17-003500 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Craftmaster Plastering And Stucco, Inc. Status: Closed Recommended Order on Monday, November 13, 2017.

Summary: Petitioner proved that Respondent failed to secure workers' compensation insurance for non-compliance period during which the corporate officers' exemptions had lapsed; Petitoner failed to prove its remaining allegations by clear & convincing evidence.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS'

COMPENSATION,

Petitioner,

vs. Case No. 17 - 3500

CRAFTMASTER PLASTERING AND

STUCCO, INC.,

Respondent.

_______________________________/

RECOMMENDED ORDER

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

on October 6, 2017, by video teleconference in Tallahassee and

Panama City, Florida, before Administrative Law Judge Suzanne

Van Wyk .

APPEARANCES

For Petitioner: Mic hael Joseph Gordon, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: Rasheem Kincey, pro se

Craftmaster Plastering and Stucco, Inc.

129 Nann Street

Enterprise, Alabama 36330

STATEMENT OF THE ISSUE

Whether Respondent, Craftmaster Plastering and Stucco,

Inc., failed to comply with the coverage requirements of the

WorkersÓ Compensation Law, chapter 440, Florida Statutes; and,

if so, what penalty should be assessed pursuant to section

440.107, Florida Statutes (2016 ) .

PRELIMINARY STATEMENT

On January 23, 2017, the Department issued a ÐStop - Work

OrderÑ (Order) alleging that Respondent failed to comply with

th e coverage requirements of the W orkersÓ Compens ation L aw on

that date. The Order directed Respondent to cease business

operations and pay a penalty equal to two times the amount

Respondent would have paid in premium to secure workersÓ

compensation insurance during periods within the preceding two

year s when it failed to do so, or $1,000, whichever is greater,

pursuant to section 440.107(7)(d). Along with the Order,

Petitioner issued a Business Records Request (BRR) to

Respondent.

Respondent timely requested an administrative hearing to

dispute the Dep artmentÓs Order and the imposition of a penalty.

On June 19, 2017, the Department forwarded RespondentÓs request

to the Division of Administrative Hearings to hold a hearing on

disputed issues of material fact. The hearing was initially

scheduled for Sep tember 6, 2017, but was subsequently

rescheduled, at the request of the parties, to October 6, 2017.

The final hearing convened as rescheduled. The Department

presented the testimony of Michelle Loy, a Division

Investigative Supervisor ; and Nathaniel Hat ten, a Division

Penalty Auditor. The DepartmentÓs Exhibits A through G were

admitted into evidence. Respondent presented the testimony of

its President, Rasheem Kincey, but offered no exhibits.

The proceeding was recorded but neither party ordered a

tran script. Both parties timely filed Proposed Recommended

Orders which have been considered by the undersigned in

preparing this Recommended Order.

Unless otherwise indicated, all statutory references are to

the 2016 edition of the Florida Statutes, which we re in effect

on the date of the alleged violations of the WorkersÓ

Compensation Law .

FINDING S OF FACT

1. The Department is the state agency responsible for

enforcing the requirement of the WorkersÓ Compensation Law that

employers secure the payment of wo rkersÓ compensation coverage

for their employees. § 440.107, Fla. Stat. (2017).

2. Respondent is a Florida for - profit corporation

organized on or about January 1, 2015, which was engaged in the

construction industry in Florida at all times relevant heret o.

3. According to the record evidence, Respondent was

administratively dissolved on September 23, 2016. No evidence

of reinstatement was introduced.

4. According to the Secretary of StateÓs database, Rasheem

Kincey is RespondentÓs President, Mecca Kinc ey is its Vice

President, and Ulysses Kincey is its Treasurer.

5. On January 23, 2017, Ms. Loy received a telephone call

from Department Compliance Investigator, Carl Woodall, who was

onsite at a restaurant undergoing renovations at the

intersection of U. S. Highway 98 and Kraft Avenue in Panama City,

Florida (the worksite). Mr. Woodall reported his findings to

Ms. Loy from a random workersÓ compensation compliance check he

had completed at the worksite. Based upon Mr. WoodallÓs verbal

report, Ms. Loy ins tructed Mr. Woodall to issue the subject

Order.

6. According to Ms. Loy, Mr. Woodall observed several

workers at the worksite, interviewed them, and recorded notes on

a field interview worksheet.

7. Ms. Loy had no personal knowledge of any of the workers

at the worksite, did not observe the activities of anyone at the

worksite, and did not interview anyone at the worksite.

8. Mr. Woodall did not testify at the final hearing.

9. The Department did not introduce Mr. WoodallÓs field

interview worksheet int o evidence.

10. Ms. Loy reviewed the Coverage and Compliance Automated

System (CCAS), which is maintained by the Department, and

confirmed Respondent did not have a valid workersÓ compensation

insurance policy.

11. Mr. Hatten was assigned to calculate th e penalty to be

imposed for RespondentÓs alleged failure to secure workersÓ

compensation insurance coverage for its employees.

12. From Mr. WoodallÓs field interview worksheet,

Mr. Hatten retrieved the names Rasheem Kincey, Mecca Kincey,

Ulysees Kincey, B randon White, Mark Kim Wilson, Jerome Bradley,

and Brandon Samuel Kincey Smith, and entered those names on his

penalty calculation worksheet as RespondentÓs uninsured

employees for the penalty audit period.

13. In this case, the penalty audit period inclu ded the

two years immediately preceding the date on which the O rder was

issued: January 23, 2015 through January 23, 2017.

14. Respondent did not comply with PetitionerÓs BRR;

therefore, the Department did not have sufficient records to

establish Respond entÓs payroll during the penalty audit period.

