15-002464 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Gulf Coast Site Prep., Inc. Status: Closed Recommended Order on Thursday, January 14, 2016.

Summary: Department proved by clear and convincing evidence that Respondent failed to secure payment of workers' compensation insurance for its employees.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS Ó

COMPENSATION,

Petitioner,

vs. Case No. 15 - 2464

GULF COAST SITE PREP , INC. ,

Respondent.

_______________________________/

REC OMMENDED ORDER

Pursuant to notice , a fina l hearing was held in this case

on October 29 , 2015, in Tallahassee, Florida, before Suzanne Van

Wyk , a duly - designated Administrative Law Judge of the Division

of Administrative Hearings .

APPEARANCES

For Pe titioner: Thomas Nemecek , Esquire

Department of Financial Services

Division of WorkersÓ Compensation

200 East Gaines Street

Tallahassee, Florida 32399

For Respondent: Kristian E iler Dunn, Esquire

Dunn and Miller, P . A.

215 E ast Tharpe Street

Tallahassee, Florida 32303

STATEMENT OF THE ISSUES

W hether Respondent , Gulf Coast Site Prep, Inc. , failed to

comply with the cover age requirements of the WorkersÓ

Compensation Law, c ha pter 440, Florida Statut es , by not

obtaining workersÓ compensation insurance for its employees ,

and, if so, wh a t penalty should be assessed against Respondent

pursuant to s ection 440.107 , Florida Statutes (2014) . 1 /

PRELIMINARY STATEMENT

Pursuant to the WorkersÓ Compensation Law, c hapter 440, the

Department of Financial Services, Divisio n of Workers Ó

Compensation ( Department), seeks to enforce the statutory

requirement that employer s secure the payment of workersÓ

compensation for their employees.

On March 27, 2015 , the Depa rtmen t issued a Ð Stop - Work Order

for Specific Worksite Only , Ñ alleging that Respondent failed to

comply with the cover age requirements of the workersÓ

compensation law on that date. The O rder directed Respondent to

cease business operations at the specific wor k site and pay a

penalty equal to two times the amount Respondent would have paid

in premium s to secure workersÓ compensation during periods

within the preceding t wo years when it failed to do so , or

$1,000, whichever is greater, pursuant to s ection 440.107 (7)(d) .

The Department also requested business records from Respondent

in order to determine the exact amount of the penalty.

Respondent provided no records.

Respondent timely requested an administrative hearing to

dispute the DepartmentÓs S top - W ork O rde r and the imposition of a

penalty . On May 1 , 2015, the Department forwarded RespondentÓs

request to the Division of Administrative Hearings (Division) .

The hearing was scheduled for September 3 , 2015, but was

subse quently rescheduled to October 29 , 2015, and was convened

as rescheduled .

At the hearing, the Department presented the testimony of

Jill Scogland , compliance investigator for the Division of

Workers Ó Compensation , and Eunika Jackson, a Department penalty

auditor . The DepartmentÓ s Exhibits 1 thr ough 3 , 6 through 10,

and 12 through 1 6 were admitted into evidence. Respondent

presented no testimony and offered no exhibits.

The one - volume Transcript of the final hearing was filed

with the Division on November 12 , 2015 . The parties jointly

requested , and the undersigned granted, an extension of time

until December 14, 2015, to file post - hearing submissions. Both

parties timely filed Proposed Recommended Order s which have been

considered by the undersigned in preparing this Recommended

Order.

FINDING S OF FACT

1 . The Department is the state agency responsible for

enforcing the requirement of the W orkersÓ C ompensation L aw that

employer s secure the payment of workersÓ compensation coverage

for their employees and corporate officers . § 440.107, Fla.

Sta t.

2 . Respondent, Gulf Coast Site Prep., Inc., is a Florida

for - profit corporation organized on March 3, 2008. Respondent Ós

registered business address is 952 TR Miller Road, Defuniak

Springs, Florida . Ashley Adams is RespondentÓs President and

Register ed Agent.

3 . On March 27, 2015 , the DepartmentÓs investigator - in -

training , Jill Scogland , and lead investig at or, Sharon Kelson,

conducted a random workers Ó co mpensation compliance check at

Lot 34 in the Driftwood Estates residential subdivision in

Santa R osa Beach, Florida .

