11-003018 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Robert Miranda Construction, Inc. Status: Closed Recommended Order on Wednesday, December 28, 2011.

Summary: Respondent failed to secure and maintain workers' compensation insurance for its employees. Petitioner's assessment of a penalty in the amount of $2,469.90 was warranted.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERSÓ )

COMPENSATION , )

)

Petitioner , )

)

vs. ) Case No. 11 - 3018

)

ROBERT MIRANDA CONSTRUCTION, )

INC. , )

)

Respondent . )

)

RECOMMENDED ORDER

This case was heard on November 14, 2011, by video

teleconference at sites in Tallahassee, Florida , and

Jacksonville, Florida, before E. Gary Early, an Administrative

Law Judge assigned by the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Jamila G. Gooden, Esquire

Department of Financial Services

D ivision of Legal Services

WorkersÓ Compensation Section

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: No appearance

STATEMENT OF THE ISSUE

W hether Petitioner properly issued a Sto p Work Order and

Penalty Assessment against Respondent for failing to obtain

workers' compensation insurance that meets the requirements of

c hapter 440, Florida Statutes.

PRELIMINARY STATEMENT

On March 28, 2011, Petitioner, the Department of Financial

Ser vices, Division of WorkersÓ Compensation issued and served a

Stop - Work Order and Order of Penalty Assessment on Respondent,

alleging that Respondent was not in compliance with the workersÓ

compensation coverage requirements of c hapter 440, Florida

Statutes . The Stop - Work Order was posted on the construction

site, and ordered Respondent to cease all business operations

for all worksites in the state. The Order of Penalty Assessment

set the penalty amount at 1.5 times the amount that the employer

would have paid in premiums had workersÓ compensation insurance

been procured. On April 5, 2011, Respondent filed an Election

of Proceeding by which it disputed the allegations that it

failed to obtain workersÓ compensation coverage that met the

requirements of c ha pter 440, Florida Statutes.

On April 8, 2011, Petitioner issued an Amended Order of

Penalty Assessment (hereinafter "Amended Order") which was

served on Respondent on April 18, 2011. The Amended Order

established a monetary penalty of $21,623.46. The Order,

Amended Order, and Election of Proceeding were transmitted to

the Division of Administrative Hearings for a formal

administrative hearing, and assigned to the undersigned. The

case was set for Hearing to convene on August 19, 2011.

On August 4, 2011, Petitioner moved to continue the hearing

in order to allow it to review additional records provided by

Respondent and, if appropriate, recalculate the penalty. The

motion was granted and the case was placed in abeyance.

On September 19, 2011, Petit ioner filed a Status Report

requesting that the hearing be rescheduled. Petitioner also

filed a Motion to Amend Penalty Assessment, along with its 2 nd

Amended Order of Penalty Assessment, by which it reduced the

penalty from $21,623.46 to $2,523.27. The Motion was granted,

and the hearing was rescheduled for November 14, 2011.

On November 7, 2011, Petitioner filed a 2 nd Motion to Amend

Penalty Assessment, along with its 3 rd Amended Order of Penalty

Assessment, by which it further reduced the penalty fro m

$2,523.27 to $2,469.90. The 2 nd Motion was granted.

Accordingly, the 3 rd Amended Order of Penalty Assessment forms

the basis for this proceeding.

The case proceeded to hearing on November 14, 2011 , by

video hearing at sites in Tallahassee, Florida , a nd

Jacksonville, Florida. P etitioner presented the testimony of

Allen DiMaria, an Investigator with the Division of WorkersÓ

Compensation, and Cathe Ferguson, an Insurance Specialist III

and penalty calculator for the Division of WorkersÓ

Compensation. P etitioner introduced Exhibits 1 through 11, each

of which was admitted into evidence. Respondent did not appear

at the final hearing.

The one - volume Transcript was filed on December 12, 2011.

Petitioner timely filed its Proposed Recommended Order, which

has been considered in the preparation of this Recommended

Order. References to statutes are to Florida Statutes (2011)

unless otherwise noted.

FINDINGS OF FACT

1. Petitioner is the state agency responsible for

enforcing the Flor ida Workers' Compensa tion Law, c hapter 440,

Florida Statutes, including those provisions that employers

shall be liable for, and shall secure and maintain payment of

compensation for their employees who suffer work - related

injuries.

