13-002536 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Barber Custom Builder's, Inc. Status: Closed Recommended Order on Wednesday, April 30, 2014.

Summary: Petitioner proved, by lawful application of classification codes and manual rates, that Respondent is liable for payment of penalty for failure to secure workers' compensation insurance. A stop-work order is not a 120.569(2)(n) immediate final order.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

S ERVICES, DIVISION OF WORKERSÓ

COMPENSATION ,

Petitioner ,

vs. Case No. 1 3 - 2536

BARBER CUSTOM BUILDERS , INC. ,

Respondent .

/

RECOMMENDED ORDER

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

on February 10, 2014, in Tallahassee, Florida, before E. Gary

Early, an Administrative Law Judge assigned by the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Trevor Suter , Esquire

Crystal D. Stephens, Esquire

Department of Financial Services

Division of Worker sÓ Compensation

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: Kristian Dunn, Esquire

Dickens and Dunn, P.L.

517 East College Avenue

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

Whether Petitioner , Department of Financial Services,

Division of WorkersÓ Compensation (ÐPetitionerÑ or ÐDepartmentÑ)

properly issued a Stop - Work Order and Penalty Assessment against

Respondent , Barber Custom Builders, Inc. (ÐRespondentÑ or

Ð BarberÑ) for failing to obtain workers' compensation insurance

that meets the requirements of c hapter 440, Florida Statutes.

PRELIMINARY STATEMENT

On June 5, 2013 , Petitioner issued and served a Stop - Work

Order , No. 13 - 273 - 1A, and Order of Penalty Asses sment

(collectively the ÐStop - Work OrderÑ) alleging that Respondent

was not in compliance with the workersÓ compensation coverage

requirements of c hapter 440 . The Stop - Work Order was posted on

the construction site and provided to Dennis Barber , and ordered

Respondent to cease all business operations for all worksites in

the state. The Stop - Work Order set the general penalty amount

at 1.5 times the amount that the employer would have paid in

premiums had workersÓ compensation insurance been pro cured.

On June 17, 2013, Petitioner issued an Amended Order of

Penalty Assessment (hereinafter "Amended Order"). The Amended

Order established a monetary penalty of $9 6 ,302.87 .

On June 2 5 , 2013 , Respondent filed a Request for Hearing

through which it di sputed the allegations that it failed to

obtain workersÓ compensation coverage that met the requirements

of c hapter 440 . The Stop - Work Order, Amended Order, and

Election of Proceeding were transmitted to the Division of

Administrative Hearings for a formal administrative hearing,

which hearing was set to convene on September 10, 2013 .

On August 1 4, 201 3 , Petitioner moved the presiding

Administrative Law Judge to relinquish jurisdiction over this

matter to the Department based on certain matters having been

admitted in discovery. The motion was denied. The motion

alternatively requested a continuance of the final hearing in

order to allow it to receive discovery responses and prepare for

he a ring. The motion to continue was granted and the case was

re - scheduled to commence on October 8, 2013 .

On September 24, 2013, Respondent filed an unopposed motion

to continue the final hearing , which included a 2nd Amended

Order of Penalty Assessment by which the D epartment reduced the

penalty assessed from $96,302.87 to $36,387.03. The continuance

was for the purpose of allowing Respondent to depose the

DepartmentÓs penalty calculator as to the accuracy of the

revised calculations. The motion was granted, and the parties

were required to file a status rep ort by October 15, 2013.

On October 15, 2013, Respondent filed a notice of

availability providing dates on which the parties were available

for the final hearing. Based thereon, the final hearing was re -

scheduled to commence on December 4, 2013.

On November 7, 2013, this matter was transferred to the

undersigned for further proceedings and disposition.

On November 21, 2013, Respondent filed an unopposed motion

to continue the final hearing in which it represented that the

sole remaining issue was th e amount of the penalty, an amount

that was being negotiated by the parties. Based on the

representations in the motion, the final hearing was continued

and re - scheduled for February 10, 2014.

On January 31, 2014, the parties timely filed their J oint

P re - hearing S tipulation and their respective witness and exhibit

lists.

On February 4, 2014, Respondent filed a M otion to D ismiss

and Amended Motion to Dismiss that were based on deficiencies in

the issuance of the Stop - Work Order, specifically that the S top -

Work Order is an immediate final order that was entered without

conforming with the requirements of section 120.569 (2)(n),

Florida Statutes. On February 6, 2014, Petitioner filed its

response thereto.

