13-004357F Stephen Ogles, Llc vs. Department Of Financial Services, Division Of Workers' Compensation Status: Closed DOAH Final Order on Tuesday, April 22, 2014.

Summary: Respondent was substantially justified in issuing Stop-Work Orders to two limited liability companies, and, therefore, Petitioners' claims for awards of attorney's fees and costs are denied.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STEPHEN OGLES, LLC,

Petitioner,

vs. Case No. 13 - 4357F

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS'

COMPENSATION,

Respondent.

_______________________________

RL OGLES ROOFING, LLC,

Petition er,

vs. Case No. 13 - 4424F

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS'

COMPENSATION,

Respondent.

_______________________________/

FINAL ORDER

Pursuant to notice, a f inal hearing was held in this cas e on

March 18, 2014 , in Tallahassee, Florida, before W. David Watkins,

Administrative Law Judge of the Division of Administrative

Hearings.

APPEARANCES

For Petitioner: Thomas L. Dickens, Esquire

Dickens and Dunn, P.L.

517 East College Avenue

Tallahassee, Florida 32301

For Respondent: Trevor Suter , Esquire

Elizabeth A. Miller, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

STATEMENT OF THE ISSUE

Whether Respondent, Departmen t of Financial Services ,

Division of Workers ' Compensation (Department or Respondent),

should pay Petitioner sÓ , Stephen Ogles, LLC , or RL Ogles Roofing,

LLC (Petitioner s ), attorney ' s fees and costs under section

57.111, Florida Statutes (201 3 ) , 1 / for initi ating Division of

Administrative Hearings (DOAH) C ase N o s . 13 - 244 8 and 13 - 2517 .

PRELIMINARY STATEMENT

On June 12, 2013, the Department issued and served Stop - Work

Orders (SWO) and Orders of Penalty Assessment Nos. 13 - 292 - Dl and

13 - 291 - Dl. Respondent asses sed a penalty of $3,492.87 against

Petitioner, Stephen Ogles, LLC, and $12,282.06 against

Petitioner, RL Ogles Roofing, LLC, for failure to secure the

payment of workers' compensation for its employees.

On June 17, 2013, Petitioners filed a timely request for

hearing. On September 10, 2013, Petitioners filed an amended

request for formal administrative hearing, pursuant to s ection s

120.569 and 120.57(1), Florida Statutes .

On October 8, 2013, Respondent issued to both Petitioners a

Notice of Revocation of Administrative Complaint and Motion for

Entry of Order Closing File.

On November 12, 2013, Petitioners timely filed an

Application for Attorney's Fees and Costs , and on November 15,

2013, Petitioners filed an Amended Application for Award of

Attorney's Fee s and Costs. On November 20, 2013, Respondent

moved to dismiss the Amended Application for Attorney's Fees and

Costs on the grounds that the applications failed to include an

affidavit specifying the nature and extent of the legal services

rendered in the underlying action . On December 13, 2013, the

undersigned issued an Order to Show Cause. Petitioners responded

to the Order to Show Cause on December 23, 2014 , by submitting an

Ð Itemized List of Services. Ñ

By Order dated January 7, 2014, the two cases w ere

consolidated, sua sponte.

B oth Petitioners seek , in the instant matter , an award of

attorney Ó s fees and costs pursuant to section 57.111 , Florida

Statutes .

At the final hearing Petitioner s testified on their own

behalves and also offered the testimo ny of John David Middleton,

Robert Ogles, Sr. , and Kathleen Petracco . Respondent offered the

testimony of Julie Jones , Ralph Paul Douglas, Jr., and Jonas

Hall . Petitioners Ó Exhibits 1 and 2 were admitted into evidence.

Respondent ' s Exhibits 1 , 2 , 4, 7 , 9, 10, and 11 were also

admitted into evidence.

A Transcript of the proceeding was filed with DOAH on

April 3 , 201 4 . On April 14, 2014, Respondent filed its P roposed

F inal O rder . The following day, April 15, 2014, Petitioners

filed a P roposed R ecommended O rder. 2 / Both submittals have been

carefully considered in the preparation of this Final Order.

FINDING S OF FACT

1 . Respondent is the state agency responsible for enforcing

the statutory requirement that employers secure the payment of

workers' compens ation for the benefit of their employees and

officers, pursuant to s ection 440.107, Florida Statutes.

