12-001582 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. All Phase Construction And Development, Llc Status: Closed Recommended Order on Tuesday, October 9, 2012.

Summary: Respondent failed to provide workers' compensation coverage for two of the three years at issue.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL )

SERVICES, DIVISION OF WORKERSÓ )

COMPENSATION , )

)

Petitioner , )

)

vs. ) Case No. 12 - 1582

)

ALL PHASE CONSTRUCTION AND )

DEVELOPMENT, LLC , )

)

Respondent . )

)

RECOMMEN D ED ORDER

Pursuant to notice to all parties , the final hearing was

conducted in this case on September 6, 2012, via video

teleconference with sites in Tallahassee and Tampa , Florida,

before Administrativ e Law Judge R. Bruce McKibben of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Jamila G. Gooden, Esquire

Department of Financial Services

200 E ast Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: Da vid M. Robey, pro se

All Phase Construction and

Development, LLC

3118 Whitehead Lane

Land O Lakes, Florida 34638

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent, All Phase

Construction and Development, LLC (ÐAll PhaseÑ) , failed to

provide workersÓ compensation coverage for its employees and, if

so, what amount is owed, including any penalties imposed by

Respondent, Department of Financial Services, Division of

Work ersÓ Compensation ( Ð Department Ñ ).

PRELIMINARY STATEMENT

This case commenced with the posting of a Stop - Work Order

at All PhaseÓs corporate offices. All Phase timely filed a

request for a formal administrative hearing.

At the final hearing, the Departmen t presented the

testimony of Jonathan Hill, compliance investigator; and Jordan

Rimert, penalty auditor. The Department offered nine exhibits

into evidence, each of which was admitted. All Phase presented

the testimony of its sole owner, David M. Robey. All Phase did

not offer any exhibits into evidence during the final hearing.

The parties advised that a transcript of the final hearing

would be ordered. By rule , the parties have ten days from the

date the transcript is filed to file proposed recommen ded orders

( Ð PROs Ñ ). The T ranscript was filed at the D ivision of

A dministrative H earings on September 20, 2012. All Phase and

the Department each filed its PRO on October 1, 2012. The All

Phase PRO included three exhibits. However, inasmuch as those

ex hibits had not been properly offered into evidence during the

final hearing, they were not relied upon by the undersigned in

making findings in this Recommended Order. Other than those

exhibits, each party's PRO was duly considered in the

preparation of t his Recommended Order.

FINDINGS OF FACT

1. The Department is the State agency responsible for,

inter alia, monitoring businesses within the State for

compliance with workersÓ compensation insurance compliance.

2. At all times relevant hereto, All Phase w as a limited

liability company duly existing pursuant to the laws of the

State of Florida. All Phase came into existence on April 2,

2007. The sole member and manager of All Phase is David M.

Robey. The address of record for All Phase is 1906 North

Arme nia Avenue, Suite 214, Tampa, Florida. The Registered Agent

for All Phase listed in , Department of State, Division of

Corporation , records is TK Registered Agent, Inc., located at

101 E. Kennedy Boulevard, Suite 2700, Tampa, Florida.

3. On or about June 9, 2011, the Department received an

anonymous call concerning All Phase. The call, which the

Department calls a Ðpublic referral,Ñ was from an anonymous

source claiming that All Phase was not providing workersÓ

compensation insurance for its employees. M r. Hill was assigned

to investigate the complaint.

4. Mr. Hill first determined from the DepartmentÓs

coverage and compliance automated system (ÐCCASÑ) that there was

no current workersÓ compensation coverage listed for All Phase .

CCAS showed that All Phase had coverage in place from January 1,

2010 , until January 1, 2011, but there was no coverage after

that period . The calendar year 2010 coverage had been provided

by a professional employer organization (PEO).

5. After ascertaining there was no curr ent workersÓ

compensation coverage, Mr. Hill visited the All Phase offices in

Tampa on June 9, 2011. Upon locating the office, Mr. Hill went

inside and met a woman who identified herself as Michelle

Little, secretary for All Phase. Ms. Little advised Mr. Hill

that Mr. Robey, the owner, was at a meeting in Orlando. She

told Mr. Hill that Mr. Robey was a certified general contractor ,

who was involved in various construction jobs. Mr. Hill later

independently verified Mr. RobeyÓs general contractorÓs

certi fication and license.

6. Ms. Little said there were four employees in the

office, plus Mr. Robey and his brother, a job estimator.

Mr. Hill could not independently verify Ms. LittleÓs description

of the office staff. Mr. Hill then checked to see if the re was

any workersÓ compensation insurance coverage in place for the

alleged employees , but did not find any. Mr. Hill called Mr.

Robey and left a message; he told Mr. Robey to return the call

by the end of that business day or Mr. Hill would have a Stop -

Work Order (ÐSWOÑ) entered. Mr. Hill did not receive a return

telephone call.