2. Respondent is an active Florida for - pro fit corporation,

having been first incorporated on November 18, 2004. Respondent

has been certified as a Building Contractor by the Department of

Business and Professional Regulation, Construction Industry

Licensing Board, and holds license No. CBC1253639 .

3. On March 28, 2011, Petitioner's investigator, Allen

DiMaria, conducted a random i nspection of a worksite at

3434 Atlantic Boulevard, Jacksonville, Florida 32207.

Mr. DiMaria noticed an individual at the site cutting wood with

a circular saw. He i ntroduced himself to the individual and

produced identification. Mr. DiMaria then asked the individual

what he was doing and for whom he worked. The individual

identified himself as Mickey Larry Griffis, Jr., stated that he

was cutting wood to replace ro tted wood on a privacy fence, and

indicated that he was employed by Respondent. He stated that it

was his first day working for Respondent, but that he had worked

for Respondent in the past.

4. Mr. DiMaria proceeded to call Respondent, as the

contract or on the project, and spoke with Robert Miranda.

Mr. Miranda indicated that he hired Mr. Griffis to watch work at

the site, but not to do the work. Despite Mr. MirandaÓs

explanation, Mr. DiMaria correctly determined that Mr. Griffis

was engaged in Ðcons tructionÑ activity for which workersÓ

compensation insurance coverage was required.

5. Mr. DiMaria returned to his office, and consulted the

Coverage and Compliance Automated System (CCAS), the statewide

database for workersÓ compensation information, to determine

RespondentÓs status in the workersÓ compensation system. Using

the CCAS, Mr. DiMaria determined that Respondent had no workersÓ

compensation coverage on file for any employee of the company.

Rather, Respondent had an exemption, which is issued by

Petitioner to officers of companies, and which serves to exempt

said officers from the requirement to obtain workersÓ

compensation insuranc e for themselves. Pursuant to s ection

440.05(3), exemptions apply only to the officers of a company,

not to employees.

6. Mr. DiMaria conferred with his supervisor, who

authorized him to issue a Stop - Work Order and Penalty

Assessment. The consolidated Stop - Work Order and Penalty

As sessment was issued on March 28, 2011 , and posted on the

construction site. The Order required Respondent to cease all

business operations statewide. The Order also assessed a

penalty equal to 1.5 times the amount the employer would have

paid in premium when applying the approved manual rates to the

employer's payroll for the preceding three - year period, pursuant

to section 440.107(7)(d).

7. On March 29, 2011, Mr. DiMaria issued a Request for

Production of Business Records for Penalty Assessment

Calcul ation (hereinafter the "Request") to Respondent, requiring

Respondent to produce business records for the period of

March 29, 2008 , through March 28, 2011. The records requested

included, but were not limited to business licenses, banking and

account reco rds for payroll and disbursements, and records

regarding subcontractors and other leased or temporary workers.

8. In response to the Request, Respondent provided

Petitioner with certain licenses, proposals, and contracts for

work performed. Respondent also sent Certificates of Election

to be Exempt from Florida WorkersÓ Compensation Law that had

been issued to Respondent by Petitioner. The c ertificates

identified the scope of RespondentÓs business as demolition,

painting, framing, drywall, and Ðcertif ied building contractor.Ñ

All records received by Mr. DiMaria were sent by him to Cathe

Ferguson, who was responsible for performing penalty

calculations.

9. Ms. Ferguson reviewed the records in order to determine

the appropriate penalty based on the in formation provided. The

penalty worksheet prepared by Ms. Ferguson indicates that no

payroll information was supplied to Petitioner by Respondent

regarding Mr. Griffis, the employer on - site at the time of the

inspectio n. Therefore, Mr. GriffisÓ p ayroll w as imputed

pursuant to s ection 440.107(7)(e).

10. Ms. Ferguson used the ÐScopes ManualÑ published by the

National Council on Compensation Insurance, and adopted by

Petitioner in Florida Administrative Code Rule 69L - 6.021, to

determine the appropriate lev el of imputed compensation to

Mr. Griffis. She determined that the work being performed on

the site fell within class code 6400. Class code 6400 is

described in r ule 69L - 6.021(2)(yyy) as Ð Fence Installation and

Repair - Metal, Vinyl, Wood or Prefabricate d Concrete Panel

Fence Installed By Hand .Ñ Based on the evidence related to the

inspection, which indicated that Mr. Griffis was engaged in the

repair of a wooden privacy fence, the work being performed by

Mr. Griffis falls within class code 6400.