The case proceeded to hearing on February 10, 20 14. At the

commencement of the hearing, the parties indicated that

additional records had been discovered and provided to the

Department that would likely result in a further recalculation

of the penalty amount. It was agreed that the testimony of

Lawren ce Eaton would be received, as Mr. Eaton was a witness who

had traveled to Tallahassee from out - of - town, but that the

hearing would otherwise be continued. A ruling on the Amended

M otion to D ismiss was reserved.

On March 11, 2014, the Department filed an unopposed M otion

to M odify C harging D ocuments , which included a 3rd Amended Order

of Penalty Assessment that reduced the penalty assessed from

$36,387.03 to $2,272.31. The motion was granted.

On March 12, 2014, the parties filed a Joint Stipulation

and Status Report that requested disposition of this proceeding

on stipulated exhibits and facts as follow:

1. Based on business records received from Respondent, the

Department has recalculated the assessed penalty. The penalty

has been reduced from $36,38 7.03 to $2,272.31.

2. The parties stipulate that exhibits 1 through 14 [as

pre - numbered and filed by the Department on January 31, 2014]

are admitted as evidence.

3. The parties stipulate that the attached 3rd Amended

Order of Penalty Assessment is cal culated correctly, if the

manual rates were properly adopted by rule, and also admit the

3rd Amended Order of Penalty Assessment into evidence. However,

Respondent disputes the use of the manual rates.

Based on the stipulations, the parties agreed to for ego

additional testimony, conclude the final hearing , and submit

proposed recommended orders, with the sole remaining issues

being 1) whether the Stop - Work Order is an immediate final order

as described in section 120.569(n), Florida Statutes , which was

en tered without having met the requirements of that section; 2)

whether PetitionerÓs use of NCCI classification codes used to

classify the nature of RespondentÓs business that are not

currently adopted by rule is permissible; and 3) whether

Petitioner may us e approved manual rates that have been adopted

by the Office of Insurance Regulation, but not by the Department

of Financial Services, for establishing presumptive wages for

calculating workersÓ compensation premiums.

There was no transcript filed of the February 10, 2014

hearing. The parties timely filed their Proposed Recommended

O rder s , which ha ve been considered in the preparation of this

Recommended Order. References to statutes are to Florida

Statutes (201 3 ) unless otherwise noted.

FINDINGS O F FACT

1. On January 31, 2014 , the parties filed a J oint P re -

hearing S tipulation, by which the parties stipulated to the

facts set forth in the following paragraphs 2 through 12. Those

facts are accepted and adopted by the undersigned.

2. The Department is the state agency responsible for

enforcing the statutory requirement that employers secure the

payment of workersÓ compensation for the benefit of their

employees and corporate officers.

3. Respondent, a Florida corporation, was engaged in

business operations in the construction industry in the State of

Florida from June 6, 2010 through June 5, 2013.

4. Respondent received a Stop - Work Order and Order of

Penalty Assessment from the Department on June 5, 2013.

5. The Department had a legal basis to issue and serve

Stop - Work Order 13 - 273 - 1A on Respondent. Respondent contests

the validity of the DepartmentÓs Stop - Work Order as a charging

document.

6. Respondent received a Request for Production of

Business Records for Penalty Assessment Ca lculation from the

Department on June 5, 2013.

7. Respondent received an Amended Order of Penalty

Assessment from the Department on June 17, 2013.

8. Respondent executed a Payment Agreement Schedule for

Periodic Payment of Penalty and was issued an Order of

Conditional Release from Stop - Work Order on August 6, 2013.

9. Respondent received a 2nd Amended Order of Penalty

Assessment from the Department on September 25, 2013.

10. Respondent employed more than four non - exempt

employees during the per iods of June 10, 2010 through Ju ne 30,

2010; July 2, 2010 through December 31, 2010; January 14, 2011

through December 29, 2011; January 30, 2012 through December 16,

2012; and January 4, 201 [3] through June 5, 2013.

11. Respondent was an ÐemployerÑ as defined in chapter

440 .

12. All of the individuals listed on the Penalty Worksheet

of the [2nd Amended Order of Penalty Assessment] , except Buffie

Barber and Linda Barber, were ÐemployeesÑ in the State of

Florida (as that term is defined in section 440.0 2(15)(a) ,

Florida Statutes) , of Respondent during the periods of non -

compliance listed on the penalty worksheets.

13. In addition to the foregoing, in their March 12, 2014 ,

Joint Stipulations and Status Report, the parties stipulated to

the facts set forth in the following paragraphs 14 and 15.

Those facts are accepted and adopted by the undersigned.