2 . Petitioners are in the business of roofing, within the

construction industry, as defined by s ubsection 440.02(8), and

are Florida employers over whom Respondent has jurisdiction to

enforce the payment of workers' compensation premiums for the

benefit of Petitioners' employees.

3 . Petitioners are the sole members of their respective

limited liability companies, each with one employee.

4 . An officer o f a corporation may elect to be exempt from

c hapter 440, Workers' Compensation, by filing a notice of

election with the Respondent. § 440.02( 15)(b)1., Fla. Stat.

5 . An officer of a corporation who elects to be exempt from

Florida's Workers' Compensation Law is not an employee. § 440.02

(15) (b)3., Fla. Stat.

6 . Jonas Hall is employed as an investigator for the

Division of Workers Ó Compensation. He has been conducting

workers Ó compensation compliance investigations for approximately

five years, and dur ing that time has been involved in between

2,000 and 3,000 investigations.

7 . On June 12, 2013, Respondent issued a Stop - Work Order

and Order of Penalty Assessment to Stephen Ogles, LLC, and RL

Ogles Roofing, LLC, and a Stop Work Order For Specific Worksi te

Only to Ogles Construction and Roofing, LLC. Findings of Fact 8

through 18 below set forth the specific facts and circumstances

known to Respondent at the time the SWO was issued. These facts

are based upon the testimony at hearing of Jonas Hall, whic h is

found credible, as well as documentary evidence offered by

Respondent , which is corroborative of Mr. HallÓs testimony.

8 . Mr. Hall began a random site investigation on June 12,

2013 , after he noticed construction work about to be performed at

a singl e - family dwelling located in Live Oak, Florida .

9 . Upon investigation, four men were found to be installing

roofing at a private residence. One of those workers, Robert

Ogles, advised Respondent's investigator that he was working with

his three sons , St ephen, Matt , and Robert , Jr.

10 . Investigator Hall first spoke to the elder Robert Ogles

who advised Investigator Hall that he wa s the general contractor

on the job and that his sons were working as subcontractors. At

no time during the interview did Rob ert Ogles state that his sons

were employees of his company , Ogles Construction and Roofing,

LLC .

11 . Investigator Hall next spoke to Stephen Ogles who

stated that he owned his own business and ha d a valid workers Ó

compensation exemption.

12 . Investigato r Hall then spoke to the younger Robert

Ogles w ho also advised him that he owned his own business and ha d

a valid workers Ó compensation exemption.

13 . Finally, Investigator Hall spoke to t he third son, Matt

Ogles, who also stated that he own ed his own bu siness and ha d a

valid workers Ó compensation exemption.

14 . At no time during the interview of June 12, 2013 , did

any of the three sons state that they were employees of their

fatherÓs business.

15 . After interviewing the four Ogles, Investigator Hall

left the jobsite in order to gain access to a wireless internet

connection for his computer. Once he obtained a connection,

Investigator Hall accessed the Division of Corporations website

to look up the correct name s of the businesses owned by the four

Og les. With respect to the two Petitioners, the website revealed

that Stephen Ogles was the sole member of Stephen Ogles, LLC , and

that Robert Ogles, Jr. , was the sole member of RL Ogles Roofing,

LLC.

16 . Investigator Hall then accessed the Coverage and

C ompliance Automated System (CCAS) to ascertain the status of

workers compensation coverage for the four individuals. CCAS

revealed that while both Petitioners had at one time held

exemptions, both exemptions had expired at the time of

Investigator HallÓs site visit on June 12, 2013. Based upon this

information, Investigator Hall reasonably concluded that both

Petitioners were not in compliance with Florida workers Ó

compensation coverage requirements.

17 . With respect to the third son, Matt, Mr. HallÓs

i nvestigation revealed that his company, Matt Ogles, LLC, held a

valid exemption, and was therefore compliant with the workers

compensation coverage requirements. As such, Investigator Hall

did not issue a n SWO to Matt Ogles, LLC.

18 . After accessing info rmation about PetitionersÓ status

on his computer, Investigator Hall returned to the jobsite. Upon

his return , he observed all four of the Ogles working at the

jobsite, with two actively working on the roof of the home.

Investigator Hall then called thos e on the roof down, and served

the SWOs on Petitioners.

1 9 . The facts uncovered in Investigator Hall ' s

investigation on June 12, 2013, provided the Department with a

reasonable ba sis to issue the SWOs to Petitioner s .

