16-000364 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Northlake Mobile Enterprises, Inc. (15-136-D2); Mb Food And Beverage, Inc. (15-137-D2); Congress Valero, Inc. (15-138-D2); Hena Enterprises, Inc. (15-139-D2); Hayma Enterprises, Inc. (15-140-D2); And Blue Heron Bp, Inc. (15-141-D2), Et Al. Status: Closed Recommended Order on Thursday, June 16, 2016.

Summary: Respondents violated the requirement in chapter 440 to secure workers' compensation coverage. Recommend penalty assessments in the total amount of $53,503.44.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS '

COMPENSATION,

Petitioner,

vs. Case Nos. 16 - 0355

16 - 0361

NORTHLAKE MOBILE ENTERPRISES, 16 - 0362

INC. (15 - 136 - D2); MB FOOD AND 16 - 0364

BEVERAGE, INC. (15 - 137 - D2); 16 - 0365

CONGRESS VALERO, IN C. (15 - 138 - 16 - 0367

D2); HENA ENTERPRISES, INC. (15 -

139 - D2); HAYMA ENTERPRISES, INC.

(15 - 140 - D2); AND BLUE HERON BP,

INC. (15 - 141 -

Respondents.

_______________________________/

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was

conducted before Administrative Law Judge Mary Li Creasy by video

teleconference with locations in West Palm Beach and Tallahassee ,

F lorida, on April 6, 2016 .

APPEARANCES

For Petitioner: Tabitha G. Harnage, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent s : Frank Jose ph Blotney, Esquire

Bull and Blotney , LLP

Suite 101 - B

4524 Gun Club Road

West Palm Beach, Florida 33415

STATEMENT OF THE ISSUE

Whether Respondents violated the provisions of chapter 4 40,

Florida Statutes, by failing to secure the payment of workers '

compensation co verage, as alleged in the Stop - W ork Orders, and ,

if so, what penalty is appropriate.

PRELIMINARY STATEMENT

This proceeding arose out of the requirement in Florida ' s

Workers ' Compensation Law that employers must secure the payment

of workers ' compensation insurance for their employees. On

March 30, 2015, the Department of Financial Services (Department)

served each Respondent a Stop - Work Order and Order of Penalty

Assessment (Stop - Work Order) for failing to secure workers '

compensation for their employees as required by chapter 440,

Florida Statutes (2015). The Department received business

records from Respondents and, in turn, issued each an amended

penalty. On January 14, 2016, the Department served the six

Amended Orders of Penalty Assessment on Respondents, assessing

penalties as follows: $1,367.06 for Northlake Mobile

Enterprises, Inc. (Northlake); $9,687.00 for MB Food and

Beverage, Inc. (MB); $12,651.42 for Congress V alero, Inc.

(Congress V a l ero); $18,50 8.88 for Hena Enterprises, Inc. (Hena);

$ 7,257.48 for Hayma Enterprises, Inc. (Hayma); and $4,031.60 for

Blue Heron BP, Inc. (Blue Heron).

On April 27, 2015, Respondents filed a consolidated Petition

with the Departme nt, which requested a hearing and disputed the

penalties totaling $53,503.44. On January 22, 2016, this matter

was referred to the Division of Administrative Hearings (DOAH).

The six cases were consolidated and assigned DOAH C ase No.

16 - 0355.

On April 6, 2016, a final hearing was held as scheduled . 1/

T he Department presented the testimon y of Investigator Robert

Feehrer and Penalty Auditor Christopher Richardson. The

Department offered eight exhibits, all of which were received

into evidence. Responde nts presented the testimony of Nazma

Akter and offered no exhibits.

The two - volume transcript of the final hearing was filed

with DOAH on April 28, 2016. Respondents ' motion for extension

of time to file proposed recommended orders was granted without

o bjection on April 6, 2016, allowing the parties until May 18,

2016, to file their proposed recommended orders. Petitioner

timely filed a proposed recommended order. Respondents filed

their proposed recommended ord er on May 20, 2016, and upon

Pe ti ti oner ' s motion, it was struck as untimely and not considered

in the preparation of this Recommended Order .

References to st atutes and rules are to the 2015 versions,

unless otherwise indicated.

