10-001245 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. J. D. Tree Service, Inc. Status: Closed Recommended Order on Tuesday, March 29, 2011.

Summary: Employer conducted business in violation of a Stop-Work Order. Statute requires $1,000 fine for each day.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS' )

COMPENSATION , )

)

Petitioner , )

)

vs. ) Case No. 10 - 1245

)

J. D. TREE SERVICE, INC. , )

)

Respondent . )

)

RECOMMENDED ORDER

On January 26, 2011, a formal administrative hearing was

conducted by video telec onference in Tallahassee and Fort Myers,

Florida, before William F. Quattlebaum, Administrative Law Judge

(ALJ) , Division of Administrati ve Hearings .

APPEARANCES

For Petitioner: Timothy L. Newhall, Esquire

Ryan C. Cox, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

Fo r Respondent: James D. King, pro se

Sherri King

J. Dee Service, Inc.

16591 Gator Road

Fort Myers, Florida 33912

STATEMENT OF THE ISSUE S

The issue s in the case are wh ether J. Dee Service , Inc.

(Respondent) , conducted business in violation of a previously -

issued Stop - Work Order, and , if so, whether the Department of

Financial Services, Division of Workers' Compensation

(Petitioner) , properly calculated the applicabl e penalty

assessment.

PRELIMINARY STATEMENT

On December 14, 2009, a compliance investigator employed by

the Petitioner observed trucks and workers bearing the

Respondent's business information and engaged in tree trimming

operations. The investigator also determined that a Stop - Work

Order , originally issued against the Respondent in 2007 and

lifted after the Respondent executed a penalty payment

agreement, had been reinstated based on non - payment of the

installment payments. On December 14, 2009, the Peti tioner

issued a second Stop - Work Order. The Petitioner subsequently

issued an Order Assessing Penalty for Working in Violation of

Reinstated Stop - Work Order, seeking to i mpose a penalty of

$555,000.00.

The Respondent disputed the Stop - Work Order and the p enalty

assessment and requested a formal hearing. On March 15, 2010,

the Petitioner forwarded the request to the Division of

Administrative Hearings. The hearing was first scheduled to

commence on May 26, 2010, and was rescheduled three times at the

requ est of the parties. The case was transferred to the

undersigned on January 21, 2011, and was heard on January 26,

2011.

At the hearing, the Petitioner presented the testimony of

four witnesses and had Exhibits identified as 1, 3 through 10,

12 , and 14 thr ough 16 admitted into evidence. The Respondent

presented the testimony of one witness.

The T ranscript of the hearing was filed on February 22,

2011. The T ranscript indicates that the Petitioner's

Exhibits 2, 11 , and 13 were admitted concurrently at the c lose

of the Petitioner's case presentation, but the T ranscript does

not indicate that there was any discussion of the exhibits.

Additionally, the T ranscript indicates that , during the hearing

and prior to the admission of each exhibit, the ALJ inquired as

to whether the Respondent had any objection to each exhibit, but

that no such inquiry occurred as to Petitioner's Exhibits 2, 11 ,

and 13. There was no acknowledgement on the record that the

referenced exhibits had been admitted, and , therefore , the

exhib its have no t been reviewed or considered.

On March 4, 2011, the Petitioner filed a Proposed

Recommended Order that has been considered in the preparat ion of

this Recommended Order.

FINDINGS OF FACT

1. The Petitioner is the state agency charged with the

re sponsibility to enforce c hapter 440, Florida Statutes (2010) , 1/

which essentially requires that Florida employers secure

workers' compensation coverage for their employees.

2. The Respondent is a Florida corporation providing

various tree services, includ ing tr imming and related

activities.

3. On June 11, 2007, the Petitioner issued a Stop - Work

Order (07 - 172 - D7) and an Order of Penalty Assessment based on

the Respondent's failure to obtain proper workers' compensation

ins urance coverage for employees.

4. On June 14, 2007, the Petitioner issued an Amended

Order of Penalty Assessment for $147,419.52 against the

Respondent. The a mended o rder was personally served on the

Respo ndent on the date of issuance.

