16-006877 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. A-Z Roofing, Inc. Status: Closed Recommended Order on Friday, May 26, 2017.

Summary: The Department proved by clear and convincing evidence that Respondent failed to secure workers' compensation coverage for some of its employees during the audit period.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS'

COMPENSATION,

Petitioner,

vs. Case No. 16 - 6877

A - Z ROOFING, INC.,

Respondent.

_______________________________/

RECOMMENDE D ORDER

A duly - noticed hearing was held in this case on April 3,

2017, via video teleconference with sites in Tallahassee and

Jacksonville, Florida, before Administrative Law Judge Suzanne

Van Wyk.

APPEARANCES

For Petitioner: Michael Joseph Gordon, Esqui re

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: Ethelyn Roseboro, pro se

A - Z Roofing, Inc.

450 Busch Drive , Suite 5B

Jacksonville, Florida 32218

STATEMENT OF THE ISSUE S

Whether A - Z Roofing, Inc. (ÐRespondentÑ), failed to secure

the payment of workersÓ compensation insurance coverage for its

employees; and, if so, whether the Department of Financial

Services, Division of WorkersÓ Compensation (ÐPetitionerÑ o r

ÐDepartmentÑ), correctly calculated the penalty to be assessed

against Respondent.

PRELIMINARY STATEMENT

On September 23, 2016, the Department served Respondent

with a Stop - Work Order for Specific Worksite Only (Stop - Work

Order) and an Order of Penalty A ssessment, pursuant to chapter

440, Florida Statutes, for failing to secure workersÓ

compensation for its employees.

On October 19, 2016, Respondent requested a hearing to

dispute the Stop - Work Order and Penalty Assessment. On

November 18, 2016, Petitio ner referred this matter to the

Division of Administrative Hearings, which scheduled a final

hearing for April 3, 2017.

On January 18, 2017, the Department served an Amended Order

of Penalty Assessment on Respondent, assessing a penalty of

$273,556.12. Fo llowing review of business records provided by

Respondent, the Department moved to amend the Amended Order of

Penalty Assessment. The motion was granted and the penalty

sought was amended to $82,094.68 effective April 3, 2017.

The final hearing commenced as scheduled. Petitioner

presented the testimony of Department Compliance Investigator ,

Ann Johnson; Department Facilitator , Pete Vallejo; and

Department Penalty Auditor , Phillip Sley. PetitionerÓs Exhibits

P1 through P11 were admitted in evidence.

Res pondent presented the testimony of Ethelyn Roseboro,

RespondentÓs President, and introduced RespondentÓs Exhibits R1

and R2.

A one - volume Transcript of the proceedings was filed on

April 24, 2017. Petitioner timely filed a Proposed Recommended

Order, whi ch has been considered by the undersigned in preparing

this Recommended Order. Respondent did not make any post -

hearing filing.

All references to the Florida Statutes herein are to the

2016 version.

FINDING S OF FACT

1. The Department is the state agenc y charged with

enforcing the requirement of chapter 440, Florida Statutes, that

employers in Florida secure workersÓ compensation coverage for

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

2. Respondent is a Florida for - profit corporation engaged

in the cons truction industry with headquarters in Jacksonville,

Florida. Ethelyn Roseboro is RespondentÓs President.

3. On September 23, 2016 , the DepartmentÓs Compliance

I nvestigator, Ann Johnson, inspected a jobsite at 1229 Blue

Eagle Drive in Jacksonville, Flori da. Ms. Johnson observed

three men at the jobsite performing roofing work on a home

undergoing renovations. Two of the men were on the roof

stripping off old shingles and tarpaper, while a third was on

the ground retrieving the discarded materials.

4. M s. Johnson interviewed the men she observed working at

the jobsite. The man working on the ground originally

identified himself as Tony Brown, but later admitted that his

name was actually Allen Roberts.

5. In response to Ms. JohnsonÓs inquiry as to who was

Mr. RobertsÓ employer, Mr. Roberts stated that he did not know

and directed Ms. Johnson to his co - worker Donald Purdy.

6. Mr. Purdy disclosed, after initially misleading

Ms. Johnson, that he was a friend of the homeowner, Jessica

Longo.

7. A third wo rker at the site identified himself as Marvin

Gainer.

Initial Investigation and Stop - Work Order

8. Ms. Johnson reviewed the local building departmentÓs

permit records and determined that Bracy Building Contractors,

Inc. (ÐBracy BuildersÑ), 1/ had pulled a permit to replace the

siding on the structure for the owner, Ms. Longo. No permit was

pulled for a re - roof.

9. Ms. Johnson contacted Brad Bracey at Bracy Builders,

who indicated that he had subcontracted the roofing work to

Respondent, A - Z Roofing, Inc. Ms. Johnson next contacted

Ms. Roseboro at A - Z Roofing, Inc.

