11-000243 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Sergio A. Balsinde Status: Closed Recommended Order on Wednesday, May 18, 2011.

Summary: Respondent was ineligible to elect exemption from the workers' compensation insurance requirement of chapter 440, due to his affiliation with a person who was delinquent in paying a Stop-Work Order and Penalty Assessment Order.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS' )

COMPENSATION, )

)

Petitioner, )

)

vs. ) Case No. 1 1 - 0 243

)

SERGIO A. BALSINDE , )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice , this cause came on for a formal hearing

before Lawrence P. Stevenson, a duly - designated Administrative

Law Judge, in Gainesville , Florida, on March 2, 2011 .

APPEARANCES

For Petitioner: Timothy L. Ne whall , Esquire

Department of Financial Services

Division of Workers' Compensation

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: Sergio A. Balsinde, pro se

Olivia Balsi nde 1 /

3819 Pepper Tree Lane, Apt. No. 3101

Wi ldwood, Florida 34785

STATEMENT OF THE ISSUE

At issue in this proceeding is whether Respondent ,

Sergio A. Balsinde ("Respondent") is entitled to elect to be

exempt from the workers' compensation insurance coverage

requirements of c hapter 440, Florida Statutes.

PRELIMINARY STATEMENT

On February 8, 2007, a Stop - Work and Order of Penalty

Assessment was issued and served on Balco Construction and

Development, In c. ("Balco") by the Department of Financial

Services, Division of Workers' Compensation ( " Department " ) . The

total penalty assessed against Balco, as reflected in the Second

Amended Order of Penalty Assessment issued on July 18, 2008, was

$32,452.08. On S eptember 23, 2008, Balco entered into an

Amended Payment Agreement Schedule with the Department that

called for Balco to make 60 monthly payments, each due on the

first day of the month . Balco ceased making payments in January

2009. On October 26, 2009, the Department issued an Order

Reinstating Stop - Work Order on Balco, reinstating the

February 8, 2007 , Stop - Work Order. The Order Reinstating Stop -

Work Order was served on Balco on October 30, 2009.

On November 29, 2010, the Department received a Notice o f

Election to be Exempt from Florida's Workers' Compensation Law,

in the name of Sergio A. Balsinde as a corporate officer and 10

percent owner of LC Cable Corp. The election of exemption

indicated that LC Cable Corp was engaged in the construction

indust ry and listed "Certified Electrical Contractor" as the

scope of business or trade.

Upon review of the election of exemption, the Department

discovered that Mr. Balsinde is also a corporate officer and

owner of Balco, and that the February 8, 2007 , Stop - Wor k Order

was still in effect against Balco. A corporate officer is

ineligible for an election to be exempt if that officer is

affiliated with a "person who is delinquent in paying a S top -

W ork O rder and P enalty A ssessment O rder issued pursuant to

section 44 0.107, Florida Statutes, or owed pursuant to a court

order." § 440.105(15), Fla. Stat. (2010). The Department

accordingly denied Mr. Balsinde's election of exemption on

December 6, 2010, and contemporaneously served a Notice of

Denial on Mr. Balsinde.

On December 28, 2010, Mr. Balsinde filed a P etition for

A dministrative H earing to contest the Department's decision.

The petition alleged that Mr. Balsinde was entitled to an

exemption because the Order Reinstating Stop - Work Order was

discharged in a Chapte r 7 bankruptcy proceeding filed by

Mr. Balsinde as an individual. The petition also requested

review of the Order Reinstating Stop - Work Order issued by the

Department on October 26, 2009 , and served on Mr. Balsinde on

October 30, 2009.

On January 14, 20 11, the Department referred the petition

to the Division of Administrative Hearings for the assignment of

an administrative law judge and the conduct of a formal hearing.

The hearing was scheduled for March 2, 2011, on which date the

hearing was held.

At the hearing, the Department presented the testimony of

Mark Francis Mark, the Department employee who managed the

exemption program. The Department's Exhibits 1 through 9 were

admitted into evidence. Respondent testified on his own behalf

and presented t he testimony of his wife, Olivia Balsinde.