14. Based on business records received from Respondent,

the Department ha s recalculated the assessed penalty. The

penalty has been reduced from $36,387.03 to $2,272.31.

15. The 3rd Amended Order of Penalty Assessment is

calculated correctly, if the manual rates were properly adopted

by rule.

16. A review of the stipulated 3rd Amended Order of

Penalty Assessment reveals assessed penalties for employees

engaged in work described as class code 5403 (carpentry - NOC)

and class code 8810 (clerical office employees - NOC).

1 7 . Given the stipulations of the parties, further

findings are unnecessary.

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 (2013) .

1 9 . Petitioner is the agency of the Stat e 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 , and the requirement that the

employer pro vide the carrier with

information to accurately determine payroll

and correctly assign classification codes.

In addition to any other 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 employer compliance.

(c) Examine and copy business records.

* * *

(g) I ssue 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 relevant

period and that the penalty assessments are correct.

§120.5 7(1)(j), Fla. Stat.; DepÓt of Bankin g & Fin., Div. of Sec.

& Inv. Prot. 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 evi dence 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 (Fla.

1997).

2 1 . It is well - established that the Department has Ðbroad

powers to in vestigate employers, to halt any work where

employers are not complying, and to assess penalties on those

who do not comply.Ñ Twin City Roofing Constr. Specialists, Inc.

v. Dep't of Fin. Servs. , 969 So. 2d 563, 566 (Fla. 1st DCA

2007).

2 2 . 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'

Compensation Law is, therefore, re quired 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).

2 3 . Section 440.02(16)(a) defines Ðemployer , Ñ to include

Ðevery person carrying on any employment.Ñ

2 4 . Section 440.02(15)(a) defines ÐemployeeÑ to include

Ðany person who receives remuneration from an employer for the

performance of any work or service while engaged in any

employment.Ñ

2 5 . Section 4 40.02(17) defines ÐemploymentÑ to include

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 em ployer.Ñ

2 6 . 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

2 7 . 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

2 8 . By stipulation of the parties, the record contains

clear and convincing evidence that Respondent was an "employer"

for workers' compensation purposes because it was doing business

in the construction industry . As such , Respondent was required

to secure and maintain compensation for its employees pursuant

to s ection 440.10.

2 9 . Section 440.107(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 c ompensation 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' compe nsation

required by this chapter within the

preceding 3 - year period or $1,000.00,

whichever is greater.

30 . By stipulation of the parties, and based on business

records provided by Respondent , the Department correctly

calculated the assessed penalty in this case to be $2,272.31 ,

provided the manual rates were properly adopted.

Stop - Work Order as Immediate Final Order

3 1 . Respondent argues that a stop - work order entered

pursuant to section 440.107 is, in effect, an immediate final

order as described in section 120.569(2)(n). Section

120.569(2)(n) provides that:

If an agency head finds that an immediate

danger to the public health, safety, or

welfare requires an immediate final order,

it shall recite with particularity the facts

underlying such findin g in the final order,

which shall be appealable or enjoinable from

the date rendered.

3 2 . Respondent argues that the stop - work order served by

Mr. Eaton on June 5, 2013, is invalid since the DepartmentÓs

agency head made no finding Ðthat an immediate da nger to the

public health, safety, or welfare requires an immediate final

order,Ñ and that the DepartmentÓs agency head did not Ðrecite

with particularity the facts underlying such finding in the

final order.Ñ

3 3 . Through its enactment of chapter 440, th e L egislature

has established that Ð[t]he workersÓ compensation system in

Florida is based on a mutual renunciation of common - law rights

and defenses by employers and employees alike.Ñ £ 440.011, Fla.

Stat. In the view of the undersigned, chapter 440 est ablishes

the comprehensive process by which workersÓ compensation

benefits and remedies are to be extended, and provides the sole

means by which the obligations of the workersÓ compensation

program are to be enforced by the appropriate officials.

3 4 . S ection 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 wo rkers'

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 . . . .

3 5 . By its enactment of section 440.107 (7)(a) , the

legislature has determined that the failure to maintain workersÓ

compensation insurance is, as a matter of law, an immediate

threat to human health safety and welfare so as to warrant

issuance and service of a stop - work order . Thus, no separate

f inding by the agency head reciting the facts that establish

such a danger is necessary.

3 6 . Had the legislature intended for a stop - work order

authorized and issued pursuant to section 440.10 7 to be

considered to be an immediate final order as described in

section 120.569(2)(n) , it would have used that term. 1 / The fact

that it did not is compelling evidence that such a result was

not intended. See, e.g . , First Quality Home Care, Inc. v.