5. The Respondent did not challenge either the Stop - Work

Order or the Amended Order of Penalty As sessment.

6. On June 15, 200 7 , the Respondent executed a "Payment

Agreement Schedule for Periodic Payment of Penalty" (hereinafter

"Agreement"). The Agreement permitted the Respondent to satisfy

the penalty t h ro ugh a ten percent down payment and 60 s ubsequent

monthly payments.

7. Based on the execution of the Agreement, the Petitioner

lifted the Stop - Work Order on the condition that the Respondent

complied wi th the terms of the Agreement.

8. The Agreement sp ecifically stated that failure to meet

the terms set forth therein would "result in the immediate

reinstatement of the Stop - Work Order, and the remaining unpaid

balance of the penalty to be paid by the employer shall become

immediately due."

9. The Respon dent was provided a copy of the Agreement and

acknowledged understandin g the terms set forth therein.

10. The Respondent made the down payment required at the

time the Agreement was executed, but thereafter made none of the

monthly payments due under the Agreement.

11. On May 18, 2007, the Petitioner issued an Order

Reinstating Stop - Work Order (the "Reinstatement Order") based on

the Respondent's failure to comply with the payment terms of the

Agreement.

12. The Reinstatement Order identified the unpaid balance

as $132,674.52 and directed the Respondent to "cease all

business operations in the State of Florida" unt il certain

conditions were met.

13. Such conditions included satisfaction of the existing

unpaid penalty balance as well as any additional pen alty related

to business operations conducted in violation of the Stop - Work

Order and a determination by the Petitioner that the Respondent

was in compliance with workers' compensation coverage

requirements.

14. The Respondent did not challenge the Reinst atement

Order , and it became eff ective on June 6, 2008.

15. On December 14, 2009, a workers' compensation

compliance investigator employed by the Petitioner observed tree

service operations being conducted at a recreational ve hicle

park in Naples, Florida .

16. The investigator observed that there were persons

wearing t - shirts bearing the Respondent's identification. Upon

inquiry by the investigator, the workers stated that they we re

working for the Respondent.

17. The investigator observed that the vehi cles from which

the workers were operating b ore the Respondent's insignia.

18. The investigator determined that there was an existing

Stop - Work Order against the Respondent.

19. On January 8, 2010, the Petitioner issued a Request

for Production of Busine ss Records , seeking to identify the

number of days during which the Respondent had operated in

violation of the Stop - Work Order, and provided the request to

the Respondent.

20. Also on January 8, 2010, the Petitioner issued an

Order Assessing Penalty for Working in Violation of Reinstated

Stop - Work Order, seeking to impose a penalty of $555,000.00.

The penalty calculation was based on the 555 calendar days from

June 7, 200 8 , to December 14, 2009.

21. The Respondent challenged the penalty assessment and

r equested a formal administrative hearing.

22. On May 21, 2010, the Respondent submitted payroll

records for the period of March 21, 2009 , through December 11,

2009.

23. The records established that the Respondent had

conducted business operations dur ing the period that the Stop -

Work Order was effective.

24. The records also indicated that the Respondent

routinely conducted business operations from Monday through

Friday of each week, but did not operate on Saturdays, Sundays,

or usual legal holidays .

25. On January 21, 2011, the Department issued an Amended

Order Assessing Penalty f or Working in Violation of Reinstated

Stop - Work Order in the amount of $381,000 .00 , based on the

Respondent's routine work schedule with the deletion of the

Saturdays, Sundays, and legal holidays that had been included in

the January 8, 2010 , Assessment.

26. On January 25, 2011, the Petitioner filed a Motion to

Amend Order of Penalty Assessment. The Motion was granted

without objection at the commencement of the hear ing.

27. All o rders relevant to this dispute were hand -

delivered or were mailed to the Respondent's corporate address,

which was also the residential address for the principals of the

Respondent.

