such contractor and

subcontractor or subcontractors engaged in

such contract work shall be deemed to be

employed in one and the same business or

establishment; and the contractor shall be

liable for, and shall secure, the payment of

compensation to all such employees, except

to employees of a subcontractor who has

secured such payment.

§ 440.10(1)(b).

RECOMMENDATION

Based on the Findings of Fact and Conclusions of Law, it is

RECOMMENDED that Respondent issue a final order dismissing

the Stop-Work Order and Amended Order of Penalty Assessment

against Petitioner and Mr. Harvey.

DONE AND ENTERED this 24th day of October, 2008, in

Tallahassee, Leon County, Florida.

S

DANIEL MANRY

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 24th day of October, 2008.

ENDNOTE

1/ References to chapters, sections, and subsections, are to

Florida Statutes (2007), unless otherwise stated.

COPIES FURNISHED :

Douglas D. Dolan, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

Thomas Harvey

TLC Stoneworks, LLC

5920 Bonaventure Place

Sarasota, Florida 34243

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.