15-002524 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Moonlight General Contractors, Inc. Status: Closed Recommended Order on Friday, October 23, 2015.

Summary: Respondent failed to comply with workers' compensation requirements for two employees

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS'

COMPENSATION,

Petitioner,

vs. Case No. 15 - 2 524

MOONLIGHT GENERAL CONTRACTORS,

INC.,

Respondent.

_______________________________/

RECOMMENDED ORDER

On September 2, 2015, an administrative hearing in this case

was conducted by video teleconference in Tampa and Tallahassee,

Florida , by William F. Quattlebaum, Administrative Law Judge,

Division of Administrative Hearings.

APPEA RANCES

For Petitioner: Trevor S. Suter, Esquire

Christopher Miller, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: Abbe y Khdair, pro se

Moonlight General Contractors, Inc.

Post Office Box 291972

Tampa, Florida 33687

STATEMENT OF THE ISSUE

The issue in the case is whether Moonlight General

Contractors, Inc. (Respondent) , should be assessed a penalty for

an alleged failure to comply with the workers' compensation

requirements referenced herein, and, if so, in what amount.

PRELIMINARY STATEMENT

On April 1, 2015, the Department of Financial Services,

Division of Workers' Com pensation (Petitioner) , issued a Stop -

W ork Order and Order of Penalty Assessment , alleging that the

Respondent failed to "obtain coverage that meets the requirements

of Chapter 440, F.S. and the Insurance Code." By letter dated

April 10, 2015, the Respond ent disputed the allegations and

requested a formal hearing.

On May 4, 2015, the Petitioner forwarded the RespondentÓs

request for hearing to the Division of Administrative Hearings.

On May 7, 2015, the Petitioner issued an Amended Order of

Penalty Ass essment proposing a penalty of $192,425.94.

The hearing was initially scheduled to commence on July 8,

2015, and, at the request of the parties, was rescheduled for

September 2, 2015.

On September 1, 2015, the Respondent filed a letter

requesting that the hearing be postponed, but the request was

denied.

At the hearing, the Petitioner presented the testimony of

two witnesses and had E xhibits 1 through 8 admitted into

evidence. The Respondent presented the testimony of one witness.

The T ranscript of the hearing was filed on September 24,

2015. The Petitioner filed a Proposed Recommended Order that has

been reviewed in the preparation of this Recommended O rder.

FINDING S OF FACT

1. Pursuant to s ection 440.107, Florida Statutes (2015) , 1/

the Petitione r is the state agency charged with enforcing

compliance with FloridaÓs workersÓ compensation requirements.

2. At all times material to this case, the Respondent was a

business providing services in the construction industry with a

main office located at 1900 18th Avenue South, St. Petersburg,

Florida.

3. On April 1, 2015, Kent Howe, employed by the Petitioner

as a Compliance Investigator, observed two men working on a roof

of a residential structure located at 2513 Anastasia Drive South ,

Daytona, Flor ida (the Ðsubject propertyÑ.)

4. Mr. Howe specifically observed that a portion of the

roof structure was exposed and that the individuals were working

on the roof trusses.

5. Mr. Howe testified that the men identified themselves as

ÐMilan KrealÑ and ÐSvatopluk VavraÑ and that they identified the

Respondent as their employer.

6. Mr. Howe accessed corporate records maintained online by

the Department of State, Division of Corporations, and identified

Abbey Khdair as the sole corporate officer for the Respondent.

7. Mr. Howe accessed the PetitionerÓs Coverage and

Compliance Automated System (CCAS) to determine whether the

Respondent was in compliance with applicable workersÓ

compensation requirements. CCAS is a database maintained by the

Petitioner that contains workersÓ compensation coverage

information provided to the Petitioner by insurance providers.

8. Pursuant to s ection 440.05, corporate officers can be

exempted from workersÓ compensation coverage requirements.

