09-006370 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Pierson Community Pharmacy, Inc. Status: Closed Recommended Order on Monday, April 26, 2010.

Summary: Petitioner met burden of proving that Respondent failed to secure workers' compensation insurance for its employees and owes a penalty in the amount of $13,996.60.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS’ )

COMPENSATION, )

)

Petitioner, )

)

vs. ) Case No. 09-6370

)

PIERSON COMMUNITY PHARMACY, )

INC., )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was conducted in this case on March 24,

2010, by video teleconference with hearing sites located in

Tallahassee, Florida, and Daytona Beach, Florida, before

Suzanne F. Hood, Administrative Law Judge with the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Justin Faulkner, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

For Respondent: John C. Eidt

Qualified Representative

112 East First Avenue

Pierson, Florida 32180

STATEMENT OF THE ISSUES

The issues are whether Respondent violated Chapter 440,

Florida Statutes (2009), by failing to secure the payment of

workers' compensation, and if so, what penalty should be

imposed.

PRELIMINARY STATEMENT

On October 28, 2009, Petitioner Department of Financial

Services, Division of Workers' Compensation (Petitioner) issued

a Stop-Work Order and Order of Penalty Assessment to Respondent

Pierson Community Pharmacy, Inc. (Respondent). The Stop-Work

Order alleged that Respondent had failed to secure workers'

compensation insurance as required by Chapter 440, Florida

Statutes (2009). That same day, Petitioner also issued a

Request for Production of Business Records for Penalty

Assessment Calculation.

Based on records received, Petitioner issued an Amended

Order of Penalty Assessment on October 30, 2009. The amended

Order assessed a penalty in the amount of $14,058.90 pursuant to

Section 440.197(7)(d), Florida Statutes (2009).

In a letter dated November 2, 2009, Respondent requested an

administrative hearing to contest the Amended Order of Penalty

Assessment. On November 18, 2009, Petitioner referred

Respondent's request to the Division of Administrative Hearings.

On November 25, 2009, the undersigned issued a Notice of

Hearing by Video Teleconference. The notice scheduled the

hearing for March 24, 2010.

On March 15, 2010, Petitioner filed a Motion to Amend Order

of Penalty Assessment. The Second Amended Order of Penalty

Assessment lowered the assessed penalty to $13,996.60. By Order

dated March 16, 2010, the undersigned granted the motion.

At the hearing, Petitioner presented the testimony of three

witnesses. Petitioner offered 15 exhibits that were accepted as

evidence. Respondent did not present any testimony or offer any

exhibits for admission as evidence.

The Transcript was filed on April 9, 2010. Petitioner

filed its Proposed Recommended Order on April 19, 2010. As of

the date that this Recommended Order was issued, Respondent had

not filed proposed findings of fact and conclusions of law.

Except as otherwise noted, reference hereinafter shall be

to Florida Statutes (2009).

FINDINGS OF FACT

1. Petitioner is the state agency responsible for

enforcing the statutory requirement that Florida employers

secure the payment of workers' compensation for the benefit of

their employees. See § 440.107(3), Fla. Stat.

2. Respondent is a Florida for-profit corporation

providing pharmacy services. Respondent has business locations

at 842 West Plymouth Avenue, Deland, Florida, and 112 East First

Avenue, Pierson, Florida.

3. Respondent's Pierson business site sells a small amount

of food like bubble gum and other sundries. Activities at the

Pierson location include filling prescriptions, compounding and

blending drugs, and dispensing drugs or medicine to walk-in

customers and patients. The patients are referred from a health

care clinic known as Northeast Florida Health Services (NEFHS).

The patients are federally qualified as indigent pursuant to a

federal poverty calculation.

4. Respondent's Deland location deals solely with

prescription drug transactions to indigent patients who are

referred by NEFHS. The Deland business site is very small and

has no walk-in customers or food or other sundries for sale.

5. At the end of the month, Respondent sends a bill to

NEFHS for the prescriptions dispensed by Respondent at both

locations. NEFHS than reimburses Respondent for its services.

6. Respondent pays its employees at both locations out of

a single checking account. Only one tax identification number

is used for both business locations.

