11-002463 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Jorge L. Garcia Status: Closed Recommended Order on Wednesday, November 30, 2011.

Summary: Respondent was, at the time he attempted to secure an exemption from the workers' compensation insurance requirement, ineligible to receive such exemption.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERS ' )

COMPENSATION , )

)

Petitioner , )

)

vs. ) Case No. 11 - 2463

)

JORGE L. GARCIA , )

)

Respondent . )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case

on September 14, 2011, by video teleconference with sites in

Tallahassee and Orlando, Florida, before Lynne A. Quimby -

Pennock, an Administrative Law Judge of the Div ision of

Administrative Hearings (Division).

APPEARANCES

For Petitioner: Alexander Brick, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

For Respondent: Keith A. Graham, Esquire

Marchena and Graham, P.A.

976 Lake Baldwin Lane, Suite 101

Orlando, Florida 32814

STATEMENT OF THE ISSUE

The issue in this case is whether Jor ge L. Garcia

(Respondent) is entitled to elect to be exempt from the workers '

compensation insurance coverage requirements of chapter 440,

Florida Statutes (201 0 ). 1/

PRELIMINARY STATEMENT

On February 5, 2007, Petitioner, Department of Financial

Services, D ivision of Workers ' Compensation (Department or

Petitioner) , issued a Stop - Work Order to Tempmaster Hea t ing and

Cooling, Inc. (Tempmaster), a construction - based employer. The

total penalty assessed against Tempmaster, as reflected in the

Amended Order of Penalty Assessment ( Amended Penalty Order)

issued on February 19, 2007, was $6,332.42. On February 20,

2007, Tempmaster entered into a payment agreement schedule with

the Department that called for Tempmaster to make 60 monthly

payments, each due on the f irst day of the month.

On February 20, 2008, Tempmaster was notified that it had

failed to make its periodic payments, and the Department entered

a n Order Reinstating Stop - Work Order (February 2008 Stop - Work

Order) , effective immediately. Thereafter , Temp master submitted

the requisite payments , and the Department rescinded its

February 2008 Stop - Work Order. On September 4, 2008, the

Department sent Tempmaster another notification that it had

failed to make its periodic payments, and the Department entered

another Order Reinstating Stop - Work Order (September 2008 Stop -

Work Order) , effective immediately. Tempmaster submitted the

requisite payments , and , on October 3, 2008, the Department

rescinded its September 2008 Stop - Work Order. With this

October 2008 notification , Tempmaster was advised that the

Department did not rescind a s top - w ork order more than two

times.

On June 3, 2009, the Department issued an Order Reinstating

Stop - Work Order (June 2009 Stop - Work Order) to Tempmaster,

detailing that the unpaid balance of $3,732.76 was due

immediately. To date, this amount remains unpaid.

On April 13, 2011, the Department received a " Notice of

Election to Be Exempt " (Election of Exemption) from Florida ' s

w orkers ' c ompensation l aw in the name of " Jorge L. Garcia " as a

corporate officer and ten percent owner of All Construction

Services of Central Florida, Inc. (ACSOCF). The Election of

E xemption indicated that ACSOCF was engaged in the construction

industry and listed " Residential Contractor " and " HVAC

C ontracto r " as the scope of business or trade.

Upon review of the Election of E xemption, the Department

determined that Respondent was also a corporate officer and

owner of Tempmaster and that the February 5, 2007, Stop - Work

Order and Amended Penalty Order were sti ll in effect against

Tempmaster. On April 20, 2011, the Department notified

Respondent that it was denying his Election of E xemp tion based

on several factors.

On May 11, 2011, Respondent filed a " Jorge L. Garcia and

All Construction Services of Central F lorida, Inc., Petition f or

Hearing P ursuant to Section s 120.569 and 120.57 Fla. Stat. "

( P etition) , wherein he disputed several statements in the

Department ' s denial notification. The P etition alleged that

Respondent was entitled to an exemption , because R espondent was

not affiliated with Tempmaster because it was involuntarily

dissolved on September 14, 2007, by the Florida Department of

State, Division of Corporations .

On May 16, 201 1, the Department referred the P etition to

the Division for assignment of an Administrative Law Judge to

conduct a hearing. Following one continuance, this case was set

to be heard and was heard on September 14, 2011. A J oint P re -

hearing S tipulation was timely filed, and those stipulated

findings of fact contained therein are listed below at

paragraphs 1 through 21.