10. Ms. Roseboro informed Ms. Johnson that Respondent had,

in turn, subcontracted the roofing job to JR Home Repairs, Inc.

(ÐJR HomeÑ) and directed Ms. Johnson to Cary Spires as the

contact.

11 . Prior to contacting Mr. Spires, Ms. Johnson reviewed

information in the Coverage and Compliance Automated System, or

CCAS, the DepartmentÓs inter nal database, for JR Home.

Ms. Johnson determined that JR Home did not have workersÓ

compensation insurance coverage for its employees.

12. Ms. Johnson then contacted Cary Spires, who indicated

he provided workersÓ compensation insurance through a contract

with Staff Force.

13. Ms. Johnson spoke with Brent Abdula at Staff Force,

who confirmed that JR Home was not a client, and thus does not

have workersÓ compensation insurance coverage through Staff

Force.

14. However, Mr. Abdula confirmed that Respondent is a

client with workersÓ compensation insurance coverage through

Staff Force . Unfortunately, the employ ee roster maintained by

Staff Force did not include Mr. Roberts, Mr. Purdy, or

Mr. Gainer.

15. Ms. Johnson followed up with Mr. Spires and informed

him that JR Home was not a client of record with Staff Force,

and further that none of the three workers at the jobsite in

question were covered under RespondentÓs contract with Staff

Force. At that time, Mr. Spires admitted that he did not have

workersÓ compensation insurance coverage for his employees.

16. Ms. Johnson next reviewed the Department of State,

Division of CorporationsÓ information on A - Z Roofing, Inc., and

determined it was an active Florida corporation with

Ms. Roseboro listed as its President.

17. Ms. Johnson researched A - Z Roofing, Inc., in the CCAS

database and determined that Respondent di d not have independent

workersÓ compensation insurance coverage.

18. Finally, Ms. Johnson issued the Site Specific Stop -

Work Order which is the subject of the case at hand. Unable to

reach Ms. Roseboro, Ms. Johnson initially served the Stop - Work

Order by posting it at the jobsite on September 23, 2016.

19. After several failed attempts to reach Ms. Roseboro,

Ms. Johnson hand - delivered the Stop - Work Order to Ms. Roseboro

at her office on September 29, 2016.

20. Along with the Stop - Work Order, Petitioner served

Respondent with a Request for Production of Business Records

(ÐBRRÑ) to facilitate calculating the penalty for the failure to

secure workersÓ compensation insurance.

21. In response to the BRR, Respondent provided to the

Department some bank statem ents and its 2014 and 2015 federal

income tax returns.

RespondentÓs Responsibility for the Job

22. Ms. Roseboro testified that, although the work at the

jobsite had been Ðbrought to herÑ by Mr. Spires, her company did

not perform the work, and did not su bcontract with JR Home to

perform the work.

23. Ms. Roseboro testified that she was in the process of

getting Ðeverything in place for the job to start,Ñ but was not

aware that work had begun when Ms. Johnson contacted her about

the work being performed at the jobsite. Ms. Roseboro first

testified that she had not pulled a permit for the job, and had

not activated the permit for the job. Later she testified that

once she found out the Ðjob was being worked on without my

knowledge, I voided the permit an d the guys were not paid and

they did not go back to the job site.Ñ Her testimony was

confusing and unreliable.

24. In RespondentÓs defense, Ms. Roseboro offered into

evidence a copy of the building permit and certificate of

completion issued by the Jack sonville Building Department to

Justin Larsen Construction, Inc., for a re - roof of the dwelling

at 1229 Blue Eagle Trail in Jacksonville. The permit was pulled

on September 28, 2016, and the certificate of completion was

issued on October 12, 2016.

25. M s. Roseboro offered the documents to prove that

Respondent Ðdid not complete the roofing job.Ñ T hose documents

only prove that on a date subsequent to Ms. JohnsonÓs

investigation of the jobsite, another roofing company pulled a

permit and completed a re - r oof of the subject property. It does

not establish that Respondent was not responsible for the job on

the date of the inspection, or that Respondent did not

subcontract the job to JR Home, which did not have workersÓ

compensation insurance coverage for it s employees (and which may

have begun the work without a permit).

26. Ms. Roseboro maintained at hearing that JR Home

subcontracted the re - roofing job at the subject property to

Respondent, not vice - versa. Ms. RoseboroÓs testimony conflicted

with Ms. Joh nsonÓs testimony that Mr. Roseboro informed her via

telephone on September 23, 201 6, that Respondent had hired

JR Home to perform the work. Ms. JohnsonÓs testimony on this

point was more credible and is accepted as true.

27. The Department proved that R espondent subcontracted

the re - roof job to JR Home, which did not provide workersÓ

compensation insurance coverage for its employees.

Penalty Calculation

28. Department Penalty Auditor, Phillip Sley, was assigned

to calculate the penalty to be assessed against Respondent.