20 . On June 1 7, 2013, Petitioners ti mely filed a Request

for Hearing alleging the affirmative defense that Petitioners had

valid workers' compensation exemptions. The Request for Hearing

filed on behalf of Stephen Ogles, LLC, specifically stated:

3. The Respondent disputes the SWO, to wit:

a. The OwnerÓs exemption was not expired.

And although worded somewhat differently, the Request for Hearing

filed on behalf of RL Ogles Roofing, LLC, stated:

3. The Respondent disputes the SWO, to wit:

a. The WC Exemption was current.

2 1 . The Requests for Hearing filed by Petitioners on

June 17 , 2013, are consistent with the representations made to

Investigator Hall on June 12, 2013, to wit , both Petitioners were

subcontractors on the job, and held valid exemptions.

2 2 . On September 1 0, 2013, Petitioners filed an Amended

Request for Hearing disputing the penalty assessment, and

contending that Petitioners were employees of Ogles Construction

and Roofing, LLC. The Amended Request for Hearing stated in

pertinent part:

3. The Respondent s disputes the SWO, to wit:

a. Ogles Construction and Roofing LLC

disputes the penalty assessment.

b. RL Ogles, LLC contends that he was

an employee of Ogles Construction and

Roofing, LLC.

c. Stephen Ogles, LLC contends that he

was an employee of Ogl es Construction and

Roofing, LLC.

2 3 . On October 8, 2013, Respondent issued an Order

Releasing Stop - Work Order (Revocation) to Stephen Ogles, LLC , and

RL Ogles Roofing, LLC.

2 4 . Two witnesses testified as to the reasonableness of the

attorneyÓs fees be ing sought by Petitioners. PetitionersÓ

witness on the subject, John Middleton, is a Jacksonville

attorney with eight yearsÓ experience in handling workers Ó

compensation defense matters. Mr. Middleton opined that the

$5,000 in fees being claimed by each Petitioner was not

excessive, particularly in view of the successful outcomes for

Petitioners in the underlying cases.

2 5 . RespondentÓs witness, Ralph Paul Douglas, Jr., is a

Tallahassee attorney who has concentrated his practice on

workers Ó compensa tion matters for twenty years. Mr. Douglas

testified that PetitionersÓ attorney in the underlying cases

claimed 13.3 hours per case for legal services. However,

according to Mr. Douglas, at least 1.3 hours of the total hours

should be deducted as not awa rdable due to those hours relating

to the preparation of a motion in response to an order to compel.

Such fees Ð cannot be related to any delay, any confusion caused

by that party claiming the fees, . . . obfuscation, . . .

anything that does not move the case along in the docket. Ñ

2 6 . It was Mr. Douglas Ós opin ion that 12 hours of legal

services is a reasonable number for the underlying cases.

However, since the same itemized list of services was submitted

for both cases, Mr. Douglas concluded that the second itemized

list was duplicative and mostly amounted to only ministerial

work. The second itemized list should be, therefore,

apportioned.

2 7 . Mr. Douglas testified that a $10,000 fee for the work

done on the underlying cases would not be appropriate or

reasonable based on the pleadings, the deposition testimony of

the attorney performing the work , and th e itemization of

services. Rather, a reasonable fee would be 12 hours at $200 per

hour for one case ($2,400) and $1,200 on the second ca se. Thus,

the total fees that should be awardable for both cases would be

$3,600.

2 8 . While the testimony of both Mr. Middleton and

Mr. Douglas is credible, the undersigned gives greater weight to

the testimony of Mr. Douglas due to his greater expe rience in the

field of workers Ó compensation law, and his more detailed

analysis of the legal services performed in the underlying cases.

2 9 . The unrebutted testimony presented by Stephen Ogles and

Robert Ogles, Jr. , established that their respective LLCÓs employ

fewer than 25 full - time employees and have a net worth of less

than $2 million each.

CONCLUSIONS OF LAW

30 . DOAH has jurisdiction in this proceeding pursuant to

sections 57.111(4), 120.569, and 120.57(1), Fl orida Stat utes

(2013).

3 1 . Sectio n 57.111, the Florida Equal Access to Justice

Act, authorizes the award of attorney ' s fees and costs to a small

business party that prevails in an administrative proceeding

seeking review of or defending against unreasonable government

action by a state ag ency, i.e., when the state agency ' s actions

are not substantially justified and no special circumstances

exist that would make the award unjust. Section 57.111(3)(e)

defines substantial justification as a reasonable basis in fact

and law.