4 . Ms. Scogland observed two men on site . David Wayne

Gibson was operating a front - end loader spreading dirt on site.

Colby Smith was shoveling dirt on site.

5 . While Ms. Scogland was inspecting the site, a third

man , Ashley Adams , a rrive d driv ing a dump truck with a load of

dirt.

6 . Mr. Adams identified himself as the owner of Gulf

Coast, and stated that he had an exemption from the requirement

for workersÓ compensation in surance and that he thought

Mr. Gibson did as well.

7 . Mr . Adams advised Ms. Scogland that he hired both

Mr. Gibson and Mr. Smith to work at the site. 2 /

8 . At hearing, Respondent challenged the evidence

supporting a finding that Respondent hired Mr. Gibson. 3 /

Specific al ly, Respondent argues that Ms. Scogland Ós testimony

that Mr. Adams told her he hired Mr. Gibson is unreliable

because Ms. Scogland did not include that information in her

field notes. Respondent claims that Ms. ScoglandÓs status as

investigator - in - training on the date of the inspection is

indi cative of her unreliability .

9 . To the contrary, Ms. Scogland Ós testimony regarding

both the persons and events on the date of the inspection was

clear and unequivocal. While Ms. Scogland admitted her field

notes were not as detailed on the date in quest ion as they are

for more recent inspections, she was confident that her

investigation of the facts was thorough . The fact that

Ms. Scogland did not write down what Mr. Adams said does not

render her testimony unreliable . The undersigned finds

Ms. Scoglan dÓs testimony to be clear and convincing.

10 . Ms. Scogland reviewed the Department of State,

Division of Corporations Ó online information and identified

Mr. Gibson as President and Registered Agent of David Wayne

Gibson Tractor Service, Inc. According to Ms. Scogland, the

online records indicated the corporation had been

administratively dissolved in September 2013.

11 . Ms. Scogland next accessed the DepartmentÓs Coverage

and Compliance Automated System (CCAS) and determined that

Mr. Gibson had obtaine d a workersÓ compensation coverage

exemption for himself, but the ex emption had expired on

February 15, 2015. The information contained in CCAS is

information on new policies, cancellations, etc., reported to

the Department by insurance agencies as requir ed by

administrative rule .

12 . Next, Ms. Scogland accessed the Division of

Corporations Ó website, verified Gulf Coast as an active

corporation, and identified Mr. Adams as the sole officer of

Gulf Coast.

13 . Ms. Scogland then accessed CCAS and determined that,

although Gulf Coast did not have workersÓ compensation coverage,

Mr. Adams had an active exemption effective from February 12,

2014 through February 12, 2016. Mr. Adams had a prior exemption

that expired on April 14, 2013, but had no valid exemptio n in

place between April 14, 2013 and February 12, 2014.

14 . After contacting her supervisor, Michelle Lloyd,

Ms. Scogland served Mr. Adams , on behalf of Gulf Coast, with a

site - specific S top - W ork O rder for failure to ensure workersÓ

compensation coverage for its employees .

15 . Ms. Scogland also served Mr. Adams with a Request for

Production of Business Records for Penalty Assessment

Calculation. The request was for Gulf CoastÓs payroll, account,

and disbursement records, as well as records identifying its

subcontractors, payments thereto, and workersÓ compensation

coverage thereof, from March 28, 2013 through March 27, 2015

(the penalty period) . 4 /

16 . Mr. Adams did not provide any records to the

Department in response to the records request.

17 . The DepartmentÓs penalty auditor , Eunika Jackson , was

assigned to calculate the penalty to be assessed against Gulf

Coast for failure to secure workers Ó compensation insurance

during the penalty period.

18 . The penalty to be assessed against an employer for

failure to secure workersÓ compensation coverage is two times

the amount the employer would have paid in workersÓ compensation

insurance premiums when applying approved manual rates to the

employerÓs payroll during the penalty period. £ 440.107(7)(d),

Fla . Stat.

19 . Ms. Jackson consulted the Scopes Manual, which is

published by the National Council on Compensation Insurance

(NCCI) , and identified class co de 6217 -- Excavation and Drivers --

as the appropriate construction class code for the work being

perform ed at the worksite.

20 . Respondent contests the assign ment of class code 6217

to Mr. Adams, who was driving a dump truck and delivering a load

of dirt to the site. Respondent admits that Mr. GibsonÓs

operation of the front - end loader was properly classif ied as

Excavation and Drivers.

