09-004991 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. A And M Painting Services, Inc. Status: Closed Recommended Order on Thursday, September 16, 2010.

Summary: Identification of Respondent's personnel as painters was correct. Penalty assessment was proper.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS' )

COMPENSATION , )

)

Petitioner , )

)

vs. ) Case No. 09 - 4991

)

A AND M PAINTING SERVICES, )

INC. , )

)

Respondent . )

)

RECOMMENDED ORDER

On November 9, 2009, an administrative hearing in this case

was conducted by Carolyn S. Holifield, Administrative Law Judge,

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Douglas D. Dolan, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

For Respondent: Morgan R. Bentley, Esquire

Williams, Parker, Harrison,

Dietz & Getzen

200 South Orange Avenue

Sarasota, Florida 34236

STATEMENT OF THE ISSUE

The issue in the case is whether A and M Painting Services,

Inc., (Respondent) , should be assessed a penalty for an alleged

failure to comply with workers' compe nsation requirements as

alleged in the Second Amended Order of Penalty Assessment.

PRELIMINARY STATEMENT

On June 24, 2009, the Department of Financial Services,

Division of Workers' Compensation (Petitioner) , issued an O rder

of P enalty A ssessment against t he Respondent, alleging that the

Respondent failed to "obtain coverage that meets the

requirements of Chapter 440, F.S. and the Insurance Code." The

o rder assessed a total penalty of $93,987.43. The Petitioner

subsequently issued a Second Amended Order o f Penalty Assessment

against the Respondent, wherein the total penalty was identified

as $91,455.63.

The Respondent disputed the alleged violation and the

proposed penalty assessment and requested a formal hearing. On

September 11, 2009, the Petitioner fo rwarded the request to the

Division of Administrative Hearings. The hearing was first

scheduled to commence on October 29, 2 009, and was rescheduled

for November 9, 2009, at the request of the parties.

At the hearing, the Petitioner presented the testimon y of

three witnesses and had exhibits identified as A through L

admitted into evidence. The Respondent presented t he testimony

of two witnesses.

The T ranscript of the hearing was filed on November 20,

2009. After requesting an extension of the deadline f or filing

proposed orders, the Respondent filed a Proposed Recommended

Order on December 4, 2009 , and the Petitioner filed a Proposed

Recommen ded Order on December 7, 2009.

On May 20, 2010, the case was transferred to the

undersigned Administrative Law Jud ge (ALJ) due to the

unavailability of the ALJ who presided at the hearing. See

§ 120.57(1)(a), Fla. Stat. (2009). Upon review of the record,

it appeared that a deposition admitted at the hearing as an

exhibit was incomplete. Notice was provided to the p arties , and

the remainde r of the exhibit was obtained.

This Recommended Order has been entered based upon a review

of the hearing Transcript and exhibits and the Proposed

Recommended Orders submitted by the parties.

FINDINGS OF FACT

1. On April 18, 2009, an investigator employed by the

Petitioner visited the Respondent's business location to

ascertain compliance with the pertinent workers ' compensation

requirements.

2. At the time of the visit, the investigator learned that

the Respondent was owned by an individual i dentified as Samuel

Rodriguez.

3. The investigator thereafter accessed the Petitioner's

"Coverage and Compliance Automated System" (CCAS) , which

contains records related to workers ' compensation coverage for

Florida employers. Based on a review of the information in the

CCAS, the investigator determined that the Respondent did not

have proper workers ' compensation coverage.

4. Corporate officers in certain companies may exempt

themselves from coverage requirements upon the filing of a

pro per not ice of election for exemption.

5. The Respondent was authorized to exempt certain

employees from workers' compensation coverage. The CCAS system

reflected that notices of election for exemption had been filed

by the Respondent on behalf of two per sons identified as Maria

C ardenas and Anselmo Rodriguez.