FINDING S OF FACT

1. The Department is the state agency charged wit h

enforcing the requirement of chapter 440, Florida Statutes, that

employers in Florida secure workers ' compensation coverage for

their employees. § 440.107(3), Fla. Stat.

2. Respondents are gas station/convenience stores located

in South Florida. North lake was created by Nazma Ak ter on

May 6, 2014. MB was created by Ms. Ak ter on March 23, 2010.

Congress Valero was created by Muhammad Saadat on July 21, 2011.

Hena was created by Ms. Ak ter and Abu Ahsan on December 14, 2011.

Hayma was created by Ms. Ak ter on December 14, 2011. Blue Heron

was created by Ms. Akt er on August 4, 2009. At all times

relevant hereto, Resp ondents were duly - licensed to conduct

business in the state of Florida.

3. On February 2, 2015, the Department ' s Compliance

Investiga tor Robert Feehrer, began a workers ' compensation

compliance investigation of Gardenia, LLC.

4. Investigator Feehrer called the number listed for

Gardenia, LLC, and was provided with a corporate office address.

5. On February 10, 2015, upon arrival at Garde nia, LLC ' s ,

corporate office located at 165 US Highway 1, North Palm Beach,

Florida, 33408, Investigator Feehrer spoke with Operations

Manager Mohammad Hossain. Mr. Hossain stated that Gardenia, LLC,

was a paper corporation and existed only for the purpos e of

paying unemployment taxes on the " six stores. " Mr. Hossain went

on to provide Investigator Feehrer with a list of Respondents and

names of the employees that worked at each store. As an employee

of Gardenia, LLC, and Respondents, Mr. Hossain ' s state ments are

party opponent admissions and bind Respondents. Lee v. Dep ' t of

Health & Rehab. Servs. , 698 So. 2d 1194, 1200 (Fla. 1997).

6. With Mr. Hossain ' s statements and the list of

Respondents ' employees, Investigator Feehrer then consulted the

Division of Corporations website , www.sunbiz.org , and confirmed

that Respondents were current, active Florida companies.

Investigator Feehrer then consulted the Department ' s Coverage and

Compliance Automated System ( " CCAS " ) for proof of workers '

compensation cover age and exemptions associated with Respondents.

7. Investigator Feehrer ' s CCAS search revealed that

Respondents had no workers ' compensation policies and no

exemptions.

8. On February 24, 2015, Investigator Feehrer conducted

site visits at each of the si x stores. Ms. Ak ter and

Mr. Hossain accompanied Investigator Feehrer during the se sit e

visits.

9 . At al l times material hereto, Ms. Ak ter was a corporate

officer or managing member of each of the six Respondents.

Muhammed Saadat and Abu Ahsan were corp orate officers or managing

members of Congress Valero, Hena, and Blue Heron. Kazi Ahamed

was a corporate officer or managing member of Congress Valero and

Hayma. Kazi Haider and Mohammed Haque were managing members of

Hayma. All received compensation fr om the companies with which

they were involved.

10 . Although Investigator Feehrer only personally observed

one employee working at each location during his site visits , the

payroll records revealed that at least four employees (including

corporate officer s or managing members without exemptions)

received compensation for work at each location during the

relevant period.

11 . Investigator Feehrer required additional information to

determine compliance , and with Respondents ' permission, contacted

Respondents ' accountant. Investigator Feehrer met with the

accountant at least two times to obtain relevant information

prior to March 30, 2015. Upon Ms. Ak ter ' s authorization, the

accountant provided tax returns and payroll information for

Respondents ' employees. Information from Ms. Ak ter and

Mr. Hossain also confirmed the specific employees at each of the

six stores during the period of March 30, 2013 , through March 30,

2015 .

12 . On March 30, 2015 , based on his findings, Investigator

Feehrer served six Stop - Wo rk Orders and Orders of Penalty

Assessment. The Stop - Work Orders were personally se rved on

Ms. Ak ter. Mr. Hossain was present as well and confirmed the

lists of employees for each of the six stores were accurate.

13 . I n April 2015, the Department assig ned Penalty Auditor

Christopher Richardson to calculate the six penalties assessed

against Respondents.

14 . Respondent provided tax returns for the audit period

and payroll transaction details were provided , as well as general

ledgers/breakdowns , noting t he employees for each Respondent

company .