7. On the next day, June 10, 2011, Mr. Hill went to the

All Phase offices and posted an SWO on a door of the building.

Mr. Robey disputes whether the SWO was left on the front door or

rear door of the building, but th ere is no consequence as to

that distinction . Mr. Hill also mailed a copy of the SWO via

certified mail to the address of All PhaseÓs registered agent,

TK Registered Agent, Inc. 1/ Two days later, Mr. Hill sent ou t a

ÐRequest for Production of Business Records for Penalty

Assessment CalculationÑ (ÐBusiness Records RequestÑ). The

Business Records Request listed 13 categories of documents and

information needed by the Department to accurately calculate the

penalty f or All PhaseÓs failure to have workersÓ compensation

coverage in place .

8. The Business Records Request contained a clear and

concise warning that failure to produce the requested records

would result in the Department imputing a weekly payroll amount

for each purported employee. When Mr. Robey failed to produce

the requested records, Mr. Hill prepared an Order of Penalty

Assessment (ÐOPAÑ). The OPA was amended on July 7, 2011,

showing a total penalty of $34,141.15 for failure to provide

adequate workers Ó compensation coverage. The OPA was sent via

certified mail to All PhaseÓs registered agent of record.

9. The OPA addresses only two employees for All Phase:

David M. Robey and Michelle Little. Mr. Hill could not verify

that any other employees descri bed by Ms. Little earlier

actually worked for All Phase. Mr. Robey was assigned a class

code of 5403, i.e., carpentry, not otherwise classified;

Ms. Little was assigned code 8810, i.e., clerical office

employee. The other office workers and estimator we re not

included in the calculation because Mr. Hill could not find any

evidence they ever worked for the company. Mr. Robey maintains

that Ms. Little was not really an employee of All Phase, but

inasmuch as she held herself out to be the businessÓ secreta ry

and was working in the All Phase office when Mr. Hill went to

investigate, the DepartmentÓs designation of her as an employee

of All Phase is justified and reasonable.

10. Mr. Robey also maintains that he was not actively

engaged in construction but wa s merely acting as a management

company. He did not adequately explain what part a management

company plays in a construction project, but said at times when

he was doing construction he would get workersÓ compensation

coverage. There is no persuasive ev idence to support Mr.

RobeyÓs claim concerning his business. He is a certified

general contractor working under a company with the words

Ðconstruction and developmentÑ in its title.

11. Mr. Robey had various explanations for not providing

the Departmen t with his business records. He first said that

his company had been evicted from his office after losing all of

its business. He said the company stopped operating and

therefore did not maintain any records. He said the records at

his old office became unavailable after he was evicted. Then

Mr. Robey said he was afraid to turn over his records lest the

Department find evidence of other payments to friends and family

members that could be claimed to be payroll payments. He was

afraid the assessment woul d be even higher if that happened. No

matter the actual reason, All Phase did not respond to the

Business Records Request. Had Mr. Robey provided his business

records it is possible his assessment c ould have gone down (if

the facts he alluded to , but did not prove at final hearing were

true, e.g., that Ms. Little was just a friend helping out and

that Mr. Robey was the only employee of the company and was

eligible for an exemption from coverage, etc.).

12. Mr. Rimert did the calculations for the penalt y

appearing in the OPA. He calculated the amount of the workersÓ

compensation insurance premium All Phase should have paid during

the past three years for Mr. Robey and Ms. Little. Absent their

actual salaries, Mr. Rimert used the average weekly wage set

forth in the information bulletin issued by the National Council

on Compensation Insurance, Inc. , to impute wages for the two

known employees. Applying the manual rates for each class code,

Mr. Rimert calculated the premium and then, pursuant to statute,

multiplied the amount by one and a half. His calculations form

the basis for the assessed penalty in the OPA.

13. One portion of Mr. RimertÓs calculations is amiss:

The three - year period he utilized for making the assessment

calculation included the p eriod of time All Phase was providing

workersÓ compensation coverage through a PEO. Mr. Rimert said

that he simply presumed that the employees covered by the PEO

could also have been paid directly by Mr. Robey for other work

done during the time the PEO w as providing coverage.

Mr. RimertÓs calculations supposed a full 40 - hour work week for

the employees, so any work Mr. Robey supposedly paid directly to

himself and Ms. Little would have been in excess of a normal

work week. There is no persuasive eviden ce to suggest that

Mr. Robey or Ms. Little worked more than a regular 40 - hour week.

