15-003653 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. George Washington Beatty, Iii Status: Closed Recommended Order on Wednesday, July 6, 2016.

Summary: The Department established by clear and convincing evidence that Respondent, an unincorporated sole proprietor engaged in the construction industry, failed to obtain workers' compensation coverage for himself during the penalty period.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS'

COMPENSATION,

Petitioner,

vs. Case No. 15 - 3653

GEORGE WASHINGTON BEATTY, III,

Respondent.

_______________________________/

RECOMMENDED ORDER

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

on November 3, 2015, and April 29, 2016, before Lawrence P.

Stevenson, a duly - designated Administrative Law Judge (ÐALJÑ),

in T allahassee, Florida.

APPEARANCES

For Petitioner: Joaquin Alvarez, Esquire

Trevor S. Suter, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: George Washington Beatty, III, pro se

22701 Northwest Lake Mc Kinzie B oulevard

Altha, Florida 32421

STATEMENT OF THE ISSUE S

At issue in this proceeding is whether the Respondent,

George Washington Beatty, III, failed to abide by the coverage

requirements of the Workers' Compensation Law, chapt er 440,

Florida Statutes, by not obtaining workers' compensation

insurance for himself and/or his employees , and, if so, whether

the Petitioner properly assessed a penalty against the

Respondent pursuant to section 440.107, Florida Statutes.

PRELIMINARY ST ATEMENT

Pursuant to the Workers' Compensation Law, chapter 440, the

Department of Financial Services, Division of Workers'

Compensation ("Department"), seeks to enforce the statutory

requirement that employers secure the payment of workers'

compensation fo r their employees.

On September 8, 2014, the Department issued a "Stop - Work

Order" alleging that Mr. Beatty failed to abide by the coverage

requirements of the W orkers' C ompensation L aw on that date. The

order directed Mr. Beatty to cease business opera tions and pay a

penalty equal to two times the amount he would have paid in

premium to secure workers' compensation during periods within

the preceding two years when he failed to do so, or $1,000,

whichever is greater, pursuant to section 440.107(7)(d) . The

Department also requested business records from Mr. Beatty in

order to determine the exact amount of the penalty.

Mr. Beatty did not provide business records to the

Department. On October 16, 2014, the Department issued an

ÐAmended Order of Penalty As sessmentÑ that ordered Mr. Beatty to

pay a penalty of $141,790.96, pursuant to section 440.107(7)(d).

Mr. Beatty disputed the DepartmentÓs penalty calculation

and requested an administrative hearing. On October 16, 2014,

he filed a letter with the Depar tment requesting a hearing. On

June 24, 2015, the Department forwarded Mr. BeattyÓs request to

the Division of Administrative Hearings (ÐDOAHÑ). (No

explanation was provided as to why it took the Department nearly

eight months to forward Mr. BeattyÓs req uest to DOAH . ) The

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

at RespondentÓs request and rescheduled for November 3, 2015.

On August 25, 2015, the Department issued a ÐSecond Amended

Order of Penalty AssessmentÑ base d upon records sub mitted by

Mr. Beatty. The Second Amended Order of Penalty Assessment

reduced the penalty assessment to $58,363.88. Without

objection, the undersigned ordered the hearing to go forward

based on the Second Amended Order of Penalty Assessment.

The hearing w as commenced as scheduled on November 3, 2015.

At that hearing, it became apparent that Mr. Beatty had at his

disposal (but not on hand) additional documentation that might

further lower the amount of the penalty assessment. At the

close of the hearing, the Department agreed to accept and review

Mr. BeattyÓs documents and determine whether to further amend

the penalty assessment. The hearing was recessed pending the

DepartmentÓs decision.

On December 21, 2015, the Department filed a Motion for

Leave to Amend Order of Penalty Assessment. The Motion sought

approval of a Third Amended Order of Penalty Assessment that

would reduce the penalty to $9,356.52. Without objection, the

undersigned entered an Order granting the Motion and directing

that this case would go forward based on the Third Amended Order

of Penalty Assessment.