15 . Based on Investigator Feehrer ' s observations of the six

stores on February 24, 2015 , Auditor Richardson used the

classification code 8061 listed in the Scopes® Manual, which has

been adopted by the Department through Florida Administrative

Code Rule 69L - 6.021(1) . Classification code 8061 applies to

employees of gasoline stations with convenience stores.

Classification codes are four - digit codes assigned to variou s

occupations by the National Council on Compen sation In surance to

assist in the calculation of workers ' compensation insurance

premiums.

16 . In the penalty assessment, Auditor Richardson applied

the corresponding approved manual rate for classification code

8061 for the related periods of non - complia nce. The

corresponding approved manual rate was correctly utilized using

the methodology specif ied in section 440.107(7)(d)1. and r ule

69L - 6.027 to determine the final penalties .

17 . The Department correctly determined Respondents ' gross

payroll pursuant to the procedures required by section

440.107(7)(d) and r ule 69L - 6.027 .

18 . On January 14, 2016, the Department served the six

Amended Orders of Penalty Assessment on Respondents, assessing

penalties of $1,367.06 for Northlake, $9,687.00 for MB,

$12,65 1. 42 for Congress Valero, $18,508.88 for Hena, $ 7,25 7.48

for Hayma , and $4,031.60 for Blue Heron .

19 . The Department has demonstrated by clear and convincing

evidence that Respondents were engaged in the gasoline station,

self - service/convenience store indu stry in Florida during the

periods of noncompliance; that Respondents failed to secure the

payment of workers ' compensation for their employees, as required

by Florida ' s Workers ' Compensation Law; and that the Department

correctly utilized the methodology specified in section

440.107( 7)(d)1. to determine the appropriate penalties .

CONCLUSIONS OF LAW

20 . DOAH has jurisdiction over the subject matter of and

parties to this proceeding. §§ 120.569 and 120.57(1), Fla. Stat.

21. Chapter 440 is known as the " W orkers ' Compensa tion

Law. " § 440.01, Fla. Stat.

22. Because administrative fines are penal in nature, the

Department is required to prove by clear and convincing evidence

that Respondent failed to secure the payment of workers '

compensation and that it c alculated the appropriate amount of

penalty owed by Respondent. See Dep ' t of Banking & Fin. v.

Osborne Stern & Co. , 6 70 So. 2d 932, 935 (Fla. 1996).

23. Pursuant to sections 440.10, 440.107(2), and 440.38,

every " employer " is required to secure the payme nt of workers '

compensation for the benefit of its employees unless exempted or

excluded under chapter 440. Strict compliance with the Workers '

Compensation Law is required by the employer. See C&L Trucking

v. Corbitt , 546 So. 2d 1185, 1187 (Fla. 5th DCA 1989); Dep ' t of

Fin. Serv. v. L & I Consolidated Serv., Inc. , Case No. 08 - 5911

(Fla. DOAH May 28, 2009; Fla. DFS July 2, 2009).

24. Section 440.107(2) states "' securing the payment of

workers ' compensation ' means obtaining coverage that meets the

require ments of this chapter and the Florida Insurance Code. "

25. Officers, partners, shareholders, and sole proprietors

may elect to be exempt from the coverage requirements of chapter

440. §§ 440.02(15)(b) and 440.05, Fla. Stat . Section 440.05(3)

sets out ce rtain affirmative actions required by one who elects

to be exempt from the coverage requirements. An applicant must

file a notice of election to be exempt with the Department and

pay a $50 fee to elect to be exempt.

26. Section 440.02(16)(a ) defines " emp loyer " in part as

" every person carrying on any employment. "

27. Florida law defines " employment " as " all private

employments in which four or more employees are e mployed by the

same employer. "

28. Florida law defines " employee " in part as " any person

wh o receives remuneration from an employer for the performance of

any work or service while engaged in any employment. "

§ 440.02(15)(a), Fla. Stat. Also included in the definition of

" employee " is " any person who is an officer of a corporation and

who per forms services for remuneration for such corporation

within this state, whether or not such services are continuous. "

§ 440.02(15)(b), Fla. Stat.

29 . Investigator Feehrer correctly concluded that

Respondent was not in compliance with the coverage require ments

of chapter 440 on March 30, 2015 . Therefore, the Department

properly issued and served the Stop - Work Order s .