6. As of April 18, 2009, an employee leasing company

identified as Southeast Employment Leasing provided one

employee, Alfred o Palacios, to the Respondent.

7. Workers ' compensation coverage for persons employed

through employee leasing companies is provided by the leasing

company and is based on the amount of compensation paid to the

employee by the leasing company.

8. The Petitioner's investigator issued a request for

business records, and the Respondent complied with the request.

9. Based on a review of the Respondent's business records

by one of the Petitioner's "penalty calculator" employees, the

Petitioner initially assessed a penalty of $93,987.43.

10. The Petit ioner subsequently revised the employment

classification codes applied to the personnel identified in the

Respondent's business records and reduced the assessment to

$91,455.63.

11. The calculation of the assessment was based on a

determination by the Pet itioner that the majority of the

Respondent's personnel were employed as painters.

12. The National Council on Compensation Insurance (NCCI)

assigns classification codes for various occupations to

facilitate the process of obtaining proper workers' compen sation

coverage. Painters have a NCCI classification code of 5474.

13. The Respondent has asserted that the personnel

identified by the Petitioner as painters were independent

contractors, but there was no credible evidence off ered to

support the asserti on.

14. The employment classification assigned to the

Respondent's personnel was correct. The penalty assessment

based on the classification was proper.

CONCLUSIONS OF LAW

15. The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 120.569 and 120.57, Fl a. Stat . (200 9 ).

16. The administrative fine at issue in this proceeding is

penal in nature. In order to prevail, the Respondent must

demonstrate by clear and convincing evidence that the P etitioner

was required to be in compliance with the applicable statutes on

the referenced date, that the Petitioner failed to meet the

requirements, and that the proposed penalty is appropriate.

Department of Banking and Finance v. Osborne Stern and Compa ny ,

670 So. 2d 932 (Fla. 1996); Ferris v. Turlington , 510 So. 2d 292

(Fla. 1987). In this case, the burden has been met.

17. Every Florida employer is required to obtain workers'

compensation coverage for employees unless a specific exemption

or exclusio n is provided by law. See §§ 440.10 and 440.38, Fla .

Stat . (2008).

18. Section 440.02, Florida Statutes (2008), provides the

following applicable definitions:

(8) "Construction industry" means for -

profit activities involving any building,

clearing, fill ing, 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 s uch premises are not

intended to be sold, resold, or leased by

the owner within 1 year after the

commencement of construction. The division

may, by rule, establish standard industrial

classification codes and definitions thereof

which meet the criteria of the term

"construction industry" as set forth in this

section.

* * *

(15)(a) "Employee" means any person who

receiv es 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 incl udes, but is not limited

to, aliens and minors.

* * *

(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 e mployer 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" inclu des:

* * *

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.

19. As set forth in Florida Administrative Code Rule 69L -

6.031(6)(b)35 . , painters (NCCI code 5474) are classified as

being wit hin the construction industry.

20. In this case, the evidence establishes by the

requisite burden of proof that the Respondent was t he employer

of the personnel identified on the Respondent's business

records, that such employees were properly classified as

painters by the Petitioner, and that the Petitioner properly

calculated the asse ssment against the Respondent.

RECOMMENDATION

Base d on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Financial

Services, Division of Workers' Compensation, enter a f inal o rder

assessing a penalty of $91,455.63 against the Respondent.

DONE AND ENTERED this 16th day of September, 2010 , in

Tallahassee, Leon County, Florida.

S

WILLIAM F. QUATTLEBAUM

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 16th day of September , 2010 .

COPIES FURNISHED :

Morgan R. Bentley, Esquire

Williams, Parker, Harrison,

Dietz & Getzen

200 South Orange Avenue

Sarasota, Florida 34236

Douglas D. Dolan, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

Julie Jones, CP, FRP, Agency Clerk

Department of Financial Services

Division of Legal Servic es

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

Honorable 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 - 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 Recommend ed Order should be filed with the agency that

will issue the Final Order in this case.