After entry of the Order, the Department sought to contact

Mr. Beatty in order to ascertain whether he was satisfied with

the proposed penalty or whether he wished to pursue the case to

its conclusion at a reconvened formal hearing. The Department

was unable to contact Mr. Beatty. T he undersigned entered an

Order to Show Cause on March 14, 2016, directing Mr . Beatty to

respond in writing as to his wishes regarding the case. On

Marc h 23, 2016, Mr. Beatty filed a written response indicating

his desire to resume the hearing Ðto clear this matter up.Ñ

The hearing was scheduled to resume on April 29, 2016, on which

date it was completed.

At the hearing, the Department presented the t estimony of

its investigator, Carl Woodall, and of penalty audit manager ,

Anita Proano. The Department's Exhibits 1 through 9 and 12 were

admitted into evidence. Mr. Beatty testified on his own behalf

and presented the testimony of James W. Daffin. Mr. Beatty

offered no exhibits into evidence.

The two - volume Transcript of the final hearing was filed at

DOAH on May 26, 2016. The Department timely filed a Proposed

Recommended Order on June 6, 2016. Mr. Beatty did not file a

p roposed r ecommended o rder.

U nless otherwise stated, all statutory references are to

the 2014 edition of the Florida Statutes.

FINDING S OF FACT

Based on the oral and documentary evidence adduced at the

final hearing, and the entire record in this proceeding, the

following F indings of F act are made:

1. The Department is the state agency responsible for

enforcing the requirement of the W orkers' C ompensation L aw that

employers secure the payment of workers' compensation coverage

for their employees and corporate officers. § 440.107, Fl a.

Stat.

2. George Washington Beatty, III, is a sole proprietor who

works as a painter and general construction handyman in the

vicinity of Panama City. The types of work performe d by

Mr. Beatty are properly considered construction industry work.

3. M r. BeattyÓs business is not incorporated. He has no

regular employees other than himself. His Form 1099 - MISC tax

forms indicate that he was actively engaged in performing

c onstruction work during the two - year audit period from

September 9, 2012 , through September 8, 2014.

4. Carl Woodall is a Department compliance investigator

based in Panama City. On September 8, 2014, Mr. Woodall drove

up to 1803 New Hampshire Avenue in Lynn Haven, a vacant house

where he saw a Ðfor saleÑ sign and indications of work being

performed on the house: the garage door was open and contained

a great deal of painting materials such as drop cloths and paint

buckets. A work van and a pickup truck were parked in the

driveway.

5. Mr. Woodall testified that as he walked up to th e front

door, he could see someone inside on a ladder, painting the

ceiling. As Mr. Woodall started to go in the front door, he was

met by Mr. Beatty on his way out the door. Mr. Woodall

introduced himself and gave Mr. Beatty his business card.

6. Mr. Woodall asked him t he name of his business and

Mr. Beatty stated that he did not know what Mr. Woodall was

talking about. Mr. Beatty then told Mr. Woodall that he worked

for Brush Stroke Painting but that he was not working this job

for Brush Stroke. Mr . Beatty told Mr. Woodall that he was

helping out a friend. Mr. Woodall asked whether Mr. Beatty had

workersÓ compensation insurance coverage, and Mr. Beatty again

stated that he did not know what Mr. Woodall was talking about.

He was just there helping out his friend, the owner of the

house.

7. Mr. Woodall asked Mr. Beatty to give him the ownerÓs

name and phone number. Mr. Beatty went out to his van to

retrieve the information. While Mr. Beatty was out of the

house, Mr. Woodall took the opportunity to speak with the three

other men working in the house.

8. The first man , whom Mr. Woodall approached , was

immediately hostile. He said that he was not working for

anyone, that he was just helping someone out. He walked out of

the house and never return ed while Mr. Woodall was there.

9. Mr. Woodall walked into the kitchen and spoke to a man

who was on a ladder, painting. The man identified himself as

Dennis Deal and stated that he was working for Mr. Beatty for

eight dollars an hour in cash. He told M r. Woodall that he

helped out sometimes when Mr. Beatty needed help. Before

Mr. Woodall could speak to the third person, Mr. Beatty came

back into the house with the ownerÓs contact information.