3 2 . The agency has the burden to prove substantial

justification. AHCA v. MVP Health, Inc. , 74 So. 3d 1141, 1143

(Fla. 1st DCA 2011); Helmy v. Dep ' t of Bus. and Prof ' l Reg. ,

707 So. 2d 366, 368 (Fla. 1st DCA 1998).

3 3 . It was held in AHCA v. MVP Health, Inc. , supra , a t

1143 - 44:

[A]n agency cannot satisfy the Ð substantial

justification Ñ standard simply by showing an

action was Ð not frivolous. Ñ This is because

Ð while governmental action may not be so

unfounded as to be frivolous, it may

nonetheless be based on such an u nsteady

foundation factually and legally as not to

be substantially justified. Ñ Dep ' t of HRS

v. S.G. , 613 So. 2d 1380, 1386 (Fla. 1st DCA

1993). On the other hand, the standard is

not so strict as to require the agency to

demonstrate that its action was correct.

Id. , quoting McDonald v. Schweiker , 726 F.2d

311, 316 (7th Cir. 1983) (stating the

government need not have a Ð necessarily

correct basis [] for the position that it

took Ñ ). The Ð substantial justification Ñ

standard lies between these two extremes .

The closest approximation is that if a state

agency can present an argument for its

action ÐÒ that could satisfy a reasonable

person[ , ] Ó Ñ then that action should be

considered Ð substantially justified. Ñ

Helmy , 707 So. 2d at 368, quoting Pierce v.

Underw ood , 487 U.S. 552, 565, 108 S. Ct.

2541, 101 L. Ed. 2d 490 (1998).

An additional consideration when evaluating

an agency Ó s action under section 57.111 is

that the inquiry is limited only to whether

the agency had a Ð reasonable basis in law

and fact at the time Ñ it took the action.

§ 57.111(3)(e), Fla. Stat. (2010) . . . .

(emphasis [in original] ). The reviewing

body -- whether DOAH or a court -- may not

consider any new evidence which arose at a

fees hearing, but must focus exclusively

upon the information av ailable to the agency

at the time that it acted. See Dep ' t of

Health, Bd. of Physical Therapy Practice v.

Cralle , 852 So. 2d 930, 932 (Fla. 1st DCA

2003) (criticizing an ALJ for being

Ð influenced by consideration of evidence

which was presented at [a fees ] hearing

rather than being focused solely on whether

the [agency ' s underlying] decision had a

reasonable basis in law and fact Ñ ).

3 4 . Using this legal standard, there was, on June 12, 2013,

substantial justification for the decision by Respondent to iss ue

Stop - Work Order s to Petitioner s . T herefore, an award of

attorneyÓs fees in this instance is not warranted . 3 / At the time

that Respondent issued its SWO s and the resultant penalty

assessment s, I nvestigator Hall relied on his observation of

roofing ma terials at the scene , along with four men who were

actively installing a roof. Statements made by Petitioners, the

elder Robert Ogles, and Matt Ogles that they own ed their own

businesses and held workers' compensation exemptions serve d only

to support the conclusion that Petitioners were subcontractors

for their father's business.

35 . On June 17, 2013, five days after issuance of the SWOs,

Petitioners Ó counsel filed Requests for Hearing with Responde nt

stating that Petitioners held valid workers' compensa tion

exemptions. Th is affirmative defense indicated that Petitioners

were working as subcontractors; otherwise, there would be no

significance to the possession of valid workers' compensation

exemptions. The information provided by Petitioners in their

R equests for Hearing substantiates and corroborates Investigator

Hall's determination at the work site that the Petitioners were

working as subcontractors of Ogles Construction and Roofing, LLC.

36 . When Petitioners filed their Amended Requests for

Hearing o n September 4, 2013, they changed their ÐsubcontractorÑ

defense to that of an alleged ÐemployeeÑ status working for Ogles

Constructi on and Roofing, LLC .

37 . It was the changed defense from that of subcontractors

to employees that precipitated Respondent 's revocation of the two

SWOs in the underlying cases.

DISPOSITION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED that the petition s for attorney ' s fees and

costs are denied.

DONE AND ORDERED this 2 2nd day of April , 201 4 , in

Tallahassee, Leon County, Florida.

S

W. David Watkins

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 2 2nd day of April , 201 4 .

ENDNOTE S

1 / All refere nces to Florida Statutes are to the 2013 versio n,

unless otherwise indicated.