21 . NCCI Scopes Manual provides the following with regard

to classification code 6217:

Includes burrowing, filling or backfilling.

* * *

Code 6217 is applied to specialist

contractors engaged in general excavation

includ ing ditch digging, burrowing, filling

or backfilling provided such operations are

not otherwise classified in the manual. The

operations involve the removal of earth,

small boulders and rocks by power shovels,

trench diggers or bulldozers and pili ng it

at the jobsite for backfill. The material

may also be removed by dump trucks for fill

in some other area.

Code 6217 includes excavation in connection

with building foundations, swimming pools,

landscape gardening and waterproofing

operations.

* * *

This classification also is applied to

specialist contractors engaged in grading

land and landfilling , provided these

operations are not otherwise classified in

this manual. This classification includes

ditch digging, burrowing, filling or

backfilling, and ope rations such as

scraping, cutting, piling or pushing the

earth to rearrange the terrain. These

operations utilize equipment such as

bulldozers, motor graders and carryalls.

[ emphasis supplied ] .

22 . Mr. Adams Ó operation of the dump truck falls squarely

w ith in the definition of Excavation and Drivers . The material

in the dump truck was fill for the site under excavation , a

purpose which is directly addressed in the manual under

code 6217. Under RespondentÓs interpretation, fill removed from

the site by a dump truck would be an excavation activity, but

would no longer be excavation when the dump truck arrived at

another site (or at another location on the same site) with the

fill. That interpretation is illogical.

23. No evidence was introduced to supp ort a finding that

typical operation of a dump truck in preconstruction was

classified by a different code in the Scopes Manual.

24 . It is found that Ms. Jackson properly applied the

Scopes Manual in assigning code 6217 to the work being performed

by Mr. Adams on the site.

25 . Having no payroll records from Gulf Coast , Ms. Jackson

had to impute the statewide average weekly wage as RespondentÓs

payroll for Mr. Adams and his subcontractor, Mr. Gibson. The

average weekly wages were calculated based on the W orkersÓ

Compensation and Employers Liability approved rate manual also

published by NCCI and adopted by the Department by

administrative rule.

26 . Ms. Jackson calculated a penalty of two times the

worker s Ó compensation insurance premium s that would have applied

to the purchase of insurance for Mr. Adams and Mr. Gibson during

periods of non - compliance during the penalty . The period of

non - compliance for Mr. Adams was April 15, 2013 to February 11,

2014 , during which time his exemption had lapsed . The pe riod of

non - compliance for Mr. Gibson was February 16, 2015 to March 27,

2015, during which his exemption had expired . § 440.107(7)(e),

Fla. Stat.

27 . Utilizing the penalty calculation worksheet adopted by

Florida Administrative Code Rule 69L - 6.027, Ms. Scogland

calculated a penalty of $12,181.42.

28 . On May 20, 2015 , the Department issued an Amended

Order of Penalty Assessment against Gulf Coast in the amount of

$ 12,181.42 .

29 . The Department correctly calculated the penalty based

on the statutory fo rmulas and adopted rules governing workersÓ

compensation insurance.

CONCLUSIONS OF LAW

30 . The Division of Administrative Hearings has

jurisdiction of the subject matter of and th e parties to this

proceeding. § § 120.569 and 120.57(1), Fla. Stat. (2015).

31 . Employers are required to secure payment of workersÓ

comp ensation for their employees unless exempted or excluded .

§ § 440.10(1)(a) and 440.38(1), Fla. Stat. Strict compliance

with the WorkersÓ Compensation Law is required by the employer.

See C&L Trucking v. Corbett , 546 So. 2d 1185, 1187 (Fla. 5th DCA

1989).

32 . Ð Employer Ñ is defined, in part, as Ð every person

carrying on any employment. Ñ § 440.02(16), Fla. Stat.

33 . Ð Employment Ñ means Ð any service performed by an

employee for the person emplo ying him or her Ñ and includes ,

Ð with respect to the construction industry, all private

employment in which one or more employees are employed by the

same employer. Ñ § § 440.02(17)(a) and (b)(2), Fla. Stat.

34 . Ð Employee Ñ is defined, in part, as Ð any perso n who

receives remuneration from an employer for the performance of

any work or service while engaged in any employment under any

appointment or contract for hire or apprenticeship, express or

implied, oral or written. Ñ § 440.02(15)(a), Fla. Stat.