29. Pursuant to section 440.107(7)(d), Florida Statutes,

the DepartmentÓs audit period is the two - year period preceding

the date of the Stop - Work Order. The audit period in this case

is from September 24, 2014 through September 23, 20 16.

30. Based upon Ms. JohnsonÓs observations of the work

being performed at the jobsite, as well as review of records

submitted by Respondent, Mr. Sley determined that the type of

construction work performed was roofing. Mr. Sley consulted the

Scopes Ma nual published by the National Council on Compensation

Insurance (NCCI) and assigned classification code 5551 (Roofing

- All Kinds & Drivers) for purposes of calculating the penalty.

31. Mr. Sley then applied the corresponding approved

manual rates for cl assification code 5551 for the related

periods of non - compliance. Mr. Sley applied the correct

approved manual rates and correctly utilized the methodology

specified in section 440.107(7)(d)1. and Florida Administrative

Code Rules 69L - 6.027 and 69L - 6.028 to determine the penalty to

be imposed.

32. Because Respondent did not provide records sufficient

to determine its payroll during the audit period, Mr. Sley

correctly assigned the statewide average weekly wage (AWW) to

those employees identified on the jo bsite on the date in

question. § 440.107(7)(e), Fla. Stat. Mr. Sley likewise

correctly utilized the AWW multiplied by two when applying the

statutory formula for calculating the penalty to be assessed.

See § 440.107(7)(d)1., Fla. Stat.

33. On January 1 8, 2016, the Department served Respondent

with an Amended Order of Penalty Assessment assessing a penalty

of $267,278.36, which was fully imputed.

34. Respondent provided additional records subsequent to

issuance of the Amended Order of Penalty Assessment which

allowed the Department to determine RespondentÓs actual payroll

for 2014 and 2015, rather than relying on imputed numbers.

Based on this additional information, the Department issued a

Second Amended Order of Penalty Assessment on April 3, 2016, in

the amount of $82,094.68.

CONCLUSIONS OF LAW

35. The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parties to this

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

36. Employers are required to secure payment of workersÓ

compensation for their employees unless exempted or excluded.

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

37. Where a contractor sublets any part of his or her

contract work to a subcontractor :

[A]ll of the employees of such contractor

and subcontractor . . . engaged on such

contract work shall be deemed to be employed

in one and the same business . . . and the

contractor shall be liable for, and shall

secure, the payment of [workersÓ]

compensation [insurance for] all such

employees.

§ 440 .10(1)(b), Fla. Stat.

38. Further, a Ðcontractor shall require a subcontractor

to provide evidence of workersÓ compensation insurance.Ñ

§ 440.10(1)(c), Fla. Stat.

3 9. Strict compliance with the WorkersÓ Compensation L aw

is required by the employer. S ee C&L Trucking v. Corbett ,

546 So. 2d 1185, 1187 (Fla. 5th DCA 1989).

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

and must show by clear and convincing evidence that the employer

violated the WorkersÓ C ompensation L aw and that the penalty

ass essments were correct under the L aw. See DepÓt of Banking

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

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

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

Consumer Services , 5 50 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 rem embered; 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 hesita ncy, as to the

truth of the allegations sought to be

established. Slomowitz v. Walker ,

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

42. The only issue on which evidence was conflicting was

whether Respondent had engaged JR Home as a subcontractor on the

sub ject re - roof. As found herein, Ms. JohnsonÓs testimony on

this issue was more credible than Ms. RoseboroÓs and is accepted

as true. Ms. RoseboroÓs testimony was a self - serving attempt to

shift responsibility for securing workersÓ compensation

insurance t o JR Home.

43. The Department demonstrated by clear and convincing

evidence that Respondent was engaged in the construction

industry in Florida during the audit period and that Respondent

failed to secure the payment of workersÓ compensation insurance

for its employees at times during the audit p eriod as required

by FloridaÓs WorkersÓ C ompen sation L aw.

44. The Department likewise demonstrated by clear and

convincing evidence that it correctly calculated the penalty to

be imposed under the law.

RECOMMENDAT ION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a final order be entered by the

Department of Financial Services, Division of WorkersÓ

Compensation, finding that A - Z Roofing, Inc., violated the

workersÓ compensati on insurance law and assessing a penalty of

$82,094.68.

DONE AND ENTERED this 2 6 th day of May , 2017 , in

Tallahassee, Leon County, Florida.

S

SUZANNE VAN WYK

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 6 th day of May , 2017 .

ENDNOTE

1/ A review of t he online public records of the Florida Division

of Corporations reveals that the correct name of the company is

Bracey Building Contractors, Inc. The small typographical error

in the records of the Department has no effect.

COPIES FURNISHED:

Michael J oseph Gordon, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

(eServed)

Ethelyn Roseboro

A - Z Roofing, Inc.

Suite 5B

450 Busch Drive

Jacksonville, Florida 32218

Julie Jones, CP, FRP, Agency Clerk

Divis ion 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 Re commended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.