15-002717 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Touch Free Technology, Llc Status: Closed Recommended Order on Friday, October 16, 2015.

Summary: Respondent required to obtain workers' compensation coverage.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS'

COMPENSATION,

Petitioner,

vs. Case No. 15 - 2717

TOUCH FREE TECHNOLOGY, LLC,

Respondent.

_______________________________/

R ECOMMENDED ORDER

On August 26, 2015, an administrative hearing in this case

was conducted by video teleconference in Sarasota and

Tallahassee, Florida , by William F. Quattlebaum, Administrative

Law Judge, Division of Administrative Hearings.

APPEARANCES

F or Petitioner: Leon Melnicoff, Qualified Representative

Trevor S. Suter, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Res pondent: Michael Hric, Esquire

Michael Hric, P.A.

1800 2nd Street , Suite 920

Sarasota, Florida 34236

STATEMENT OF THE ISSUE

The issue in the case is wh ether Touch Free Technology, LLC

(Respondent) , should be as sessed a penalty, and , if so, in what

amount, for an alleged failure to comply with workers'

compensation requirements referenced herein.

PRELIMINARY STATEMENT

On October 21, 2014, the Department of Financial Services,

Division of Workers' Compensation (Pe titioner) , issued an Order

of Penalty Assessment against the Respondent, alleging that the

Respondent failed to "obtain coverage that meets the requirements

of c hapter 440, F.S. and the Insurance Code." On November 7,

2014, the Petitioner issued an Amende d Order of Penalty

Assessment proposing a penalty of $20,480.86.

By separate p etitions dated November 10 and December 3,

2014, the Respondent disputed the alleged violation and proposed

penalty assessment, and requested a formal hearing.

On April 1, 20 15, the Petitioner issued a Second Amended

Order of Penalty Assessment against the Respondent, wherein the

proposed penalty assessment was reduced to $14,994.72.

On May 15, 2015, the Petitioner forwarded the RespondentÓs

request for hearing to the Divisi on of Administrative Hearings.

The hearing was initially scheduled to commence on July 2, 2015,

and was rescheduled for August 26, 2015, at the request of the

parties.

At the hearing, the Petitioner presented the testimony of

two witnesses and had E xhib its 1 through 17 admitted into

evidence. The Respondent presented the testimony of one witness.

The T ranscript of the hearing was filed on September 16,

2015. Both parties filed Proposed Recommended Orders that have

been reviewed in the preparation of this Recommended O rder.

FINDING S OF FACT

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

the Petitioner is the state agency charged with enforcing

compliance with FloridaÓs workersÓ compensation requirements.

2. On October 21, 2014, Germaine Green, an investigator

employed by the Petitioner, observed two individuals installing

automated car wash equipment into a structure located at

5740 Ranch Lake Road, Lakewood Ranch, Florida 34202.

3. Ms. Green identified the individuals performing the

installation as Mark Hawkins and Randy Allore, and observed that

they were being supervised by Timothy Smith.

4. The Respondent is a business located at 6160 15th

Street , East, Bradenton , Florida 34203. The Respondent was

engaged in business activitie s during the period from October 22,

2 01 2 , through October 21, 2014, including the installation,

maintenance and servicing of automated car wash equipment.

5. Mr. Smith is the Ðmanaging memberÑ of the Respondent.

6. On October 21, 2014, Mr. Smith adm itted to the inspector

that the Respondent did not have workersÓ compensation coverage

or exemptions from coverage requirements. Ms. GreenÓs review of

state workersÓ compensation coverage records confirmed the

admission.

7. Mr. Hawkins and Mr. Allore a dvised the PetitionerÓs

investigator that they did not operate a business and that they

did not have their own workersÓ compensation coverage.

8. The Respondent asserts that the services of Mr. Hawkins

and Mr. Allore were supplied by ÐTommyÓs Car Wash S ystems , Ñ from

whom the Respondent acquired the equipment, and that they were

not directly employed by the Respondent.

9. Pursuant to s ection 440.02(15)2, an uninsured

subcontractor is considered an employee of the Respondent for

purposes of workersÓ com pensation coverage. Under the statute,

Mr. Hawkins and Mr. Allore were the RespondentÓs employees.

10. On October 21, 2014, the PetitionerÓs investigator

requested that Mr. Smith provide certain business records, and

the Respondent complied with the requ est.

11. The records were reviewed by Eric Ruzzo, the

PetitionerÓs penalty auditor. Mr. Ruzzo determined that, in

addition to the three individuals observed by the PetitionerÓs

investigator on October 21, 2014, two additional individuals,

Marie Smith a nd Don Meissner , Jr., were employed by the

Respondent.

12. The National Council on Compensation Insurance (NCCI)

assigns classification codes for various occupations related to

levels of risk presented by the specific tasks performed by an

employee. Th e codes are used to establish rates charged for

workersÓ compensation coverage. They are also used in

determining the penalty assessed for violations of workersÓ

compensation requirements.

13. NCCI C ode 3724 (ÐMachinery or Equipment Erection or

Repair NOC & DriversÑ) specifically includes Ðautomatic car

washing equipment , Ñ such as that which the PetitionerÓs

investigator observed being installed by the Respondent on

October 21, 2014.