7. On October 27, 2009, Hector Beauchamp, one of

Petitioner's workers' compensation compliance investigators,

received a referral, indicating that Respondent was operating

without workers' compensation insurance coverage for its

employees. After receiving the referral, Mr. Beauchamp used the

website of the Department of State, Division of Corporations, to

obtain Respondent's federal employer identification number.

8. The Department of State website showed that Respondent

became Pierson Community Pharmacy, Inc., on March 3, 2005. The

website also indicated that Respondent had two corporate

officers, John Eidt and Hanan Francis.

9. Next, Mr. Beauchamp contacted Samantha Nixon, one of

Petitioner’s penalty calculators, to research Respondent's

unemployment compensation tax information on the Department of

Revenue's website. Ms. Nixon's research revealed that

Respondent employed in excess of four employees for each quarter

in the past three years.

10. Mr. Beauchamp also consulted Petitioner's Coverage and

Compliance Automated System (CCAS) database. The CCAS database

lists the workers' compensation insurance policy information for

Florida employers together with any workers' compensation

exemptions for corporate officers.

11. The CCAS database accurately revealed that Respondent

had no workers' compensation insurance policy in place for its

employees and no workers' compensation exemptions for either

Mr. Eidt or Ms. Francis as corporate officers. This was true

from October 29, 2006, through October 28, 2009. Additionally,

the CCAS database did not reveal any utilization of employee

leasing by Respondent.

12. Mr. Beauchamp also researched the National Council on

Compensation Insurance, Inc. (NCCI) on-line database. Using

Respondent's name and federal employer identification number,

the database showed no record of a Florida workers' compensation

insurance policy for Respondent.

13. On October 28, 2009, Mr. Beauchamp visited both of

Respondent's business locations. At the Pierson location,

Mr. Beauchamp observed five individuals working behind a

Plexiglas partition filling prescriptions.

14. Mr. Beauchamp spoke with Mr. and Mrs. Francis. They

confirmed that Respondent did not have workers' compensation

insurance in place.

15. Mr. Beauchamp then issued and served a Stop-Work

Order. He also issued and served a records request.

16. On October 29, 2010, Respondent provided Petitioner

with the following records: (a) corporate tax records for 2007

and 2008; (b) a workers' compensation insurance application

submitted after the issuance of the Stop-Work Order; and

(c) payroll summaries for October 2006 through October 2009.

The records confirmed that Respondent had employed more than

four employees for the prior three years.

17. On October 30, 2009, Petitioner issued and served the

Amended Order of Penalty Assessment. That order was followed by

the Second Amended Order of Penalty Assessment on March 15,

2010.

18. Ms. Nixon calculated the gross payroll for

Respondent's employees for the relevant time period. The gross

payroll amounts for Ms. Francis from January 1, 2008, through

December 31, 2008, and April 1, 2009, through June 30, 2009,

were limited to the average weekly wage in effect at the time

the Stop-Work Order was issued, multiplied by 1.5 for those

periods pursuant to Florida Administrative Code Rule 69L-

6.035(2).

19. As a corporate officer, Ms. Francis' actual earnings

were in excess of these amounts. However, Florida

Administrative Code Rule 69L-6.035(2) limits the amount of a

corporate officer's income upon which workers' compensation

penalties may be assessed to 1.5 times the average weekly wage

in effect at the time a Stop-Work Order is issued or actual

earnings, whichever is less.

20. Using the classification codes in the NCCI Scopes ®

Manual, Petitioner accurately assigned the occupation

classification code 8045, which corresponds to "Store: Drug

Retail." Classification code 8045 is "applicable to store

locations where the employer's books of accounts reflect at

least 40 percent gross receipts in prescription sales and less

than 50 percent gross receipts in the service of food."

Prescription sales intended for the patients of health care

facilities are included even though the facility is billed

instead of the individual patient.

21. Ms. Nixon then divided the payroll for each year by

100 and multiplied that figure by the approved manual rates

adopted by the Florida Office of Insurance Regulation for 2006,

2007, 2008, and 2009 for classification code 8045. That product

was then multiplied by 1.5 to find the penalty for the period

for the three-year period. The total penalty is $13,996.60.

CONCLUSIONS OF LAW

22. 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.