10. Mr. Beatty continued to deny that he was paying anyon e

to work in the house. With Mr. Beatty present, Mr. Woodall

spoke with the third man, Micha el Leneave, who stated that

Mr. Beatty was paying him ten dollars an hour in cash.

Mr. Woodall then took Mr. Beatty over to Mr. Deal, who

reiterated that Mr. Beat ty was paying him eight dollars an hour.

11. Mr. Beatty responded that he could not believe the men

were saying that because he ha d never told them a price.

Mr. Woodall asked Mr. Beatty to identify the man who left the

house, and Mr. Beatty told him it w as Tommy Mahone. Mr. Beatty

stated that Mr. Mahone had a bad temper and probably left to get

a beer.

12. After speaking with Mr . Beatty and the other men,

Mr. Woodall phoned Brian Daffin (Mr. Daffin) , the owner of the

house. Mr. Woodall knew Mr. Daffin as the owner of an insurance

company in Panama City. Mr. D affin told Mr. Woodall that

Mr. Beatty was painting his house, but was ev asive as to other

matters. Mr. Woodall stated that as the owner of an insurance

company, Mr. Daffin was surely familiar wit h workersÓ

compensation insurance requirements and that he needed a

straight answer as to whether Mr. Daffin had hired Mr. Beatty to

paint the house.

13. Mr. Daffin stated that he did not want to get

Mr. Beatty in trouble, but finally conceded that he h ad hired

Mr. Beatty to paint the hous e. Of the other three men,

Mr. Daffin was familiar onl y with Mr. Mahone. He told

Mr. Woodall that he had hired Mr. Beatty alone and did not know

the details of Mr. BeattyÓs arrangements with the other three

men.

14. At the hearing, Mr. Beatty testified that he was asked

by Mr. Daffin to help him p aint his house as a favor.

Mr. Beatty had met Mr. Daffin through James Daffin, Mr. Daffin Ós

father and Mr. BeattyÓs friend. No one was ever paid for

anything. Mr. Beatty s tated that he t ook the lead in speaking

to Mr. Woodall because he was the only one of the four men in

the house who was sober. He told Mr. Woodall that he was in

charge because Mr. Daffin had asked him to oversee the work.

15. None of the three men alleg ed to have been working for

Mr. Beatty testified at the hearing. Mr. Daffin did not

testify. Mr. BeattyÓs testimony is thus the only direct

evidence of the working arrangement, if any, which obtained

between Mr. Beatty and the three other men present at the house

on September 8, 2014. The only e vidence to the contrary was

Mr. WoodallÓs hearsay testimony regarding his conversations with

the three men and with Mr. Daffin.

16. Mr. Woodall checked the Department's Coverage and

Compliance Automated System ("CCAS") database to determine

whether Mr. Beatty had secured the payment of workers'

compensation insurance coverage or had obtained an exemption

from the requirements of chapter 440. CCAS is a database that

Department investigators routinely consult du ring their

investigations to check for compliance, exemptions, and other

workers' compensation related items. CCAS revealed that

Mr. Beatty had no exemption or workers' compensation insurance

coverage for himself or any employees. There was no evidence

t hat Mr. Beatty used an employee leasing service.

17. Based on his jobsite interviews with the alleged

employees and Mr. Beatty, his te lephone conversation with

Mr. Daffin, and his CCAS computer search, M r . Woodall concluded

that as of September 8, 2014, Mr. Beatty had three employees

working in the construction industry and that he had failed to

procure workersÓ compensation coverage for himself and these

employees in violation of chapter 440. Mr. Woodall consequently

issued a Stop - Work Order that he pe rsonally served on Mr. Beatty

on September 8, 2014.

18. Also on September 8, 2014, Mr. Woodall served

Mr. Beatty with a Request for Production of Business Records for

Penalty Assessment Calculation, asking for payroll and accounting

records to enable the Department to determine Mr. BeattyÓs

payroll and an appropriate penalt y for the period from

September 9, 2012 , through September 8, 2014.