14. Mr. Ruzzo properly determined that NCCI C ode 3724 was

applicabl e to the job duties of Mr. Smith, Mr. Meissner,

Mr. Hawkins and Mr. Allore, and calculated the penalty assessment

on that basis.

15. The Respondent asserted that Mr. RuzzoÓs determination

of the applicable NCCI C ode was erroneous, but the assertion was

not supported by the evidence.

16. Mr. Hawkins and Mr. Allore were installing automatic

car wash equipment when observed by Ms. Green. The evidence

established that Mr. Smith and Mr. Meissner, when required to do

so, performed repairs to such equipmen t. Installation and

repairs of automatic car wash equipment are specifically included

within NCCI C ode 3724.

17. Mr. Ruzzo determined that Ms. Smith was the

RespondentÓs office manager and properly assigned NCCI C ode 8810

(ÐClerical Office Employees NO CÑ) in calculating the penalty

related to Ms. Smith.

18. Mr. Ruzzo reviewed the business records submitted by

the Respondent and initially calculated a penalty assessment of

$20,480.86. Following a review of additional records provided by

the Responden t, Mr. Ruzzo reduced the penalty assessment to

$14,994.72.

19. The employment classifications assigned to the

Respondent's personnel were correct. The amended penalty

assessment was properly calculated by Mr. Ruzzo.

CONCLUSIONS OF LAW

20. The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 120.569 and 120.57, Fla Stat .

21. 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 applicable 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).

In this case, the burden has been met.

22. Every Florida employer is required to obtain workers'

compensation coverage for employe es unless a specific exemption

or exclusion is provided by law. See §§ 440.10 and 440.38, Fla .

Stat .

23. Section 440.02, provides the following relevant

definitions:

(8) "Construction industry" means for - profit

activities involving any building, clearin g,

filling, excavation, or substantial

improvement in the size or use of any

structure or the appearance of any

land. . . . The division may, by rule,

establish standard industrial classification

codes and definitions thereof which meet the

criteria of t he term "construction industry"

as set forth in this section.

* * *

(15)(a) ÐEmployeeÑ means any person 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, whether lawfully or unlawfully

employed, and includes, but is not limited

to, aliens and minors.

* * *

(c) ÐEmployeeÑ includes:

1. A sole proprietor or a partner who is not

engaged in the construction industry, devotes

full time to the proprietorship or

partnership, and elects to be included in the

definition of employee by filing notice

thereof as provided in s. 440.05.

2. All persons who are being paid by a

construction contractor as a subcontractor,

unless the subcontractor has validly elected

an exemption as permitted by this chapter, or

has otherwise secured the payment of

compensation coverage as a subcontractor,

consistent with s. 440.10, for work perfor med

by or as a subcontractor.

3. An independent contractor working or

performing services in the construction

industry.

4. A sole proprietor who engages in the

construction industry and a partner or

partnership that is engaged in the

construction i ndustry.

* * *

(16)(a) ÐEmployerÑ means the state and all

political subdivisions thereof, all public

and quasi - public corporations therein, every

person carrying on any employment, and the

legal representative of a deceased person or

the recei ver or trustees of any person. . . .

ÐEmployerÑ also includes employment agencies,

employee leasing companies, and similar

agents who provide employees to other

persons. If the employer is a corporation,

parties in actual control of the corporation,

inclu ding, but not limited to, the president,

officers who exercise broad corporate powers,

directors, and all shareholders who directly

or indirectly own a controlling interest in

the corporation, are considered the employer

for the purposes of ss. 440.105, 44 0.106, and

440.107.

* * *

(17)(a) ÐEmployment,Ñ subject to the other

provisions of this chapter, means any service

performed by an employee for the person

employing him or her. (Emphasis added) .

24. By statutory definition, the RespondentÓs business of

automatic car wash equipment installation constitutes activity in

the construction industry.

25. For purposes of workersÓ compensation coverage,

Mr. Hawkins and Mr. Allore are considered employees of the

Respondent under the statutory defin ition. The RespondentÓs

assertion that their services were supplied by the manufacturer

of the equipment is immaterial under the statute, because the

statute assigns the ultimate responsibility for assuring that

proper coverage is in place to the Responde nt. It was the

RespondentÓs obligation to obtain the coverage or to confirm that

they were otherwise covered.

26. Mr. Smith, Mr. Meissner, and Ms. Smith were clearly

employees of the Respondent.

27. Mr. Ruzzo properly assigned NCCI codes to the

Resp ondentÓs employees and properly calculated the penalty

assessment against the Respondent.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is recommended that the Petitioner , Department of

Financial Services, Division of Wo rkersÓ Compensation, enter a

final ord er assessing a penalty of $14,994.72 against the

Respondent , Touch Free Technology, LLC .

DONE AND ENTERED this 16th day of October , 2015 , in

Tallahassee, Leon County, Florida.

S

WILLI AM F. QUATTLEBAUM

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 o f Administrative Hearings

this 16th day of October , 2015 .

ENDNOTE

1/ All citations to the Florida Statutes are to the 2014 edition

unless stated otherwise.

COPIES FURNISHED:

Michael Hric, Esquire

Michael Hric, P.A.

1800 2nd Street , Suite 920

Sarasot a, Florida 34236

(eServed)

Trevor S. Suter, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

(eServed)

Leon Melnicoff

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 422 9

(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 writ ten 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.