Respondent offered no exhibits into evidence.

A Transcript of the final hearing was filed at the Division

of Administrative Hearings on March 24, 2011. The Department

timely filed a P roposed R ecommended O rder on April 4, 2011.

Respondent did not file a proposed recommended order.

On April 19, 2011, well after the time for filing proposed

recommended orders, Mr. Balsinde filed a letter requesting an

extension of the period of time for filing proposed recommended

orders. The request is hereby denied.

Unless otherwise stated, all statutory references are to

the 2009 edition of the Florida Statutes.

FINDINGS OF FACT

Based on the oral and documentary evidence adduced at the

final hearing, and the entire record in th is proceeding, the

following findings of fact are made:

1. The Department is the state agency responsible for

enforcing the requirement of the workers' compensation law that

employers secure the payment of workers' compensation insurance

coverage for thei r employees and corporate officers .

§ 4 40.107 (3) .

2. A corporate officer may elect to become exempt from the

workers' compensation insurance coverage requirements of c hapter

440 by complying with the election of exemption methodology set

forth in s ection 440.05. If the election of exemption meets the

criteria of s ection 440.05, then the Department is required to

issue a certification of the election to be exempt to the

officer. § 440.05(3).

3. A corporate officer is ineligible for an exemption if

he is affiliated with "a person who is delinquent in paying a

stop - work order and penalty assessment order issued pursuant to

s ection 440.107, or owed pursuant to a court order."

§ 440.05(15).

4. Balco was originally incorporated in 1985.

Mr. Balsinde has be en a corporate officer of Balco since at

least April 28, 2003, the date of the earliest Balco annual

report entered into evidence.

5. Mr. Balsinde is also a corporate officer and 10 percent

owner of LC Cable Corp.

6. The Department issued and served a St op - Work Order and

Order of Penalty Assessment on Balco on February 8, 2007. At

the final hearing in the instant case, Mr. Balsinde testified

that the Stop - Work Order and Order of Penalty Assessment had

been erroneously entered against his company. He tes tified that

the uninsured workers in question did not even work for Balco.

Mr. Balsinde testified that h e had attempted to rectify the

error with the Department, but was unable to make the Department

acknowledge its mistake.

7. Whatever the merits of Mr . Balsinde's factual claim,

neither he nor any other representative of Balco formally

challenged the Stop - Work Order and Order of Penalty Assessment.

Having long ago become final, the Stop - Work Order and Order of

Penalty Assessment cannot be contested in this proceeding.

8. On September 23, 2008, Balco entered into an Amended

Payment Agreement Schedule with the Department that called for

Balco to make 60 monthly payments, each due on the first day of

the month , and a suspension of the Stop - Work Order . After Balco

ceased making payments according to the schedule, the Department

issued an Order Reinstating Stop - Work Order on October 26, 2009.

The reinstatement order was served on Mr. Balsinde on

October 30, 2009.

7. As of October 26, 2009, the unpaid ba lance of the

penalty assessment against Balco was $22,236.38 , which was

ordered due immediately by the reinstatement order . As of the

date of the hearing in this case, the balance remained unpaid.

8. Neither Mr. Balsinde nor any other representative of

B alco filed a timely request for a review proceeding to

challenge the reinstatement order. Balco did not appeal the

reinstatement order.

9. On July 22, 2010, a final decree in Chapter 7

bankruptcy was entered on behalf of Mr. Balsinde by the United

States Bankruptcy Court for the Southern District of Florida, in

Case Number 10 - 18850 - LMI.

10. The discharge in bankruptcy was received by

Mr. Balsinde as an individual. Though the final decree listed

the Department as an unsecured creditor and Balco as a bu siness

of the debtor, Balco did not receive a discharge in bankruptcy,

nor did the company file a bankruptcy petition subsequent to the

issuance of the reinstatement order by the Department.