19. Mr. Beatty provided the Department with no documents

in response to the Request for Production. On September 24 ,

2014, the Department issued an Amended Order of Penalty

Assessment that assessed a total penalty of $141,790.96. The

Amended Order of Penalty Assessment wa s served on Mr. Beatty via

hand - delivery on October 16, 2014.

20. Anita Proano, penalty audit sup ervisor for the

Department, later performed her own calculation of the penalty

as a check on the work of the penalty calculator. Ms. Proano

testified as to the process of penalty calculation. Penalties

for workers' compensation insurance violations are b ased on

doubling the amount of evaded insurance premiums over the two -

year period preceding the Stop - Work Order, which in this case

was the period from September 9, 2012 , through September 8,

2014. § 440.107(7)(d), Fla. Stat. Because Mr. Beatty initially

provided no payroll records for himself or the three men alleged

to have worked for him on September 8, 2014, the penalty

calculator lacked sufficient business records to determine an

actual gross payroll on that date.

21. Section 440.107(7)(e) provides that where an employer

fails to provide business records sufficient to enable the

Department to determine the employerÓs actual payroll for the

penalty period, the Department will impute the weekly payroll at

the statewide average weekly wage as defined in section

440.12(2), multiplied by two. 1/

22. In the penalty assessment calculation, the Department

consulted the classification codes and definitions set forth in

the SCOPES of Basic Manual Classifications (ÐScopes ManualÑ)

published by the National Cou ncil on Compensation Insurance

(ÐNCCIÑ). The Scopes Manual has been adopted by reference in

Florida Administrative Code R ule 69L - 6.021. Classification

codes are four - digit codes assigned to occupations by the NCCI

to assist in the calculation of workers' compensation insurance

premiums. Rule 69L - 6.028(3)(d) provides that "[t]he imputed

weekly payroll for each employee . . . shall be assigned to the

highest rated workers' compensation classification code for an

employee based upon records or the investiga tor's physical

observation of that employee's activities."

23. Ms. Proano testified that the penalty calculator

correctly applied NCCI Class Co de 5474, titled ÐPainting NOC

& Shop Operations, Drivers,Ñ which is defined in part as Ðthe

general painting cla ssification. It contemplates exterior and

interior painting of residential or commercial structures that

are constructed of wood, concrete, stone or a combination

thereof regardless of height.Ñ The corresponding rule provision

is rule 69L - 6.021(2)(jj). The penalty calculator used the

approved manual rates corresponding to Class Code 5474 for the

periods of non - compliance to calculate the penalty.

24. Subsequent to issuance of the Amended Order of Penalty

Assessment, Mr. Beatty submitted to the Departmen t , IRS Wage and

Income Transcripts for the tax years of 2011, 2012 , and 2013,

but not for tax year 2014. These Transcripts consisted of Form

1099 - MISC forms completed by the business entities for which

Mr. Beatty had performed work during the referenced t ax years.

The Department used the Transcripts to calculate the penalty for

the 2012 and 2013 portions of the penalty period and imputed

Mr. BeattyÓs gross payroll for the 2014 portion pursuant to the

procedures required by section 440.107(7)(e) and rule 6 9L - 6. 02 8.

25. On August 25, 2015, the Department issued a Second

Amended Order of Penalty Assessment in the amount of $58,363.88,

based on the mixture of actual payroll information and

imputation referenced above.

26. At the final hearing co nvened on No vember 3, 2015,

Mr. Beatty stated that he now had the Wage and Income Transcript

for tax year 2014 and would provide it to the Department. At

the close of hearing, the undersigned suggested, and the

Department agreed, that the proceeding should be stayed to give

the Department an opportunity to review the new records and

recalculate the proposed penalty assessment.

27. On December 21, 2015, the Department issued a Third

Amended Order of Penalty Assessment in the amount of $9,356.52.

Ms. Proano herself ca lculated this penalty. The Third Amended

Order assessed a total penalty of $9,199.98 for work performed

by Mr. Beatty during the penalty period, based on the Wage and

Income Transcripts that Mr. Beatty submitted.