Alliance for Aging, Inc. , 14 So. 3d 1149 , 1153 - 1154 (Fla. 3rd

DCA 2009)(Ð had the Legislature intended to subject a private

corporation designated as an AAA to the APA's bid protest

procedures, it would have included that entity in the pertinent

statutes d efining Òagency.ÓÑ).

3 7 . In addition to the foregoing, section 120.52(7)

defines a Ðfinal orderÑ as:

a written final decision which results from

a proceeding under s. 120.56, s. 120.565,

s. 120.56 9, s. 120.57, s. 120.573, or

s. 120.574 which is not a rule, and which is

not excepted from the definition of a rule,

and which has been filed with the agency

clerk, and includes final agency actions

which are affirmative, negative, injunctive,

or declaratory in form.

3 8 . There is not hing in section 440.107 suggesting that a

stop - work order is final in nature, with relief limited to

ap peal or injunction. Rather, the stop - work order is in the

nature of an administrative complaint under rule 28 - 106.2015,

for which the remedy of an admin istrative proceeding is

available. See, e.g. , Riopelle v. DepÓt of Fin. Servs. , Div. of

Workers' Comp. , 907 So. 2d 1220, 1222 (Fla. 1st DCA 2005)(Ð The

administrative law judge advised Riopelle by order that she had

the right to request an expedited, summary hearing pursuant to

section 120.574, Florida Statutes (2001). She instead sought

relief under section 120.57(1), Florida Statutes (2001) . . . .

Riopelle therefore fails to show that section 440.107 is

unconstitutional by denying due process to a n employer found to

be in violation of chapter 440.Ñ).

3 9 . The Stop - W ork O rder in this proceeding was accompanied

by a Notice of Rights that advised Respondent of the process by

which an administrative challenge to the proposed action was to

be commenced . Respondent thereupon challenged the proposed

action by timely filing its Request for Hearing under sections

120.569 and 120.57(1) .

40 . For the reasons set forth herein, a stop - work order

issued under the authority of section 440.107 (7)(a), Florida

Statutes , is not an immediate final order as described in

section 120.569(2)(n), Florida Statutes.

NCCI classification codes

4 1 . By stipulation, Respondent argues that it was an error

for the Department to apply NCCI classification codes that are

not cur rently adopted by rule to classify the nature of

RespondentÓs business.

4 2 . Section 440.107(9) provides that Ð[t]he department

shall adopt rules to administer this section.Ñ

4 3 . Section 440.02(8) provides, in pertinent part, that

Ð[t]he division may, 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

4 4 . The 3rd Amended Order of Penalty Assessment charges

Respondent with failing to obtain workersÓ compensation

insurance coverage for employees engaged in work described in

classification codes 5403 and 8810.

Classification Code 5403

4 5 . Rule 69L - 6.021(1 ) provides, in pertinent part, that:

The Division adopts the classification codes

and descriptions that are specified in the

Florida Contracting Classification Premium

Adjustment Program, and published in the

Florida exception pages of the National

Council on Compensation Insurance, Inc.

(NCCI), Basic Manual (2001 ed.), including

updates through January 1, 2011.

4 6 . Rule 69L - 6.021(2) provides, in pertinent part, that

Ðan employer is engaged in the construction industry when any

portion of the employerÓ s business operations is described in

the construction industry classification codes that are adopted

in this rule . . . . (cc) 5403 Carpentry - NOC.Ñ

4 7 . Rule 69L - 6.021(3) provides that:

(3) The Division adopts the definitions

published by NCCI, SCOPES ® of Basic Manual

Classifications (February 2011), including

updates through February 1, 2011, that

correspond to the classification codes and

descriptions adopted in subsection (1)

above. The definitions identify the

workplace operations that satisfy the

criteria of the term Ðconstruction industryÑ

as used in the workersÓ compensation law.

The definitions are hereby incorporated by

reference and can be obtained by writing to

the Division o f WorkersÓ Compensation,

Bureau of Compliance, 200 East Gaines

Street, Tallahassee, Florida 32399 - 4228.

4 8 . Despite the clear authority for the adoption of

construction industry class codes, and the specific adoption of

class code 5403, Respondent argue s in its P roposed R ecommended

O rder that the application of the rule , which was last amended

on October 11, 2011, is invalid because Ð[t]he class code that

the Department utilizes, 5403, has been revised a total of six

times since February 1, 201 1 .Ñ There is no evidence in the

record of this proceeding to support that allegation.