CONCLUSIONS OF LAW

28. The Division of Administrative He arings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 120.569 and 120.57, Fla . Stat .

29. The administrative fine at issue in this proceeding is

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

demonstrate by clea r and convincing evidence that the Respondent

was required to be in compliance with the applicable statutes on

the referenced date, that the Respondent failed to meet the

requirements, and that the proposed penalty is appropriate.

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

(Fla. 1996); Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987).

In this case, the burden has been met.

30. Every Florida employer is required to obtain workers'

compensation coverage for employees unless a specific exemption

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

Stat.

31. The Respondent is an employer. The workers observed

by the investigator on December 9, 2007, and who were identified

on payroll records submitted on May 21, 2010, were employees of

the Respondent. Section 440.02 provides the following

applicable definitions:

(15)(a) ÐEmployeeÑ 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.

* * *

(16)(a) ÐEmployerÑ 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.

ÐEmployerÑ also includes employment

agencies, emp loyee 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.

32. The evidence establishes that the Respondent was the

subject of a 2007 Stop - Work Order, that the Respondent entered

into an Agreement to pay the penalty related to the 2007 Stop -

Work Order, and that , based on execution of the Agreement, the

Stop - Work Order was conditionally lifted. Section 440.107(7)(a)

provides a s follows:

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 workersÓ

compensation required by this chapte r 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 ju stify

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

eff ect 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

s ervice 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 may be served

with regard to an employerÓs worksite by

posting a copy of the stop - work order in a

con spicuous location at the worksite. 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 an y 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. If an order of

conditional release is issued, failure by

the employer to meet any term or condition

of such penalty payment agreement shall

result in the immediate rein statement of the

stop - work order and the entire unpaid

balance of the penalty shall become

immediately due. The department may require

an employer who is found to have failed to

comply with the coverage requirements of s.

440.38 to file with the departmen t, as a

condition of release from a stop - work order,

periodic reports for a probationary period

that shall not exceed 2 years that

demonstrate the employerÓs continued

compliance with this chapter. The

department shall by rule specify the reports

required and the time for filing under this

subsection. (Emphasis supplied )

33 . The evidence establishes that the Respondent failed to

make any of the monthly payments required under the terms of the

Agreement and that the Petitioner reinstated the Stop - Work Or der

based on the Respondent's non - payment. The evidence establishes

that the Respondent operated in violation of t he reinstated

Stop - Work Order.

34. Section 440.107(7)(c) provides as follows:

The department shall assess a penalty of

$1,000 per day agains t an employer for each

day that the employer conducts business

operations that are in violation of a stop -

work order. (Emphasis supplied)

35. The evidence establishes that the Respondent routinely

conducted business operations from Monday through Friday of each

week and did not operate on Saturdays, Sundays, or usual legal

holidays. There are 381 days during the relevant period during

which the Respondent conducted business operations in violation

of the reinstated Stop - Work Order. The Petitioner is re quired

to assess the pena lty for each day of operation.

RECOMMENDATION

Based 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

asses sing a penalty of $381,000.00 against the Respondent for

conducting business operations in violation of t he reinstated

Stop - Work Order.

DONE AND ENTERED this 29th day of March , 2011 , 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

Div ision of Administrative Hearings

this 29th day of March , 2011 .

ENDNOTE

1/ References to Florida Statutes are to Florida Statutes

(2010), Unless otherwise indicated.

COPIES FURNISHED :

James D. King

Sherri King

J. Dee Service, Inc.

16591 Gator Ro ad

Fort Myers, Florida 33912

Timothy L. Newhall, Esquire

Ryan C. Cox, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

Julie Jones, CP, FRP, Agency Clerk

Department of Financial Services

Division of Legal Servi ces

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

Honorable Jeff Atwater

Chief Financial Officer

Department of Financial Services

The Capitol, Plaza Level 11

Tallahassee, Florida 32399 - 0300

P. K. Jameson, General Counsel

Department of Financia l 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 Recommen ded Order should be filed with the agency that

will issue the Final Order in this case.