35 . Re spondent admitted in its Proposed Recommended Order

that Mr. Gibson was its employee and was operating without

coverage. Respondent concedes that it is responsible for that

portion of the penalty based on Mr. GibsonÓs period of non -

compliance.

36 . Ð Emplo yee Ñ also includes Ð any person who is an officer

of a corporation and who performs services for remuneration for

such corporation within this state. Ñ § 440.02(15)(b), Fla.

Stat. Thus, Mr. Adams was RespondentÓs employee during the

penalty period .

37 . T he Department has the burden of proof in this case

and must show by clear and convincing evidence that the employer

violated the WorkersÓ Compensation Law and that the penalty

assessments were correct under the law . See Dep Ó t of Banking

and Fin . v. Osborn e Stern and Co. , 670 So. 2d 932 (Fla. 1996);

and Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987).

38 . In Evans Packing Co. v. Department of Agriculture and

Consumer Services , 550 So. 2d 112, 116 n. 5 (Fla. 1st DCA 1989),

the Court defined clear and convi ncing evidence as follows:

[C]lear and convincing evidence requires

that the evidence must be found to be

credible; the facts to which the witnesses

testify must be distinctly remembered; the

evidence must be precise and explicit and

the witnesses must be lacking in confusion

as to the facts in issue. The evidence must

be of such weight that it produces in the

mind of the trier of fact the firm belief or

conviction, without hesitancy, as to the

truth of the allegations sought to be

established. Slomowitz v. Walker , 429

So. 2d 797, 800 (Fla. 4th DCA 1983).

39 . The Department proved by clear and convincing evidence

that Mr. Adams was RespondentÓs employee and was without

coverage during the period of non - compliance.

40 . Contrary to RespondentÓs contentio n, the Department

also proved by clear and convincing evidence that the amount of

the penalty calculated was correct. Classification code 6217

was correctly applied to Mr. AdamsÓ excavation operation at the

worksite.

41 . The Department proved by clear a nd convincing evidence

that Gulf Coast violated the workersÓ compensation insurance law

and that $12,181.42 is the correct penalty to be applied.

RECOMMENDATION

Having considered the foregoing Findings of Fact and

Conclusions of Law, it is,

RECOMMENDED t hat the Department of Financial Services,

Division of Workers Ó Compensation, enter a final order upholding

the Stop - Work Order and Amended Penalty Assessment against

Respondent, Gulf Coast Site Prep. , Inc. , for its failure to

secure and maintain required w orkersÓ compensation insurance for

its employees.

DONE AND ENTERED this 14th day of January , 201 6 , in

Tallahassee, Leon County, Florida.

S

SUZANNE VAN WYK

Administrative Law Judge

Division of Administrative Hearings

The D eSoto 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 14th day of January , 201 6 .

ENDNOTE S

1 / Except as otherwise noted herein, all references to the

Florida Statutes are to the 2014 version.

2 / Ms. ScoglandÓs testimony that Mr. Adams told her he hired

Mr. Gibson and Mr. Smith is admissible as an exception to

hearsay pursuant to section 90.803(18), Florida Statutes. Her

testimony was reliable and unrefuted by any other evidence.

3 / Respondent appears to have conceded this point in his

Proposed Recommended Order wherein he stated, ÐIt has also been

established that David Gibson was the lawful subcontracto r

employed by Respondent.Ñ Resp. Pro. Rec. Order, ¥ 16 (Dec. 14,

2015). The undersigned addresses it in an abundance of caution.

4 / Pursuant to section 440.107(7)(d), the penalty period for an

employer who fails to secure workersÓ compensation cover age is

the two years immediately preceding the date the S top - W ork O rder

is issued.

COPIES FURNISHED :

Kristian Eiler Dunn, Esquire

Dunn and Miller, P.A.

215 East Tharpe Avenue

Tallahassee, Florida 32303

(eServed)

Thomas Nemecek, Esquire

Department of F inancial Services

Division of Workers' Compensation

200 East Gaines Street

Tallahassee, Florida 32399

(eServed)

Sarah Logan Beasley

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399

(eServed)

Julie Jones, CP, FRP, Agency Clerk

Division of Legal Services

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written excepti ons 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.