Furthermore, even if the classification code had been amended by

NCCI , there is no evidence that the Department used the amended

code, or that any amendment was material to the d escription of

the business in which Respondent was engaged, i.e., general

carpentry work.

4 9 . Based on the foregoing, there was statutory authority

for the Department to adopt construction industry class codes

and, through its promulgation of rule 69L - 6. 021, the Department

adopted the class code, 5403, cited in the 3rd Amended Order of

Penalty Assessment.

Classification Code 8810

50 . Rule 69L - 6.031(1) provides, in pertinent part, that:

(1) Under paragraph 440.107(7)(b), F.S.,

stop - work orders or orders of penalty

assessment issued against a corporation ,

limited liability company, partnership, or

sole proprietorship shall be in effect

against any successor corporation or

business entity that has one or more of the

same principals, limited liability company

members, or officers as the predecessor

corporation or business entity against which

the stop - work order was issued and are

engaged in the same or equivalent trade or

activity.

* * *

(b) For employers engaged in the non -

construction industry, a corporation, . . .

and the successor corporation . . . are

engaged in the same or equivalent trade or

activity if they each perform or have

performed business operations that include

operations de scribed in at least one

classification code that is in the

manufacturing, goods and services, or the

office and clerical industry group listed in

subsection (6) of this rule. (emphasis

added) .

5 1 . Rule 69L - 6.031(6) provides, in pertinent part, that:

List of class codes, descriptions, and

industry groups. A complete description of

class codes is contained in the SCOPES®

Manual Classifications (October 2005)

published by the National Council on

Compensation Insurance, Inc. (NCCI) and is

available for v iewing through the Division

of WorkersÓ Compensation, Bureau of

Compliance, 2012 Capital Circle, S.E.,

Hartman Building, Tallahassee, Florida

32399 - 4228 or a copy is available, for a

fee, by calling NCCI at 1(800)622 - 4123. The

SCOPES® list of codes, descr iptions and

industry groups is as follows:

* * *

(c) Industry Group: Office & Clerical

* * *

10. 8810 CLERICAL OFFICE EMPLOYEES NOC

5 2 . The Administrative Procedure Act, chapter 120, Florida

Statutes, addresses the incorporation of materials by r eference

in section 120.54(1)(i), which provides, in pertinent part,

that:

1. A rule may incorporate material by

reference but only as the material exists on

the date the rule is adopted. For purposes

of the rule, changes in the material are not

effective unless the rule is amended to

incorporate the changes.

* * *

6. The Department of State may adopt by

rule requirements for incorporating

materials pursuant to this paragraph.

5 3 . Department of State rule 1 - 1.013, entitled ÐMaterials

Incorpor ated by ReferenceÑ provides, in pertinent part, that:

(1) Any ordinance, standard, specification,

guideline, manual, handbook, map, chart,

graph, report, form or instructions to

forms, or other similar material that meets

the definition of rule provided i n Section

120.52(16), F.S., and is generally available

to affected persons may be incorporated by

reference in a rule adopted pursuant to

Section 120.54, F.S., and Rule 1 - 1.010,

F.A.C.

(2) A reference to material incorporated in

a rule must include:

(a) Specific identification of the

incorporated material, along with an

effective date. Forms and their

instructions should be identified by title,

the form number, and effective date. In

addition, incorporated forms and

instructions should clearly display the form

title, form number, effective date, and the

number of the rule in which it is

incorporated.

(b) A statement that the material is

incorporated by reference.

(c) A statement describing how an affected

person may obtain a copy of the incorporate d

material.

5 4 . R ule 1 - 1.013 does not prescribe particular language

that must be used in order to constitute a Ðstatement that the

material is incorporated by reference.Ñ Although t he

identification of classification code 8810, clerical office

employee s NOC, in rule 69L - 6.031 does not use the words

Ðincorporated by reference,Ñ the listing of the individual NCCI

SCOPES® Manual Classifications codes by industry group, number ,

and name , along with the instruction that the SCOPES® Manual is

available for viewing at the DepartmentÓs offices, is sufficient

to constitute a ÐstatementÑ that the material is incorporated by

reference.

5 5 . Rule 69L - 6.031 includes all of the information

described in rule 1 - 1.013 , and is sufficient to place any

employer of reason able intelligence on notice that the codes

have been adopted by the Department for describing job

classifications of Florida employees for which workersÓ

compensation compliance is required.