11. M r. GriffisÓ salary was imputed for the full three -

year period from March 30, 2008 , to March 28, 2011, with a total

imputed payroll of $183,327.82. The workersÓ compensation

insurance premium was calculated by multiplying one percent of

the gro ss payroll f or that period by the approved manual rate

for each quarter, which resulted in a calculated premium of

$14,415.62. The penalty was determined by multiplying the

calculated premium by 1.5, resulting in the final penalty of

$21,623.46 . 1/

12. On April 8, 2 011, Petitioner issued an Amended Order

of Penalty Assessment assessing a monetary penalty amount of

$21,623.46 against Respondent.

13. Respondent subsequently provided Petitioner with

additional records regarding RespondentÓs employees, including a

nu mber of bank records. Ms. Ferguson revised her penalty

worksheet to reflect that payroll was now based on records,

rather than being imputed, included a number of additional

employees for fixed periods of employment, and applied different

class codes. Ms . Ferguson testified that her application of the

class codes was based upon her review of employee records and

check ledgers provided by Respondent. Petitioner did not appear

at the hearing to offer evidence to the contrary.

Ms. FergusonÓs determinations were supported by competent,

substantial evidence, and it is found that her determination of

the appropriate class code for each employee was accurate.

14. Total payroll for the th ree - year period in question

was determined to be $14,676.25. Applying t he same formula as

that applied to determine the penalty amount reflected in the

Amended Penalty Assessment, the premium was calculated to have

been $1,682.15, with a resulting penalty of $2,523.27.

15. On August 11, 2011, Petitioner issued a 2 nd Amended

Order of Penalty Assessment reducing Respondent's penalty from

$21,623.46 to $2,523.27 .

16. Petitioner subsequently removed Al Baukecht, Mack

Plumbing, and ÐNo NameÑ from the list of RespondentÓs employees.

With that chan ge, total payroll for the thre e - year period in

question was reduced to $14,092.00. The premium was calculated

to have been $1,646.57, and the penalty reduced from $2,523.27

to $2,469.90.

17. On September 21, 2011, Petitioner issued a 3 rd Amended

Order of Penalty Assessment reducing Respondent's penalty to

$2,469.90 .

CONCLUSIONS OF LAW

18. The Division of Administrative Hearings has

jurisdiction over the subject matter and parties pursuant to

sections 120.569 and 120.57(1), Florida Statutes.

19. Petitioner is the agency of the State o f Florida

charged, pursuant to section 440.107(3) , with the duty to:

. . . enforce workers' compensation coverage

requirements, including the requirement that

the employer secure the payment of workers'

compensation . . . . In addition to any

othe r powers under this chapter, the

department shall have the power to:

(a) Conduct investigations for the purpose

of ensuring employer compliance.

(b) Enter and inspect any place of business

at any reasonable time for the purpose of

investigating employe r compliance.

(c) Examine and copy business records.

* * *

(g) Issue stop - work orders, penalty

assessment orders, and any other orders

necessary for the administration of this

section.

(h) Enforce the terms of a stop - work order.

(i) Levy and pursue actions to recover

penalties.

(j) Seek injunctions and other appropriate

relief.

20. Petitioner has the burden of proof in this case and

must show by clear and convincing evidence that Respondent

violated the Workers' Compensation Law during the relev ant

period and that the penalty assessments are correct.

§120.57(1)(j), Fla. Stat.; DepÓt of Bankin g & Fin., Div. of

Securities and Investor Protection v. Osborne Stern & Co. ,

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

(Fla. 1987); Pou v. DepÓt of Ins. , 707 So. 2d 941 (Fla. 3d DCA

1998). Clear and convincing evidence Ðrequires more proof than

a Òpreponderance of the evidenceÓ but less than Òbeyond and to

the exclusion of a reasonable doubt.ÓÑ In re Graziano , 696 So.

2d 744, 753 (Fl a. 1997).