Mr. Howe determined throug h CCAS that Mr. Khdair had an active

exemption for himself as the corporate officer , but t he two

individuals working on the subject property had no workersÓ

compensation coverage.

9. Mr. Howe contacted Mr. Khdair, who told Mr. Howe that

the two men were employed through an employee leasing company

identified as ÐSkilled Resources.Ñ

10. Personnel employed through licensed employee leasing

companies can have workersÓ compensation coverage arranged

through the leasing companies.

11. Mr. Howe contacted Skilled Resources and determined

that, although on occasion the Respondent had obtained employees

from Skilled Resources, the individuals working on the subject

property had not been supplied to the Respondent by Skilled

Resources.

12. Mr. Howe thereaf ter issued a Stop - W ork Order and posted

it at the jobsite.

13. On April 2, 2015, the Stop - W ork Order was personally

served on Mr. Khdair , along with a Request for Production of

Business Records for Penalty Assessment Calculation for the

period from Apri l 2, 2013 , through April 1, 2014 (the Ðaudit

periodÑ). On that same date, Mr. Khdair paid a $1,000 penalty

down payment towards the penalty assessment, in order to obtain a

release from the Stop - W ork Order and allow the subject property

roof to be secured from potential inclement weather.

14. By letter dated April 10, 2015, Mr. Khdair advised the

Petitioner that, prior to April 1, 2015, the Respondent and the

property owner had entered into a contract to perform work

related to Ða new gable roof, electr ical, plumbing, and HVAC

work.Ñ Mr. Khdair wrote that he obtained the building permit for

the project and that the property owner was to hire additional

subcontractors to work under the permit Mr. Khdair had obtained.

15. Mr. Khdair wrote that he Ðinad vertentlyÑ referred

Mr. Howe to Skilled Resources when Mr. Howe contacted him on

April 1, 2015, and that the property owner had hired the workers

without Mr. KhdairÓs knowledge or consent. Mr. Khdair wrote

that, prior to Mr. HoweÓs telephone call, Mr. Kh dair was unaware

that there were any people working at the subject location, other

than those who were to have obtained their own sub - perm its in

relation to the project.

16 . On April 10, 2015, Mr. Khdair also submitted a letter

purporting to be from the property owner stating that the owner

had personally hired Mr. Vavra and ÐGuy AckerlyÑ to work on the

roof.

17 . Neither of the two individuals observed by Mr. Howe

working at subject property on April 1, 2015 , identified himself

as ÐGuy Ackerly.Ñ

18 . The task of calculating the penalty assessment was

assigned to Eunika Jackson, employed by the Petitioner as a

Penalty Auditor.

19 . The Respondent failed to provide any business records

to the Petitioner . A ccordingly, Ms. Jackson calculated the

penal ty assessment pursuant to s ection 440.107(7)(e), which

provides that in the absence of business records sufficient to

determine payroll, the Petitioner is required to impute wages for

the employees working without workersÓ compensation coverage.

20 . As the corporate officer, Mr. Khdair had obtained an

exemption from the coverage requirements.

21 . The National Council on Compensation Insurance (NCCI)

assigns classification codes for various occupations related to

levels of risk presented by the specifi c tasks performed by an

employee. The codes are used to establish rates charged for

workersÓ compensation coverage and are relevant for determining

the penalty assessed for violations of workersÓ compensation

requirements.

22 . For purposes of enforcing compliance with FloridaÓs

workersÓ compensation requirements, the Petitioner has adopted

the NCCI codes through Florida Administrative Code Rules 69L -

6.021.

23 . Ms. Jackson correctly determined that NCCI Code 5551 is

applicable in this case. NCCI Code 5551 (titled ÐRoofing - All

Kinds & DriversÑ) specifically applies to Ðthe installation of

new roofs and the repair of existing roofsÑ and includes Ðthe

installation and/or repair of joists, trusses, rafters, roof

decks, sheathing, and all types of roofing materials.Ñ

24 . In determining the penalty assessment, Ms. Jackson

calculated the penalty based on the Respondent having three

employees without workersÓ compensation coverage. Ms. Jackson

applied the procedures set forth in s ection 440.107(7)(d) and

r ules 69L - 6.027 and 69L - 6.028, and determined that the penalty

assessment was $192,425.94 , which reflects a penalty of

$64,141.98 for each of the three individual s .