28. The Third Amended Order assessed a total penalty of

$156.54 for work performed by Messrs. Mahone, Deal , and Leneave

on September 8, 2014. This penalty was imputed and limited to

the single day on which Mr. Woodall observed the men working at

the house in Lynn Haven. Mr. BeattyÓs records i ndicated no

payments to any employee, during the penalty period or

otherwise.

29. The evidence produced at the hearing established that

Ms. Proano utilized the correct class codes, average weekly

wages, and manual rates in her calculation of the Third Ame nded

Order of Penalty Assessment.

30. The Department has demonstrated by clear and

convincing evidence that Mr. Beatty was in violation of the

workers' compensation coverage requirements of chapter 440. The

Department has also demonstrated by clear and convincing

evidence that the penalty was correctly calculated through the

use of the approved manual rates, business records provided by

Mr. Beatty, and the penalty calculation worksheet adopted by the

Department in rule 69L - 6.027.

31. However, the Depa rtment did not demonstrate by clear

and convincing evidence that Tommy Mahone, Dennis Deal, and

Michael Leneave were employees of Mr. Beatty on September 8,

2014. There is direct evidence that Mr. Woodall saw the men

working in the house, but the only evi dence as to whether or how

they were being paid are the hearsay statements of the three men

as relayed by Mr. Woodall. The men were not available for

cross - examination; their purported statements to Mr. Woodall

could not be tested in an adversarial fashio n. Mr. BeattyÓs

testimony that the men were not working for him and that he was

merely supervising their work as a favor to Mr. Daffin is the

only sworn, admissible evidence before this tribunal on that

point. Mr. Beatty was adamant in maintaining that h e did not

hire the men, and his testimony raises sufficient ambiguity in

the mind of the factfinder to preclude a finding that Messrs.

Mahone, Deal , and Leneave were his employees.

32. Mr. Beatty could point to no exemption or insurance

policy that woul d operate to lessen or extinguish the assessed

penalty as to his own work.

33. The Department has demonstrated by clear and

convincing evidence that Respondent was engaged in the

construction industry in Florida during the period of

September 9, 2012 , thr ough September 8, 2014, and that

Respondent failed to carry workersÓ compensation insurance for

himself as required by FloridaÓs WorkersÓ Compensation Law from

September 9, 2012, through September 8, 2014.

34. The penalty proposed by the Third Amended O rder of

Penalty Assessment should be reduced to $9,199.98, the amount

sought to be imposed on Mr. Beatty himself.

CONCLUSIONS OF LAW

35. The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parties to this

procee ding. §§ 120.569 and 120.57(1), Fla. Stat.

36. Employers are required to secure payment of

compensation for their employees. §§ 440.10(1)(a) and

440.38(1), Fla. Stat.

37. "Employer" is defined, in part, as "every person

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

"Employment . . . means any service performed by an employee for

the person employing him or her" and includes "with respect to

the construction industry, all private employment in which one

or more employees are employed by the same employer . "

§§ 440.02(17)(a) and (b)2, Fla. Stat.

38. "Employee" is defined, in part, as "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 contr act for hire or apprenticeship, express or

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

39. The Department has the burden of proof in this case

and must show by clear and convincing evidence that the employer

violated the Workers' Compensatio n Law and that the penalty

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

and Fin . , Div . of Sec . and Investor Prot . v. Osborne Stern and

Co. , 670 So. 2d 932 (Fla. 1996); and Ferris v. Turlington , 510

So. 2d 292 (Fla. 1987).

40. In Evans Pa cking Co. v. Department of Agriculture and

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

the Court defined clear and convincing 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 of

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).

41. Judge Sharp, in her dissenting opinion in Walker v.

Flori da Department of Business and Professional Regulation , 705

So. 2d 652, 655 (Fla. 5th DCA 1998)(Sharp, J., dissenting),

reviewed recent pronouncements on clear and convincing evidence:

Clear and convincing evidence requires more

proof than preponderance of evidence, but

less than beyond a reasonable doubt. In re

Inquiry Concerning a Judge re Graziano ,

696 So. 2d 744 (Fla. 1997). It is an

intermediate level of proof that entails

both qualitative and quantative [sic]

elements. In re Adoption of Baby E.A. W. ,

658 So. 2d 961, 967 (Fla. 1995), cert.

denied , 516 U.S. 1051, 116 S. Ct. 719, 133

L.Ed.2d 672 (1996). The sum total of

evidence must be sufficient to convince the

trier of fact without any hesitancy. Id.