11. Mr. Balsinde submitted a Notice of Election to be

Exempt t o the Department on November 29, 2010, as an officer of

LC Cable Corp . , a corporation operating in the construction

industry.

12. The Department reviewed Mr. Balsinde's application to

determine his eligibility to elect the exempt ion. The

Department's C overage and Compl iance Automated System indicated

that Mr. Balsinde is the officer of a corporation that is

delinquent in paying a S top - W ork O rder and O rder of P enalty

A ssessment, which makes him ineligible for an exemption.

13. The Department issued a No tice of Denial of

Mr. Balsinde's election of exemption on December 6, 2010.

CONCLUSIONS OF LAW

1 4 . The Division of Administrative Hearings has

jurisdiction of the subject matter of and th e parties to this

proceeding. § § 120.569 and 120.57(1), Fla . Stat.

1 5 . The uncontested Order Reinstating Stop - Work Order

issued on October 26, 2009 , constituted final agency action

pursuant to s ection 440.107(7)(a). The order included a "Notice

of Rights" informing Balco of its right to seek review of the

final order pursuant to s ection 120.68 . Neither Mr. Balsinde

nor any other representative of Balco sought appellate review of

the order. Therefore, this tribunal lacks jurisdiction to

review any challenge to the Order Reinstating Stop - Work Order or

the underl ying Stop - Work Order and Order of Penalty Assessment

issued on February 8, 2007.

16. As the party seeking affirmative relief, Respondent

has the burden to demonstrate entitlement to the relief

requested by a preponderance of the evidence. Young v. Dep Ó t of

Cmty . Aff . , 625 So. 2d 831, 835 (Fla. 1993) ; Dep Ó t of Transp . v.

J.W.C. Company, Inc. , 396 So. 2d 778 (Fla. 1st DCA 1981) . In

this proceeding, Mr. Balsinde seeks to establish that he

qualifies for an election of exemption from the workers'

compensation insurance coverage requirements of c hapter 440 .

Section 440.05 sets forth the requirements for an election of

exemption as follows , in relevant part:

(3) Each officer of a corporation who is

engaged in the construction industry and who

elects an exempti on from this chapter . . .

must mail a written notice to such effect to

the department on a form prescribed by the

department. . . . Upon receipt of the notice

of the election to be exempt, receipt of all

application fees, and a determination by the

departme nt that the notice meets the

requirements of this subsection, the

department shall issue a certification of

the election to the officer, unless the

department determines that the information

contained in the notice is invalid. The

department shall revoke a certificate of

election to be exempt from coverage upon a

determination by the department that the

person does not meet the requirements for

exemption or that the information contained

in the notice of election to be exempt is

invalid. . .

* * *

( 15) Any corporate officer who is an

affiliated person of a person [ 2 / ] who is

delinquent in paying a stop - work order and

penalty assessment order issued pursuant to

s ection 440.107, or owed pursuant to a court

order, is ineligible for an election of

exempt ion. The S top - W ork O rder and P enalty

A ssessment shall be in effect against any

such affiliated person. As used in this

subsection, the term "affiliated person"

means:

* * *

(f) Any officer, director, trustee,

partner, owner, manager, joint venture r, or

employee of such other person or a person

performing duties similar to persons in such

positions. . .

17. Mr. Balsinde's application failed to satisfy the

exemption eligibility requirements set forth in the quoted

statutory provisions. The evidenc e established that

Mr. Balsinde is a corporate officer of Balco and that Balco is

delinquent in paying a S top - W ork O rder and P enalty A ssessment

O rder. Therefore, Mr. Balsinde is an "affiliated person" of a

person who is delinquent in paying a S top - W ork O r der and P enalty

A ssessment O rder and is ineligible for an exemption.

18. Mr. Balsinde argued that the Order Reinstating Stop -

Work Order against Balco was discharged by the final decree in

his personal bankruptcy case. The evidence on this point was

ambig uous at best. The final decree included the Department in

the list of unsecured creditors and named Balco as a business of

the debtor, but the final decree made no specific finding that

the Stop - Work Order and Order of Penalty Assessment against

Balco wer e discharged .