5 6 . The title of rule 69L - 6.031, Ð Stop - Work Orders in

Effect Against Successor Corporations or Business Entities, Ñ

could be construed as an expression of intent that the

incorporation of the classification codes listed therein is to

apply only when a stop - work order is being applied to a

successor. See , Op. AttÓy G en. Fla. 11 - 24 (2011)(ÐWhile the

title to an act is not dispositive of its effect, it may be

considered in determining the intent of the Legislature.Ñ)

However, general rules of construction indicate that Ðthe

title's primary purpose is to give notice of the subject matter

contained in the act . . . and the language of the title is not

binding as to the meaning and application of the act.Ñ Carter

v. Gov't Employees Ins. Co. , 377 So. 2d 242 , 243 (Fla. 1st DCA

1979).

5 7 . T he plain language of rule 69L - 6.031 itself , when read

in its entirety, demonstrates that the NCCI SCOPES® Manual

Classifications codes incorporated by reference therein apply to

the employing business entities and to successor entities with

common governance and business activities . In that regard, the

following provisions of the rule apply directly to the employ er ,

and not to the successor entity:

(4) An order applying a stop - work order or

order of penalty assessment shall take

effect when served upon the employer or, for

a parti cular worksite, when served at that

worksite.

(5) Under paragraph 440.107(7)(c), F.S.,

the department shall assess a penalty of

$1,000 per day against an employer for each

day that the employer conducts business

operations in violation of an order a

appl ying a stop - work order or order of

penalty assessment.

5 8 . To accept an argument that rule 69L - 6.031 does not

allow the industry group codes to be used to establish the

nature of an employerÓs business due to a narrow construction of

the t itle of the rule would result in an absurd result ,

rendering a penalty assessment deficient as applied to an

employer that failed to procure workersÓ compensation insurance

for its employees , but enforceable against an arguably less

culpable successor business ent ity. Such a result is to be

avoided. Murray v. Mariner Health , 994 So. 2d 1051, 1061 (Fla.

2008).

5 9 . Based on the ÐstatementÑ of the Department in rule

69L - 6.031, and in light of the facts stipulated by the parties,

the correctness of the action that led to the calculation and

assessment of the penalty for RespondentÓs failure to maintain

workersÓ compensation insurance for its employees as set forth

in the 3rd Amended Order of Penalty Assessment was not impaired

by any material error in the adoption o f the NCCI SCOPES® Manual

Classifications codes in rule 69L - 6.031.

60 . For the reasons set forth herein, it was not an error

for the Department to use NCCI classification codes set forth in

rule 69L - 6 .031 to classify the description of duties performed

by RespondentÓs employees .

Approved Manual Rates

6 1 . By stipulation, Respondent argues that it was an error

for the Department to use approved manual rates that have been

adopted by the Office of Insurance Regulation, but not by the

Department of Financial Services, for establishing presumptive

wages for calculating workersÓ compensation premiums.

6 2 . Section 440.015 provides, in pertinent part, that :

Ð[t]he department, agency, the Office of

Insurance Regulation, and the Division of

Administrative Hearings shall administer the

WorkersÓ Compensation Law in a manner which

facilitates the self - execution of the system

and the process of ensuring a prompt and

cost - effective delivery of payments.Ñ

6 3 . Section 440.107 prov ides, in pertinent part, that:

(2) For the purposes of this section,

Ðsecuring the payment of workersÓ

compensationÑ means obtaining coverage that

meets the requirements of this chapter and

the Florida Insurance Code.

* * *

(7)(d)1. 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 employerÓs payroll

during periods for which it failed to secure

the payment of workersÓ compensation

required by this chapter within the

preceding 3 - year period or $1,000, whichever

is greater.

6 4 . Section 440.10(1) (g) provides, in pertinent part,

that:

Subject to s. 440.38, any employer who has

employees engaged in work in this state

shall obtain a Florida policy or endorsement

for such employees which utilizes Florida

class codes, rates, rules, and manuals that

are in compliance with and approved under

the provisions of this chapter and the

Florida Insurance Code.

6 5 . Rule 69L - 6.019(1) provides that:

Every employer who is required to provide

workersÓ compensation coverage for employees

engaged in work in this state shall obtain a

Florida policy or endorsement for such

employees that utilizes Florida class codes,

rates, rules and manuals that are in

com pliance with and approved under the

provisions of Chapter 440, F.S., and the

Florida Insurance Code, pursuant to Sections

440.10(1)(g) and 440.38(7), F.S.

6 6 . A review of the Florida Insurance Code reveals that

the Office of Insurance Regulation , and not the

Department, is the agency that has been granted authority by the

legislature to approve manual s of rates for workersÓ

compensation insurance .