At the final hearing, the Department called the following

witnesses: Mark Franc e s Mark and Kevin Sterling. Petitioner ' s

Exhibits 1 through 15 were offered and admitted into evidence

over Respondent ' s objection. Respondent was present with his

counsel and did not testify. Respondent ' s Exhibits 1 through 6

were offered and admitted in evidence without objection.

At the conclusion of the hearing, the parties agreed to

file their proposed recommended orders (PROs) w ithin ten days of

the filing of the transcript. The T ranscript of the final

hearing was filed on November 3, 2011. The parties timely filed

their PRO s , and each has been considered in the preparation of

this Recommended Order.

FINDINGS OF FACT

1. The De partment is the state agency responsible for

enforcing the statutory requirement that employers secure the

payment of workers ' compensation for the benefit of their

em ployees and corporate officers.

2. An exemption is a method by which a corporate officer

becomes exempt from the workers ' compensation ins urance coverage

requirement of c hapter 440. See § 440.05, Fla. Stat.

3. The Department shall certify a corporate officer ' s

election to be exempt from the workers ' compensation insurance

coverage requireme nt of c hapter 440, if the election to be

exempt meets the statutory criteria of s ection 440.05. See

§ 440.05 , Fla. Stat .

4. A corporate officer or director is ineligible for an

exemption if he is affiliated with " a person who is delinquent

in paying a st op - work order and penalty assessment order issued

pursuant to s . 440.107, [Florida Statutes]. " § 440.05(15) , Fla.

Stat .

5. Respondent has been listed as a corporate officer of

ACSOCF with the Division of Corporations in the annual reports

filed on Octobe r 1, 2007 , and thereafter.

6. Tempmaster was incorporated in Florida on March 30,

1989.

7. Tempmaster ' s Articles of Incorporation contain

provisions whereby shareholders may remove directors.

8. Respondent was listed as a director of Tempmaster in

the A rticles of Incorporation filed with the Division of

Corporations on March 30, 1989, and on the annual corporation

reports filed from February 5, 1990, through December 18, 2006.

9. Tempmaster filed its last a nnual report with the

Division of Corporations on December 18, 2006.

10. No annual report or other documents identifying the

company ' s directors were filed with the Division of Corporations

after December 18, 2006.

11. On February 5, 2007, the Department issued a Stop - Work

Order and Order of Penalty Assessment ( Division of Workers'

Compensation Case No. 07 - 054 - D4) on Tempmaster.

12. On February 19, 2007, the Department issued the

Amended Penalty Order on Tempmaster. The Amended Penalty Or der

assessed a total penalty of $6,332.42 on Tempmaster in Cas e

No. 07 - 054 - D4.

13. The Stop - Work Order , p enalty a ssessment , and

reinstating orders were not served on Respondent and were not in

effect against Respondent individually.

14. On February 20, 2007, Respondent, on behalf of

Tempmaster , executed a Payment A greement Schedule for Periodic

Payment of Penalty with the Department in Case No. 07 Ï 0 54 - D4.

15. On February 20, 2007, the Department served an Order

of Conditional Release from Stop - Work Order to Respondent, as a

director of Tempmaster in Case No. 07 - 054 - D4.

16. Tempmaster became delinquent in paying the penalty

assessment order against it on October 1, 2008, when it ceased

making payments in accordance with the Payment Agreement

Schedule for Periodic Payment of Penalty.

17. Tempmaster, whose principal address was located at

199 N orth Goldenrod Road, Suite B, Orlando, Florida , 32807, was

administratively dissolved by the Division of Corporations on

September 14, 2007, and had ceased doing business and winding up

its corporate affairs by the first quarter of 2009.

18. In the first quarter of 2009, Respondent and John

Saccone (Mr. Saccone) , the only two shareholders of Tempmaster ,

agreed that the corporation would cease to exist ; that they

would cease being directors, office rs, shareholders, and

employees; and that their relationship to Tempmaster was ended.

19. On April 13, 2011, Respondent filed an Election of

Exemption with the Department as a corporate officer of ACSOCF.

20. On April 20, 2011, the Department issued a Notice of

Denial of Respondent ' s E lect ion of Exemption, stating:

. . . JORGE L GARCIA is an affiliated person

of TEMPMASTER HEATING & COOLING I NC against

which a S top - W ork Order and an Order of

Penalty Assessment was served and is still

in effect. Accordingly , JORGE L GARCIA is

ineligible for an election of exemption and

the Notice of E lection to be Exempt

a pplication for JOR GE L GARCIA is hereby

Denied .

The Department provided no other basis for the denial of

Respondent ' s exemption.