2 / Although denominated a Proposed Recommended Order,

PetitionersÓ submittal has been considered by the above - signed to

be PetitionersÓ Proposed Final Order.

3 / In its Proposed Final Order, Respondent argues that

Petition ers lack standing to seek relief pursuant to section

57.111, since, as limited liability companies, they do not meet

the statutory definition of a small business party. Section

57.111(3)(d), provides in relevant part:

(d) The term Ðsmall business partyÑ means:

1.a. A sole proprietor of an unincorporated

business, including a professional practice,

whose principal office is in this state, who

is domiciled in this state, and whose

business or professional practice has, at the

time the action is initiated by a state

agency, not more than 25 full - time employees

or a net worth of not more than $2 million,

including both personal and business

investments;

b. A partnership or corporation, including a

professional practice, whi ch has its

principal office in this state and has at the

time the action is initiated by a state

agency not more than 25 full - time employees

or a net worth of not more than $2 million;

or

c. An individual whose net worth did not

exceed $2 million at the time the action is

initiated by a state agency when the action

is brought against that individualÓs license

to engage in the practice or operation of a

business, profession, or trade; or

2. Any small business party as defined in

subparagraph 1., without regard to the number

of its employees or its net worth, in any

action under section 72.011 or in any

administrat ive proceeding under that section

to contest the legality of any assessment of

tax imposed for the sale or use of services

as provided in chapter 212, or interest

thereon, or penalty therefor.

Respondent asserts that a limited liability company is no t a

Ðcorporation,Ñ and, consequently, is not entitled to reap the

benefits of section 57.111. While the undersigned is unaware of

any appellate case law directly on point, at least one DOAH

administrative law judge has addressed the issue. In John

Gerrit y Wade, A.R.N.P., R.N. v. Department of Health, Board of

Nursing , Case No. 02 - 3027F (Fla. DOAH Feb. 3, 2003),

Administrative Law Judge Michael Parrish held:

In this regard, it should also be noted that

the definition of a Ðsmall business partyÑ in

section 57.111, Florida Statutes, does not

mention a Ðlimited liability company,Ñ nor

does it mention a ÐmemberÑ of such a company.

And there does not appear to be any logical

way to stretch the language of section

57.111, Florida Statutes, far enough to

encompas s a Ðlimited liability companyÑ or a

ÐmemberÑ of such a company.

( id . at 6 . )

Conversely, other DOAH administrative law judges have had no

qualms about entertaining attorneyÓs fees cases brought pursuant

to section 57.111 by limited liability compa nies. See, e.g. ,

Charles DeMoss Enterprises, LLC v. DepÓt of Fin. Svcs., Div. of

WorkersÓ Comp. , Case No. 08 - 4865F (Fla. DOAH May 21, 2009).

Finally, the undersigned notes that chapter 440, the

authority by which the Division of WorkersÓ Compensatio n brings

enforcement actions, takes a broader view of the term

Ðcorporation.Ñ Section 440.02(15)(b)(1) provides that any

officer of a ÐcorporationÑ may elect to be exempt from chapter

440 by filing notice of the election with the Department, and

that sect ion 440.02(9) expressly encompasses a member of a

limited liability company within the meaning of Ðcorporate

officerÑ:

(9) ÐCorporate officerÑ or Ðofficer of a

corporationÑ means any person who fills an

office provided for in the corporate charter

or articles of incorporation filed with the

Division of Corporations of the Department of

State or as permitted or required by cha pter

607. The term Ðofficer of a corporationÑ

includes a member owning at least 10 percent

of a limited liability company created and

approved under chapter 608.

(emphasis add ed)

COPIES FURNISHED :

Trevor S. Suter, Esquire

Department of Financial Servic es

200 East Gaines Street

Tallahassee, Florida 32399

Elizabeth A. Miller, Esquire

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

Thomas L. Dickens, Esquire

Dickens and Dunn, P.L.

517 East College Avenue

Tallahassee, Florida 32301

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 JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to s ection 120.68, Florida Statutes.

Review proceedings are governed by the Florida Rules of Appellate

Procedure. Such proceedings are commenced by filing one copy of

a Notice of Appeal with the agency clerk of the Division of

Administrative Hearings and a s econd copy, accompanied by filing

fees prescribed by law, with the District Court of Appeal, First

District, or with the District Court of Appeal in the appellate

district where the party resides. The Notice of Appeal must be

filed within 30 days of rendi tion of the order to be reviewed.