6 7 . Section 627.091 provides, in pertinent part, that:

(1) As to workersÓ compensation . . .

insurances, every insurer shall file with

the office every manual of classifications,

rules, and rates, every rating plan, and

every modification of any of the foregoing

which it proposes to use. Every insurer is

authorized to include deductible provisi ons

in its manual of classifications, rules, and

rates. Such deductibles shall in all cases

be in a form and manner which is consistent

with the underlying purpose of chapter 440.

* * *

(6) Whenever the committee of a recognized

rating organization wit h responsibility for

workersÓ compensation and employerÓs

liability insurance rates in this state

meets . . . , such meetings shall be held in

this state and shall be subject to s.

286.011. The committee of such a rating

organization shall provide at least 3 weeksÓ

prior notice of such meetings to the office

and shall provide at least 14 daysÓ prior

notice of such meetings to the public by

publication in the Florida Administrative

Register.

6 8 . Section 627.101 (4) provides, in pertinent part, that:

If the office approves a filing, it shall

give prompt notice thereof to the insurer or

rating organization that made the filing,

and in which case the filing shall become

effective upon such approval or upon such

subsequent date as may be satisfactory to

the office and the insurer or rating

organization that made the filing.

6 9 . 627.151 provides, in pertinent part, that:

(2) As to workersÓ compensation and

employerÓs liability insurances, no manual

of classifications, rule, rating plan,

rating system, pla n of operation, or any

modification of any of the foregoing which

establishes standards for measuring

variations in hazards or expense provisions,

or both, shall be disapproved if the rates

thereby produced meet the applicable

requirements of this part.

70 . OIR rule 69O - 189.016, entitled Ð Filing Procedures for

WorkersÓ Compensation Classifications, Rules, Rates, Rating

Plans, Deviations and Forms, Ñ provides , in pertinent part, that:

(1) Purpose: To establish the procedures

to be utilized by insurers in the filing of

workersÓ compensation classifications,

rules, rates, rating plans, deviations and

forms pursuant to Sections 627.091, 627.211

and 627.410, F.S.

(2) Any insurer authorized to transact

workersÓ compensation and employerÓs

liability insurance in Florida shall file

with the Office every manual of

classifications, rules, rates, rating plans,

deviations and every modification of any of

the foregoing, which it proposes to use. An

insurer may satisfy its obligation to make

such filings by becoming a member of, or a

subscriber to, a licensed rating

organization which makes such filings and by

authorizing the Office to accept such

filings in its behalf. No insurer shall use

any workersÓ compensation and employerÓs

liability classification, rule, rat e or

rating plan unless it has been filed with

the Office and the filing has been

affirmatively approved.

7 1 . The issue s of whether the OIR properly approved the

NCCI manual s establishing rates and premiums for various

businesses in Florida , or whether the Department applied a

correct version of the NCCI manuals, ha ve not been raised and

are not subject to determination herein. Rather, the issue for

determination in this proceeding is, by stipulation of the

parties, whether the Department may use manual rates approved by

the Office of Insurance Regulation rather than the Department

for estab lishing presumptive wages for calculating workersÓ

compensation premiums. Thus, the issue is one of authority, not

implementation.

7 2 . The provisions of the Florida Insurance Code

referenced herein demonstrate that the Office of Insurance

Regulation has specific legislative authority to approve manuals

of classifications, rules, rates, and rating plans, including

those of a rating organization such as the NCCI.

7 3 . Given the authority legislatively conferred jointly on

the OIR and the Department to adm inister the workersÓ

compensation law, the specific authority granted by the

legislature to the OIR to approve workers compensation rating

organization manual rates , and the direction of the legislature

for the Department to calculate penalties by applying those

Ðapproved manual ratesÑ to the employerÓs payroll in calculating

penalties, it was not error for the D epartment to apply current

NCCI manual rates approved by OIR in calculating the penalty to

be assessed against Respondent for failing to maintain w orkersÓ

compensation insurance for its employees. Cf. , Eastern Air

Lines, Inc. v. Dep Ót of Rev. , 455 So. 2d 311 , 316 (Fla.

1984) (explaining that where the legislature has Ðdirected with

precisionÑ the manner in which a calculation is to be made, it

is not an error to apply an independently - derived pricing index

to provide aid in making the ministerial determination). 2/

Conclusion

7 4 . Based on the foregoing, Petitioner proved, by clear

and convincing evidence, that Respondent is liable for payment

of a penalty in the amount of $2,272.31 for its failure to

secure and maintain compensation for its employees as set forth

in the 3rd Am ended Penalty Assessment.