30 . The Department has the duty of enforcing the employer ' s

compliance with the requirements of the Workers ' Compensation

Law. § 440.107(3 ), Fla. Stat. To that end, the Department is

empowered to examine and copy the business records of any

employer conducting business in the state of Florida to determine

whether it is in compliance with the Workers ' Compensation Law.

§ 440.107(3), Fla. St at.

31 . Section 440.107(7)(d)l. provides that the Division:

[ S ] hall 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

paid in p remium when applying approved manual

rates to the employer ' s payroll during

periods for which it failed to secure the

payment of workers ' compensation required by

this chapter within the preceding 2 - year

period or $1,000, whichever is greater.

This statu tory provision mandates that the Department assess

a penalty for non - compliance with chapter 440 and does not

provide any authority for the Department to reduce the amount of

the penalty.

32 . Rule 69L - 6.027 adopts a penalty calculation worksheet

for the Department ' s penalty auditors to utilize " [f]or purposes

of calculating penalties to be assessed against employers

pursuant to section 440.107, Florida Statutes. "

3 3 . The Department applied the proper methodology in

computing the Amended Order of Penalty Assessment pursuant to

section 440.107(7)(d)l. and rules 69L - 6.027 and 69L - 6.028.

3 4 . Auditor Richardson properly utilized the penalty

worksheet mandated by rule 69L - 6.027 and the procedure mandated

by section 440.107(7)(d)1. and (7)(e) to c alculate the penalty

owed by Respondent s as a result of their failure to comply with

the coverage requirements of chapter 440.

3 5 . Therefore, the Department prove d by clear and

convincing evidence that it correctly calculated and i ssued the

penalties in the Amended O rder s of Penalty Assessment against

Respondents .

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department enter a consolidated

final order upholding the Stop - Work Orders and the Amended Orders

of Penalty Assessment in the amounts of $1,367.06 for Northlake

Mobile Enterprise s, Inc.; $9,687.00 for MB Food and Beverage,

Inc.; $12,6 51.42 for Congress Valero, Inc.; $18,508.88 for Hena

Enterprises, Inc. ; $ 7,257 .48 for Hayma Enterprises, Inc.; and

$4,031. 60 for Blue Heron BP, Inc.

DONE AND ENTERED this 1 6 th day of June , 2016 , in

Tallahassee, Leon County, Florida.

S

MARY LI CREASY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalach ee 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 1 6 th day of June , 2016 .

ENDNOTE

1/ At 4:48 p.m. on April 5, 2016, the eve of the final hearing,

Respondents filed a Motion to Continue Administrative Hearing

(Motion) alleging that they received the Department ' s proposed

exhibits, totaling over 200 pages, that afternoon and needed time

to have the exhibits reviewed by an " expert wi tness. " Oral

argument was heard on this Motion at the outset of the final

hearing.

The record reflects that Respondents took no discovery to

prepare for the hearing. Nor did the parties meet and confer to

exchange exhibits 15 days in advance of t he hearing as required

by the undersigned ' s Order of Pre - hearing Instructions issued

February 5, 2016. The Joint Pre - h earing Stipulation filed by the

parties on March 31, 2016 , did not designate any expert witness

for Respondents. Although Respondent s li sted " Accountant for MFC

Associates, " no such individual was identified. Further, it was

clear upon inquiry that counsel for Respondents did not even know

the identity of the purported accountant.

During oral argument on the motion, Respondents as serted the

hearing should be postponed because their accountant was sick.

It was clear that Respondents made little or no preparations to

have an accountant present at the final hearing. Counsel ' s lack

of preparation or failure to timely file an appropri ate motion to

compel the production of d ocuments, which Petitioner intended to

introduce as exhibits at hearing, does not constitute good cause

sufficient to justify the continuance of the final hearing. For

these reasons, the Motion was denied and the fi nal hearing went

forward as scheduled.

COPIES FURNISHED:

Frank Joseph Blotney, Esquire

Bull and Blotney , LLP

Suite 101 - B

4524 Gun Club Road

West Palm Beach, Florida 33415

(eServed)

Tabitha G. Harnage, 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

Tallahassee, Florida 32399 - 0390

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTION S

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.