21. Pursuant to s ections 440.10 and 440.38, every

"employer" is required to secure the payment of workers'

compensation for the benefit of its employees unl ess exempted or

excluded under c hapter 440. Strict compliance with the Workers'

Compe nsation Law is, therefore, required by the employer. See ,

e.g. , Summit Claims Mgmt. v. Lawyers Express Trucking, Inc. , 913

So. 2d 1182, 1185 (Fla. 4 th DCA 2005); C&L Trucking v. Corbitt ,

546 So. 2d 1185, 1186 (Fla. 5th DCA 1989).

22. Section 440.02(17)( b)2. defines ÐemploymentÑ to mean

Ðany service performed by an employee for the person employing

him or her,Ñ and includes Ðwith respect to the construction

industry, all private employment in which one or more employees

are employed by the same employer.Ñ

23. Section 440.02(8) defines Ðconstruction industryÑ to

include Ð for - profit activities involving any building, clearing,

filling, excavation, or substantial improvement in the size or

use of any structure or the appearance of any land.Ñ

24. Section 440.02(8) further provides that Petitioner

Ðmay, by rule, establish standard industrial classification

codes and definitions thereof which meet the criteria of the

term Òconstruction industryÓ as set forth in this section.Ñ

25. Petitioner has adopted th e construction industry

classification codes contained in the National Council on

Compensation Insurance Basic Manual (2001 ed.) by r ule 69L -

6.021. That rule includes activities within the scope of

RespondentÓs licensed business as a certified building

co ntractor.

26. Petitioner established by clear and convincing

evidence that Respondent was an "employer" for workers'

compensation purposes because it was doing business in the

construction industry as a building contractor, and engaged one

or more employees to perform se rvices on its behalf from

March 30, 2008 , to March 28, 2011. Therefore, Respondent was

required to secure and maintain compensation for its employees

pursuant to s ection 440.10.

27. Petitioner proved by clear and convincing evidence

that the employees identified in the pen alty worksheets were not

covered by a valid workers' compensation insurance policy during

the assessment period.

28. Section 440.107(7)(a) provides in pertinent part that:

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 workers'

compensation . . . such failure shall be

deemed an immediate serious danger to public

health, safety, or welfare sufficient to

justify service by the department of a stop -

work order on the employer, requiring the

cessation of all business operations . . . .

As a result of the foregoing, PetitionerÓs S top - Work Order was

authorized and appropriate.

29. Section 44 0.107(7)(d)1. provides that:

In addition to any penalty, stop - work order,

or injunction, the department shall assess

against any employer who has failed to

secure the payment of compensation as

required by this chapter a penalty equal to

1.5 times the amount the employer would have

paid in premium when applying approved

manual rates to the employer's payroll

during periods for which it failed to secure

the payment of workers' compensation

requ ired by this chapter within the

preceding 3 - year period or $1,000.00,

whichever is greater.

30. Business records provided to Petitioner demonstrate

that Respondent's total payroll from March 30, 2008, through

March 28, 2011, was $14,092.00. The total workers' compensation

premium that Respondent should have paid for its employees for

that period was $1,646.57. Multiplying that amount by the

statutory factor of 1.5 results in a penalty assessment in the

amount of $2,469.90 .

31. Based on the foregoin g, Petitioner proved, by clear

and convincing evidence, that Respondent is liable for payment

of a penalty in the amount of $2,469.90 for its failure to

secure and maintain compensation for its employees as set forth

in the Stop Work Order and the 3 rd Amen ded Penalty Assessment.

RECOMMENDATION

Based on the findings of fact and conclusions of law, it is

RECOMMENDED that Petitioner enter a final order assessing a

penalty of $2,469.90 against Respondent, Robert Miranda

Construction, Inc. , for its failure t o secure and maintain

required workersÓ compensation insurance for its employees .

DONE AND ENTERED this 28th day of December, 2011 , in

Tallahassee, Leon County, Florida.

S

E. GARY EARLY

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 28th day of December , 2011 .

ENDNOTE

1/ The calculated premium times 1.5 differed from the penalty

assessed in each penalty iteration by an amount not exceeding

five cents. The differences are presumed to be the result of

rounding errors, but in any event are not material deviations.

COPIES FURNISHED :

Jamila Georgette Gooden, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

Robert Miranda

Robert Miranda Construction, Inc.

2007 Braque Court

Jacksonville, Florida 32210

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 this case.