RECOMMENDATION

Based on the F indings of F act and C onclusions of L aw set

forth herein , it is

RECOMMENDED that the Department of Financial Services,

Division of WorkersÓ Compensation enter a final order assessing

a penalty of $ 2,272.31 against Respondent, Barber Custom

Builders, Inc. , for its failure to secure and maintain required

workersÓ compensation insurance for its employees.

DONE AND ENTERED this 30th day of April , 201 4 , 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 30th day of April, 201 4 .

ENDNOTE S

1 / The legislature has expressly defined certain orders as

falling under the auspices of section 120.569(2)(n), a

definition that is not applied to stop - work orders. S ee section

409.913(16)(d)( Ð The agency shall impose [immediate suspension]

on a provider or a person for any of the acts described in

subsection (15) : . . . (d) Immediate suspension, if the agency

has received information of patient abuse or neglect or of any

act prohibited by s. 409.920. Upon suspension, the agency must

issue an immediate final order under s. 120.569(2)(n)Ñ); section

496.419(10)( Ð A finding of a violation . . . constitutes an

immediate threat to the public health, safety, and welfare and

i s sufficient grounds for the department to issue an immediate

order to cease and desist all solicitation activities. The

order shall act as an immediate final order under

s.120.569(2)(n) . . . . Ñ); section 497.157(3)(ÐWhere the

department determines that an emergency exists regarding any

violation of this chapter by any unlicensed person or entity,

the department may issue and serve an immediate final order upon

such unlicensed person o r entity, in accordance with

s. 120.569(2)(n).Ñ); section 501.608(3)( Ð F ailure to obtain or

display a license or a receipt of filing of an affidavit of

exemption is sufficient grounds for the department to issue an

immediate cease and desist order, which shall act as an

immediate final order under s. 120.569(2)(n).Ñ ); section

628.461(5)(a) ( Ð The office shall, however, at any time that it

finds an immediate danger to the public health, safety, and

welfare of the domestic policyholders exists, immediately order,

pursuant to s. 120.569(2)(n), the proposed acquisition

temporarily di sapproved and any further steps to conclude the

acquisition ceased.Ñ); section 628.4615(6)(a)( Ð The office shall,

however, at any time it finds an immediate danger to the public

health, safety, and welfare of the insureds exists, immediately

order, pursuant to s. 120.569(2)(n), the proposed acquisition

disapproved and any further steps to conclude the acquisition

ceased.); and section 633.228(2)(a) (Ð If . . . it is determined

that a violation described in this section exists which poses an

immediate danger to the public health, safety, or welfare, the

State Fire Marshal may issue an order to vacate the building in

question, which order shall be immediately effective and shall

be an immediate final order under s. 120.569(2)(n).Ñ) .

2 / The undersigned is cognizant of the arguabl y contrary result

reached by the First District Court of Appeals in Abbott Labs.

v. Mylan Pharms., Inc. , 15 So. 3d 642 (Fla. 1st DCA 2009). T hat

case involved the application of a 2007 version of the federal

FD A ÐOrange BookÑ to invalidate a Board of Pharmacy rule . The

Orange Book is a listing of generic pharmaceutical drugs found

to be therapeutically equivalent to Ðlisted drugs,Ñ and is

developed by application of the Ðcomplex scienceÑ of adopting

and applyin g ever - changing methodology to reflect scientific

developments. Id. at 656. The 2007 Orange Book relied upon by

the ALJ was issued after the 2001 enactment of the statute that

provided authority for the rule. The court, relying on a long

line of cases recognizing that the L egislature may not

incorporate a future federal act or ruling of a federal

administrative body in a Florida statute ( Id. at 654 - 655) , held

that it was error for an ALJ to apply the federal 2007 Orange

Book based on authority derived f rom a 2001 Florida statute.

Abbott Labs is distinguishable from this case, which

involve s the more ministerial and mathematical process by which

the Department applies manuals of classifications and rates

approved by the OIR . As discussed herein, the OIR shares joint

duties and responsibilities with the Department for the

administration of the workersÓ compensation law , and is the

agency with the specific authority for approving the Ð manual

ratesÑ applied by the Department.

COPIES FURNISHED :

Kristian Eiler Dunn, Esquire

Dickens and Dunn, P.L.

517 East College Avenue

Tallahassee, Florida 32301

Trevor S. Suter, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

Julie Jones, CP, FRP, Agency Clerk

Division of Legal Services

Department of Financial 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.