14. Mr. Robey testified, and the Department did not

refute, that Ms. Little did not even live in the State of

Florida for all of the three years used in Mr. RimertÓs

cal culations. That being the case, Ms. Little could not be an

employee of All Phase for the entire period. However, there was

insufficient evidence to establish exactly what periods of time

Ms. Little lived outside the State of Florida. 2/

15. The Departm ent established that All Phase failed to

provide workersÓ compensation insurance coverage for Mr. Robey

for the periods: June 10, 2008 , through December 31, 2008 , for a

penalty of $7,415.10; January 1, 2009 , through March 31, 2009 ,

for a penalty of $2,888. 93; April 1, 2009 , through June 30,

2009 , for a penalty of $3,108.59; July 1, 2009 , through

December 31, 2009 , for a penalty of 5,906.24; and January 1,

2011 , through June 9, 2011 , for a penalty of $4,403.90 . (T here

was, however, PEO coverage in place fr om January 1, 2010 ,

through December 31, 2010 .) The total penalty for failing to

cover Mr. Robey is $17,816.52.

16. The Department established that All Phase failed to

provide workersÓ compensation insurance coverage for Ms. Little

for the periods: June 10, 2008 , through December 31, 2008 , for a

penalty of $190.67; January 1, 2009 , through March 31, 2009 , for

a penalty of $63.35; April 1, 2009 , through June 30, 2009 , for a

penalty of $68.63; July 1, 2009 , through December 31, 2009 , for

a penalty of $129.5 1; and January 1, 2011 , through June 9, 2011 ,

for a penalty of $100.55 . ( A gain, the PEO coverage was in place

for January 1, 2010 , through December 31, 2010 . ) The total

penalty for failing to cover Ms. Little is $552.71. The total

penalty owed by All Ph ase for its two employees is $18,369.23.

CONCLUSIONS OF LAW

17. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding pursuant to s ections 120.569 and 120.57(1), Florida

Statutes (2012) . 3/

1 8. The Department has the burden of proof in this case.

Because the penalties being proposed are penal in nature, the

standard of proof is clear and convincing evidence. See Dep Ó t

of Banking & Fin ., Div . of Sec . & Inv . Prot . v. Osborne Stern &

Co. , 670 S o. 2d 932 (Fla. 1996).

19. Pursuant to s ections 440.10 and 440.38, Florida

Statutes, every employer is required to secure the payment of

workersÓ compensation insurance for the benefit of its employees

unless the employee is exempted or excluded under c ha pter 440,

Florida Statutes. Strict compliance with the Workers'

Compensation Law is required by the employer. See C&L Trucking

v. Corbitt , 546 So. 2d 1185, 1187 (Fla. 5th DCA 1989).

20. The Department may assess a penalty against an

employer who has fai led to obtain the requisite workersÓ

compensation coverage in an amount equal to :

1.5 times the amount the employer would have

paid in premium when applying the approved

manual rates to the employerÓs payroll

during the periods for which it failed to

secu re payments of workersÓ

compensation . . . . § 440. 1 07(7)(d),

Fla. Stat.

21. Further, section 440.107(7)(e) states that:

When an employer fails to provide business

records sufficient to enable the department

to determine the employerÓs payroll . . .

th e imputed weekly payroll for each employee

. . . shall be the statewide average weekly

usage as defined in s. 440.12(2), multiplied

by 1.5.

2 2 . The Department has proven by clear and convincing

evidence that All Phase failed to provide workersÓ compensat ion

insurance coverage for each of its employees during the periods

of June 2008 , through December 31, 2009 , and January 1, 2011 ,

through June 9, 2011. The Department properly imputed income to

the employees for the se period s, when they were working and n ot

otherwise covered. However, the Department acknowledges that

All Phase had workersÓ compensation coverage during the period

January 1, 2010 , through December 31, 2010.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a final order be entered by the

Department of Financial Services , Division WorkersÓ

Compensation, assessing a penalty against All Phase Construction

and Development, LLC, in the amount of $18,369.23, which will be

due and owing within 30 days of the date of the Final Order.

Neither All Phase Construction and Development, LLC, nor any of

its principles, shall be eligible to operate as a business in

this State until the assessed penalty has been paid in full .

DONE AND ENT ERED this 9 th day o f October , 2012 , in

Tallahassee, Leon County, Florida.

S

R. BRUCE MCKIBBEN

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 9 th day of October , 2012 .

ENDNOTES

1/ Mr. Robey testified that he no longer used that registered

agent due to financial reasons, but the entity is still listed

as the registered agent of record in the State of Florida,

Division of Corporations , records.

2/ The affidavit from Ms. Little attached to All PhaseÓs

proposed recommended order might have, if introduced properly at

final hearing, established the dates Ms. Little worked for All

Phase. However, the affidavit as submitted is not admissible

evidence.

3/ Unless specifically stated otherwise herein, all references

to Florida Statutes shall be to the 2012 version.

COPIES FU RNISHED :

Jamila Georgette Gooden, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

David M. Robey

All Phase Construction and

Development, LLC

3118 Whitehead Lane

Land O Lakes, Florid a 34638 - 7200

Julie Jones, CP, FRP, Agency Clerk

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

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.