It must produce in the mind of the trier of

f act a firm belief or conviction as to the

truth of the allegations sought to be

established. Inquiry Concerning Davey , 645

So. 2d 398, 404 (Fla. 1994).

42. The undersigned has found that the Department did not

prove by clear and convincing evidence tha t Mr. Beatty employed

Tommy Mahone, Dennis Deal, and Michael Leneave on September 8,

2014. The Department did prove that Mr. Beatty was a sole

proprietor working in the constru ction industry. Therefore,

Mr. Beatty was his own employer and was required to obtain

workersÓ compensation insurance coverage for himself.

43. In Dep ar t ment of Fin ancial Serv ices , Div ision of

WorkersÓ Comp ensation v. Alfred Strange , Case No. 13 - 1212

(DOAH August 22, 2013), ALJ F. Scott Boyd provided an

illuminating historical expl anation of the workersÓ compensation

insurance requirements for sole proprietors, which is applicable

to and followed by the instant case:

38. The statutory definition of employer is

not straightforward. Section 440.02(16)(a)

defines "employer" to includ e "every person

carrying on any employment."

39. Section 440.02(17) then defines

"employment" in a somewhat circular fashion

as Ðany service performed by an employee for

the person employing him or her.Ñ The

definition excludes certain types of labor

a nd services not applicable here, and

includes, "with respect to the construction

industry, all private employment in which one

or more employees are employed by the same

employer."

40. Historically . . . it was held that a

sole proprietor could not be hi s own employee

because there was no legal entity apart from

the individual which could be considered to

be the individualÓs employer. Stevens v.

Int'l Builders of Fla. , 207 So. 2d 287, 290

(Fla. 3d DCA 1968)(sole proprietor could not

be a Ðstatutory emplo yeeÑ of himself under

the workers Ó compensation law because it is a

logical anomaly to conceive of an individual

as an entity apart from itself).

41. Particularly with respect to the

relatively dangerous construction industry,

statutory changes were subs equently enacted

to effect expansion of workersÓ compensation

coverage. First, a sole proprietor was

permitted to Ðopt inÑ by becoming an

ÐemployeeÑ of his own busin ess.

§ 440.02(2)(c), Fla. Stat. (1981); Boyd - Scarp

Enters. v. Saunders , 453 So. 2d 161, 1 63

(Fla. 1st DCA 1984)(sole proprietor who

failed to affirmatively elect to be an

employee of his own business could not be

considered a Ðstatutory employeeÑ of the

general contractor either).

42. The statute was next changed to create

an Ðopt outÑ stru cture. That is, a sole

proprietor in the construction industry was

considered to be an employee for purposes of

workersÓ compensation unless the sole

proprietor affirmatively elected to be

excluded from the definition of employee by

filing written notice of such election with

the Divis ion of Workers' Compensation.

§ 440.02(13)(c), Fla. Stat. (1995); Armstrong

v. Ormond in the Pines , 734 So. 2d 596, 597 -

598 (Fla. 1st DCA 1999)(without evidence of

election to be exempt, sole proprietor was an

employee of th e general contractor).

43. In 2004, the statute was amended again.

Section 440.02(15)(c) now defines "employee"

to include:

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 ex emption as permitted by this

chapter, or has otherwise secured

the payment of compensation

coverage as a subcontractor,

consistent with s. 440.10, for work

performed 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

industry.