25 . Although Ms. JacksonÓs calculation of the penalty was

procedurally correct, the evide nce establishes only that there

were two individuals work ing on the roof of the subject property.

CONCLUSIONS OF LAW

26 . The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 120.569 and 120.57, Fla . Stat .

27 . The administrative fine at issue in this proceeding is

penal in nature. In order to prevail, the Respondent must

demonstrate by clear and convincing evidence that the Petitioner

was required to be in compliance with the applica ble statutes on

the referenced date, that the Petitioner failed to meet the

requirements, and that the proposed penalty is appropriate.

Dep Ó t of Banking & Fin . v. Osborne Stern & Co . , 670 So. 2d 932

(Fla. 1996); Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987).

28 . Every Florida employer is required to obtain workers'

compensation coverage for employees unless a specific exemption

or exclusion is provided by law. As the contractor who obtained

the permit for the roof replacement, the Respondent is obli gated

to comply with workersÓ compensation requirements applicable to

persons hired to perform the work. See §§ 440.10 and 440.38,

Fla . Stat.

29 . When contacted on April 1, 2015 , by the Petitioner Ós

Compliance Investigator , the Respondent acknowledged that there

were people working on the roof and asserted that they had been

obtained through an employment agency.

30. A few days later, the Respondent claimed that, prior to

being contacted by the investigator, he was not aware that anyone

was work ing o n the roof . At the same time, the Respondent

submitted a letter purportedly from the subject property owner

attempting to shift responsibility for hiring the workers to the

property owner .

31. The letter is uncorroborated hearsay , insufficient to

suppo rt a finding a fact . See §§ 120.57(1)(c) , Fla. Stat .

Further, t he attempt to shift responsibility to the homeowner is

immaterial because, as the responsible contractor, the Respondent

is obligated to comply with the workersÓ compensation

requirements.

32. The same letter also serves as the basis for

identifying ÐGuy AckerlyÑ as one of the two individuals allegedly

employed to work on the subject property roof. The PetitionerÓs

Compliance Investigator observed only two individuals on the roof

at the su bject property on April 1, 201 5, and the y identified

themselves as ÐMilan KrealÑ and ÐSvatopluk Vavra . Ñ

33. The penalty assessment was calculated on the basis of

three individuals classified as NCCI Code 5551 employees. The

evidence is insufficient to establish that there was a third

person hired to work on the roof of the subject property.

34. Accordingly, the appropriate penalty assessment is

$128,283.96, based on the Respondent Ós fail ure to comply with

workersÓ compensation requirements for the tw o individuals

identified as ÐMi lan KrealÑ and ÐSvatopluk Vavra.Ñ

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is recommended that the Department of Financial Services,

Division of WorkersÓ Compensation enter a Final O rder against the

Respondent imposing a penalty assessment in the amount of

$128,283.96 , as set forth herein .

DONE AND ENTERED this 2 3rd day of October , 2015 , in

Tallahassee, Leon County, Florida.

S

WILLIAM F. QUATTLEBAU M

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 3rd day of October , 2015 .

ENDNOTE

1/ All citations to the Florida Statutes are to the 2015 edition

unless stated otherwise.

C OPIES FURNISHED:

Abbey Khdair

Moonlight General Contractors, Inc.

Post Office Box 291972

Tampa, Florida 33 687

Trevor S. Suter, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

(eServed)

Julie Jones, CP, FRP, Agency Clerk

Division of Legal Services

Department of Financial Services

200 East Gaines Street

Tallaha ssee, Florida 32399 - 0390

(eServed)

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 age ncy that

will issue the Final Order in this case.