21. On July 11, 2011, Respondent filed his

o fficer/ d ir ector and r egistered a gent r esignations from

Tempmaster with the Division of Corporations.

22. No credible evidence was presented that Respondent or

anyone from Tempmaster disputed the Stop - Work Order when it was

issued in 2007. In fact, Respondent, on b ehalf of Tempmaster ,

executed the payment plan to resolve the Stop - Work Order on

February 20, 2007.

23. On February 20, 2008, the Department reinstated

Tempmaster ' s Stop - Work Order for failure to make its periodic

payments. This Stop - Work Order was resci nded on March 25, 2008,

when Tempmaster brought current i t s payments.

24. On September 4, 2008, the Department again reinstated

Tempmaster ' s Stop - Work Order for failure to make its periodic

payments. This Stop - Work Order was rescinded on October 3,

2008, when Tempmaster brought current i t s payments.

25. Although Respondent ' s Election of E xemption indicated

that Tempmaster had ceased to exist as of the first quarter in

2009, no credible evidence or testimony was presented that the

Department was notified at that time (2009) of this development.

26. On June 3, 2009, the Department reinstated

Tempmaster ' s Stop - Work Order for failure to make its periodic

payments. However , following the June 2009 Stop - Work Order , no

additional payments were received , and Te mpmaster was in default

of its obligation. At that time , Respondent remained an officer

or director of Tempmaster, based on his own failure to take any

steps to not ify the Department of a change.

27. As of June 3, 2009, the unpaid balance of the penalty

assessment against Tempmaster was $3,732.76. This amount was

due immediately when the June 2009 Stop - Work Order was issued.

As of the date of this hearing, the balance remained unpaid.

28. A corporate officer may elect to become exempt from

the workers ' compensation insurance coverage requirements of

chapter 440 by complying with the election of exemption

methodology set forth in section 440.05. If the election of

exemption meets the criteria of section 440.05, then the

Department is required to issue a certification of the election

to be exempt to the officer. See § 440.05(3), Fla. Stat.

29. No credible testimony or evidence was submitted (or

stipulated to) that Tempmaster ever provided documentation or

notification to the Department that it had cease d operations in

the first quarter of 2009. Additionally, neither its officers

nor directors notified the Department until April 2011 that

Tempmaster was dissolved, and , then, it was only when Respondent

filed his Election of E xemption for another entity a nd inserted

a statement regarding Tempmaster.

30. Respondent ' s April 2011 statement reads :

I, Jorge Garcia, am not affiliated with

Tempmaster Heating and Cooling, Inc., as

shown by the attached Secretary of State

record. Tempmaster Heating and Cooling,

I nc. , was dissolved on September 14, 2007,

and has not been in existence since then.

My affiliation with Tempmaster Heating and

Cooling, Inc., ceased on September 14, 2007

when the corporation was dissolved.

Therefore, I request the processing of my

Notic e of Election to be Exempt.

Respondent apparently took the position that his affiliation

with Tempmaster ended in September 2007. Yet he and the other

shareholder, Mr. Saccone , met in early 2009 to dissolve the

corporation. 2/

31. Three months later, on July 11, 2011, Respondent

submitted two resignations to the Division of Corporation s : one

as the r egistered a gent for Tempmaster and the second as a

d irector for Tempmaster. These actions ended Respondent ' s

affiliation with Tempmaster. However, this act ual cessation of

Respondent ' s affiliation with Tempmaster was well after his

April 13, 2011, Election of E xemption was filed with Department.

32. Although there was some discussion about Respondent

being granted two prior exemptions by the Department, one in

2007 and another in 2009, there was no credible testimony or

evidence presented to establish the dates on which Respondent

applied for those exemptions. If Tempmaster had been in

compliance (or without a stop - work order) in 2007 when

Respondent applie d, there would be no bar to the Department

granting the exemption. The same is true for the 2009

exemption. There was a period of time between January 2009 and

June 3, 2009, when Tempmaster was in compliance. Thus,

Respondent ' s posturing that he should be granted this exemption

because he had two prior exemptions granted is baseless.

33. The Department reviewed Respondent ' s Election of

E xemption to determine his eligibility to elect the exemption.

The Department ' s Coverage and Compliance Automated Syst em (CCAS)

reflected that Respondent was an officer of a corporation that

remained delinquent in paying a s top - w ork order and o rder of

p enalty a ssessment, which made him ineligible for the exemption.

Further, no credible evidence was presented that reflect ed

Respondent notified the Department of his cessation from

Tempmaster, save for the documentation admitted at hearing,

which was after the fact.