19. Even if Mr. Balsinde was discharged as to any personal

liability for the Balco debt, the liability of Balco as a

corporate entity would be unaffected unless and until Balco

itself filed for bankruptcy. See Dep Ó t of Prof Ó l Reg . , Div . of

Real Estate v. Stephen P. McCrady , Case No. 86 - 1145 (DOAH

August 19, 1986). Mr. Balsinde would thus remain an affiliated

person of a person who is delinquent in paying a S top - W ork O rder

and P enalty A ssessment O rder.

20. Further, it is questionable whethe r the Balco debt was

dischargeable at all in Mr. Balsinde's personal bankruptcy

proceeding. The Order Reinstating Stop - Work Order imposed an

administrative fine and was punitive in nature. See Dep Ó t of

Banking & Fin . v. Osborne Stern and Company , 670 So. 2d 932, 935

(Fla. 1996).

21. 11 U.S.C. § 523(a) provides, in pertinent part:

A discharge under section 727, 1141,

1228(a), 1228(b), or 1328(b) of this title

does not discharge an individual debtor from

any debt --

* * *

(7) to the extent such debt i s for a fine,

penalty, or forfeiture payable to and for

the benefit of a governmental unit, and is

not compensation for actual pecuniary

loss....

22 . The nondischarge a bility of fines and penalties is

self - executing under 11 U.S.C. § 523(c), meaning that such fines

and penalties are " automatically nondischargeable and it is not

necessary for either the state or the debtor to file a

proceeding to request the d e termination of dischargeability. "

In re Honeycutt , 228 B.R. 428, 430 (Bankr. E.D. Ark. 1998). Th e

Department had no duty to object in Mr. Balsinde's bankruptcy

proceeding in order to preserve the debt imposed by the Order

Reinstating Stop - Work Order.

23. In conclusion, it appears that even if Balco itself

had received a discharge in bankruptcy, the Stop - Work Order and

Order of Penalty Assessment, as reinstated, would have remained

in effect as an exception to discharge pursuant to 11 U.S.C.

§ 523(a)(7).

24. The undersigned pretends to no great depth of

expertise in the field of bankruptcy law. The above discussion

is intended not as the final word on whether the debt owed to

the Department could be discharged by either Mr. Balsinde or

Balco, but as an explanation of the presumptions that Mr.

Balsinde was required to overcome in order to establish

en titlement to the election of exemption in this case.

25. Mr. Balsinde has failed to demonstrate that he is

entitled to an election of exemption from the workers'

compensation insurance coverage requirements of c hapter 440,

Florida Statutes.

RECOMMENDATION

Having considered the foregoing Findings of Fact,

Conclusions of Law, the evidence of record, and the pleadings

and arguments of the parties, it is, therefore,

RECOMMENDED that a final order be entered by the Department

of Financial Services, Division of Workers' Compensation,

finding that Sergio A. Balsinde is ineligible for an election of

exemption under s ection 440.05.

DONE AND ENTERED this 1 8 th day of Ma y , 2011 , in

Tallahassee, Leon County, Florida.

S

LAWRENCE P. ST EVENSON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Di vision of Administrative Hearings

this 1 8 th day of Ma y , 2011 .

ENDNOTES

1 / Olivia Balsinde is the wife of Sergio Balsinde, whose English

proficiency is limited. Without objection from counsel for

Respondent, Ms. Bal sinde was allowed to assist her husband at

the hearing.

2 / "'Person' means individual, partnership, association, or

corporation, including any public service corporation."

§ 440.02(23).

COPIES FURNISHED :

Timothy L. Newhall, Esquire

Department of Fin ancial Services

200 East Gaines Street

Tallahassee, Florida 32399

Sergio Balsinde

11372 Southeast 178th Place

Summerfield, Florida 34491

Julie Jones, CP, FRP, Agency Clerk

Department of Financial Services

Division of Legal Services

200 East Gaines St reet

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.