This definition does away with all elections

for sole proprietors engaged in constructi on,

and simply declares as a matter of law that

they are employees. Although not obvious

from the text alone, which does not refer to

ÐemployersÑ at all and confusingly blends

forms of legal organization with types of

business relationships, the court cas es and

legislative history summarized above make it

clear that this language also makes a sole

proprietor who engages in the construction

industry his own Ðemployer.Ñ

44. Section 440.02(8) defines "construction industry" as

"for - profit activities involvi ng any building, clearing, filling,

excavation, or substantial improvement in the size or use of any

structure or the appearance of any land." Section 440.02(8)

further provides "[t]he division may, by rule, establish standard

industrial classification co des and definitions thereof which

meet the criteria of the term 'construction industry' as set

forth in this section." Mr. BeattyÓs activities as a painter and

handyman constituted construction under the DepartmentÓs

statutorily authorized rules. Fla. Ad min. Code R. 69L -

6.021(2)(jj).

45. The Department established by clear and convincing

evidence that Mr. Beatty was his own employer for workers'

compensation purposes because he was engaged as a sole

proprietor in the construction industry during the peri od of

November 19, 2012 , through November 18, 2014.

§§ 440.02(15)(c)4., (16)(a) and (17)(b)2., Fla. Stat.

46. Section 440.107(7)(a) provides in relevant part:

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 workers'

compensation required by this chapter . . .

such failure shall be deemed an immediate

serious danger to public health, safety, or

welfare suf ficient to justify service by the

department of a stop - work order on the

employer, requiring the cessation of all

business operations. If the department

makes such a determination, the department

shall is sue a stop - work order within

72 hours.

Thus, the D epartment's Stop - Work Order was mandated by statute.

47. As to the computation and assessment of penalties,

section 440.107(7) provides, in relevant part:

(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

2 times the amount the employer would have

pa id 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 2 - year period or $1,000, whichever

is greater . . . .

48. Ms. Proano properly utilized the penalty worksheet

mandated by rule 69L - 6.027 and the procedure set forth in

section 440.107(7)(d)1. to ca lculate the penalty owed by

Mr. Beatty as a result of his failure to comply with the

coverage requirements of chapter 440, with the exception of the

$156.54 imputed to Messrs. Mahone, Deal, and Leneave.

49. The Department has proven by clear and convincing

evidence that Mr. Beatty is subject to a penalty of $9,199.98,

which is the penalty calculated in the Thir d Amended Order of

Penalty Assessment minus the portion of the penalty imputed to

Messrs. Mahone, Deal, and Leneave.

RECOMMENDATION

Having considered the foregoing Findings of Fact,

Conclusions of Law, the evidence of record, the candor and

demeanor of th e witnesses, and the pleadings and arguments of

the parties, it is, therefore,

RECOMMENDED that a final order be entered by the Department

of Financial Services, Division of Workers' Compensation,

assessing a penalty of $9,199.98 against George Washington

Beatty, III.

DONE AND ENTERED this 6th day of July , 2016 , in

Tallahassee, Leon County, Florida.

S

LAWRENCE P. STEVENSON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Park way

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 6th day of July , 2016 .

ENDNOTE

1/ Section 440.12(2) defines Ðstatewide average week ly wageÑ as

Ð the average weekly wage paid by employers subject to the

Florida Reemployment Assistance Program Law as reported to the

Department of Economic Opportunity for the four calendar

quarters ending each June 30, which average weekly wage shall be

d etermined by the Department of Economic Opportunity on or

before November 30 of each year and shall be used in determining

the maximum weekly compensation rate with respect to injuries

occurring in the calendar year immediately following.Ñ The

Department entered into evidence a letter dated November 18,

2013, signed by Tom Clendenning, w orkforce s ervices d irector of

the Department of Economic Opportunity, stating that the average

weekly wage paid by Florida employers subject to the Florida

Reemployment Ass istance Program Law was $827.08, based upon the

four calendar quarters ending June 30, 2013. This was the

figure used by the Department to calculate the imputed wages in

this case.

COPIES FURNISHED:

George W ashington Beatty, III

22701 Northwest Lake Mc Kinzie Boulevard

Altha, Florida 32421

Trevor S. Suter, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

(eServed)

Joaquin Alvarez, Esquire

Department of Financial Services

200 East Gaines Street

Tallahasse e, Florida 32399 - 4229

(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 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.