CONCLUSIONS OF LAW

34. The Division of Administrative Hearings has

jurisdiction over the parties to and the s ubject matter of this

proceeding. §§ 120.569 & 120.57, Fla . Stat . (2011) .

35. 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 ' t of

Cmt y. Aff. , 625 So. 2d 831, 835 (Fla. 1993); Dep ' t of Transp. v .

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

proceeding, Respondent seeks to establish that he qualifies for

an election of exemption from the workers ' compensation

insurance c overage requirements of chapter 440.

36. Section 440.05 sets forth the requirements for an

election of exemption , in pertinent part , as follows:

(3) Each officer of a corporation who is

engaged in the construction industry and who

elects an exemption fro m 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 department 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 c ertificate 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. . . .

* * *

(11) Any corporate officer permitted by

this chapter to claim an exemption must be

listed on the records of this state ' s

Secretary of State, Division of

Corporations, as a corporate officer. The

department shall issue a stop - work order

under s. 440.107( 7) to any corporation who

employs a person who claims to be exempt as

a corporate officer but who fails or refuses

to produce the documents required under

this subsection to the department within

3 business days after the request is made.

(12) Certificat es of election to be exempt

issued under subsection (3) shall apply only

to the corporate officer named on the notice

of election to be exempt and apply only

within the scope of the business or trade

listed on the notice of election to be

exempt.

* * *

(15) Any corporate officer who is an

affiliated person of a person who is

delinquent in paying a stop - work order and

penalty assessment order issued pursuant to

s. 440.107 , or owed pursuant to a court

order, is ineligible for an election of

exemption. The stop - work order and penalty

assessment shall be in effect against any

such affiliated person. As used in this

subsection, the term " affiliated person "

means:

* * *

(b) Any person who directly or indirectly

owns or controls, or holds with the power to

vote, 10 percent or more of the outstanding

voting securities of such other person;

(c) Any pers on who directly or indirectly

owns 10 percent or more of the outstanding

voting securities that are directly or

indirectly owned, controlled, or held with

the power to vote by such other person;

* * *

(f) Any officer, director, trustee,

partner, owner, manager, joint venturer, or

employee of such other person or a person

performing duties similar to persons in such

positions. . . .

37. Respondent ' s application failed to satisfy the

exemption eligibility requirements as set forth in the statutor y

provisions. The evidence established: that Respondent, at the

time Tempmaster was issued the February 5, 2007 , Stop - W ork Order

and p enalty a ssessment o rder, and the subsequent r einstatements

of p enalty o rders (in March and October 2008) , was an officer or

director of Tempmaster; that Respondent was still an officer or

director when Tempmaster defaulted on its scheduled payments in

June 2009; that Respondent remained a Tempmaster officer or

director until he notified the Department of his resignation

fro m Tempmaster in July 2011 (after he filed his Election of

E xemption with a different construction entity); and that

Tempmaster ' s penalty remained outstanding or delinquent.

Therefore, Respondent was 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 and is currently ineligible for an exemption.

38. Respondent failed to demonstrate that he is entitled

to an election of exemption from the workers ' compensation

insurance coverage requirements of chap ter 440.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a f inal o rder be entered by the

Department of Financial Services, Division of Workers '

Compensation , finding that Jorge L. Garcia is ineligible f or an

election of exemption under section 440.05.

DONE AND ENTERED this 30th day of November , 2011 , in

Tallahassee, Leon County, Florida.

S

LYNNE A. QUIMBY - PENNOCK

Administrative Law Judge

Division of Administrative Heari ngs

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 30th day of November, 2011 .

ENDNOTES

1/ Unless otherwise indicated, all references to the Florida

Statutes are to the 2010 version.

2/ According to the Division of Corporations , Tempmaster " was

administratively dissolved on September 14, 2007, for failure to

file its annual report, as require d by law. " However, it is

well settled that any corporation , which is administratively

dissolved , may apply for reinstatement at any time after the

effective date of dissolution. As such, Respondent (or the

other shareholder/director, Mr. Saccone) could have applied for

reinstatement of Tempmaster at any time, before Respondent ' s

resignations in July 2011.

COPIES FURNISHED :

Keith A. Graham, Esquire

Marchena and Graham, P.A.

976 Lake Baldwin Lane, Suite 101

Orlando, Florida 32814

Alexander Brick, Esqu ire

Florida Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

Julie Jones, CP, FRP, Agency Clerk

Department of Financial Services

Division of Legal Services

200 East Gaines Street

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 thi s case.