23. Petitioner has the burden of proving by clear and

convincing evidence that Respondent violated Chapter 440,

Florida Statutes, the "Workers' Compensation Law," during the

relevant period and that the penalty assessment is correct. See

Dep't of Banking & Fin. v. Osborne Stern & Co. , 670 So. 2d 932,

935 (Fla. 1996).

24. Every employer is required to secure the payment of

compensation for the benefit of its employees. See

Florida Statutes, states that "'securing the payment of workers'

compensation means obtaining coverage that meets the requirement

of this chapter and the Florida Insurance Code."

25. Petitioner has the duty of enforcing compliance with

the Workers' Compensation Law and is authorized to issue stop-

work orders and penalty assessment orders. See § 440.107(3),

Fla. Stat.

26. An "employer" is defined, in part, as "every person

carrying on any employment." See § 440.02(16)(a), Fla. Stat.

27. "'Employment’ . . . means any service performed by an

employee for the person employing him or her" and includes

"[a]ll private employments in which four or more employees are

employed by the same employer." See §§ 440.02(17)(a) and

440.02(17)(b)2., Fla. Stat.

28. "Employee" is defined, in part, as "any person who

receives remuneration from an employer for the performance of

any work or service while engaged in any employment . . . ."

See § 440.02(15)(a), Fla. Stat. This definition 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." See

§ 440.02(15)(b), Fla. Stat.

29. "Corporate officer" or "officer of a corporation" is

defined as "any person who fills an office provided for in the

corporate charter or articles of incorporation filed with the

Division of Corporations of the Department of State or as

permitted or required by chapter 607." See § 440.02(9), Fla.

Stat. Here, only Ms. Francis and Mr. Eidt are the only

corporate officers.

30. Certain corporate officers can become exempt from the

coverage requirements of Chapter 440, Florida Statutes.

However, they must affirmatively make that election. See

§§ 440.02(15)(b) and 440.05, Fla. Stat.; Fla. Admin. Code R.

69L-6.012(2). In this case, neither of Respondent's corporate

officers had a workers' compensation exemption.

31. An exemption for an officer of a corporation under

Section 440.05, Florida Statutes, is not automatic. A corporate

officer must provide Petitioner with a written notice of the

election to be exempt. See §§ 440.02(15)(b)1. and 440.05(1),

Fla. Stat.; Fla. Admin. Code R. 69L-6.012(1)(a), 69L-6.012(2),

and 69L-6.12(6).

32. The person filing the notice has to personally sign it

and "attest that he or she has reviewed, understands, and

acknowledges" the notice. See § 440.05(4), Fla. Stat. Even

then, the notice of election is not effective until "issued by

the department or 30 days after an application for an exemption

is received by the department, whichever occurs first." See

§ 440.05(5), Fla. Stat.

33. In this case, Petitioner has established by clear and

convincing evidence that Respondent was an "employer" for

purposes of the Workers' Compensation Law. Petitioner also has

proven that Respondent failed to secure the payment of workers'

compensation.

34. Petitioner properly issued the Stop-Work Order that

was mandated by statute. See § 440.107(7)(a), Fla. Stat.

Petitioner then accurately determined the penalty as set forth

in the Second Amended Order of Penalty Assessment. See

69L-6.035(1)(a), 69L-6.035(1)(b), 69L-6.035(1)(c), and 69L-

6.035(2). Respondent owes $13,996.60 as a penalty for not

providing its employees workers' compensation insurance

coverage.

RECOMMENDATION

Based on the foregoing Findings of Facts and Conclusion of

Law, it is

RECOMMENDED:

That the Department of Financial Services, Division of

Workers' Compensation, issue a final order affirming the Stop-

Work Order and Second Amended order of Penalty Assessment in the

amount of $13,996.60.

DONE AND ENTERED this 26th day of April, 2010, in

Tallahassee, Leon County, Florida.

S

SUZANNE F. HOOD

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 26th day of April, 2010.

COPIES FURNISHED :

John C. Eidt

Pierson Community Pharmacy Inc.

112 East 1st Avenue

Pierson, Florida 32180

Justin H. Faulkner, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

Julie Jones, CRP, FP

Agency Clerk

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399-0390

Benjamin Diamond, General Counsel

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0307

Honorable Alex Sink

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399-0300

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.