15. Mr. Hatten reviewed CCAS and confirmed that M ecca

Kincey, Ulysses Kincey , and Rasheem Kincey had valid workersÓ

compensation exemptions effective from February 3, 4, and 5,

2015 , respectively, through Feb ruary 2, 3, and 4, 2017 ,

respectively . RespondentÓs officers did not have exemptions

from workersÓ compensation insurance requirements during the

audit period between January 26, 2015, and February 2, 3, and 4,

2017, respectively. Mr. Hatten entered thes e timeframes on the

penalty calculation worksheet as periods of non - compliance for

the three corporate officers.

16. Mr. Hatten further found Respondent had a workersÓ

compensatio n insurance policy effective February through

July 2015. Mr. Hatten used th is information to establish

periods of non - compliance during the audit period.

1 7 . Based upon Mr. WoodallÓs notes that he observed

workers engaged in stucco application and repair at the

worksite , Mr. Hatten assigned the classification code 5022,

Masonry, for purposes of calculating the penalty. The

classification code was derived from the Scopes Manual published

by the National Council on Compensation Insurance (NCCI) and

adopted by the Department by Florida Administrative Code Rule

69L - 6.021.

1 8 . Mr. H atten next applied the workersÓ compensation

insurance rates approved by the Department for workersÓ

compensation coverage by classification code to each worker

during each period of non - compliance.

1 9 . Finally, because Respondent did not submit business

records sufficient to establish its payroll during the audit

period, Mr. Hatten assigned the statewide average weekly wage in

order to calculate RespondentÓs payroll to each ÐemployeeÑ and

its corporate officers for the periods of non - compliance.

20 . Util izing this imputed methodology, Mr. Hatten

calculated a total penalty of $94,544.92 to be imposed on

Respondent for failure to secure workersÓ compensation insurance

for its employees during the periods of non - compliance.

2 1 . The Department served Respond ent with an Amended Order

of Penalty Assessment on February 23, 2017, imposing the penalty

of $94,544.92.

2 2 . Mr. Kincey testified on RespondentÓs behalf.

Mr. Kincey admitted that he, Ulysses Kincey , and Mecca Kincey

were performing stucco work at the wo rksite on January 23, 2017.

Mr. Kincey denied that any of the other individuals , purportedly

identified at the worksite by Mr. Woodall , were his employees.

2 3 . As to the individuals named in the Amended Order of

Penalty Assessment, Mr. Kincey testified t hat Jerome Bradley was

a cook at the restaurant; Mark Kim Wilson was painting at the

worksite, and Mr. Kincey assumed Mr. Wilson was hired by the

restaurant owner, Jerry Steele; Brandon Samuel Kincey Smith was

Mr. KinceyÓs cousin, and he had no idea who ha d hired Mr. Kincey

Smith or what he was doing at the worksite; and that he had

never heard of Brandon White and could not identify Mr. White.

2 4 . The Department offered no non - hearsay evidence to

rebut Mr. KinceyÓs testimony.

2 5 . The record evidence is s ufficient to support a finding

that Rasheem Kincey, M ecca Kincey, and Ulysees Kincey were

performing stucco work at the worksite on January 23, 2017, and

were not covered by either workersÓ compensation insurance or a

valid exemption therefrom, for the per iods of non - compliance

identified in the penalty calculation worksheet.

2 6 . Mr. Hatton correctly applied the imputed methodology

and correctly calculated a penalty of $1,259.64, for

RespondentÓs failure to obtain workersÓ compensation coverage

for the thr ee corporate officers.

2 7 . The evidence is insufficient to support the remaining

imputed penalty calculation applied to Respondent.

CONCLUSIONS OF LAW

2 8 . The Division of Administrative Hearings has

jurisdiction of the subject matter of, and the parties to , this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2017).

2 9 . Employers are required to secure payment of workersÓ

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

440.38(1), Fla. Stat.

30 . ÐEmployerÑ is defined, in part, as Ðevery person

carrying on any employment.Ñ £ 440.02(16), Fla. Stat.

3 1 . ÐEmploymentÑ means Ðany service performed by an

employee for the person employing him or herÑ and includes,

Ðwith respect to the construction industry, all private

employment in which one or more employees are empl oyed by the

same employer.Ñ ££ 440.02(17)(a) and (b)(2), Fla. Stat.

3 2 . ÐEmployeeÑ is defined, in part, as Ðany person who

receives remuneration from an employer for the performance of

any work or service while engaged in any employmen t under any

appointment or contract for hire or apprenticeship, express or

implied, oral or written.Ñ £ 440.02(15)(a), Fla. Stat.

ÐEmployeeÑ also includes Ðany person who is an officer of a

corporation and who performs services for remuneration for such

corporation within this state.Ñ £ 440.02(15)(b), Fla. Stat.

3 3 . The Department has the burden of proof in this case

and must show by clear and convincing evidence that the employer

violated the WorkersÓ Compensation Law and that the penalty

assessments w ere correct under the law. 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).

3 4 . In Evans Packing 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; t he

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 hesitancy, as to the

truth of the allegations sought to be

established. Slomowitz v. Walker , 429

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

3 5 . The Department failed to establish by clear and

convincing evidence that any of the individuals listed in the

penalty calculation wo rksheet were RespondentÓs employees,

except for RespondentÓs three named corporate officers.

3 6 . Ms. LoyÓs testimony was pure hearsay and she had no

personal knowledge of, and could not independently identify,

anyone at the worksite. Furthermore, Ms. Loy did not observe

what activities those workers were engaged in, and did not

interview anyone at the worksite.

3 7 . Likewise, Mr. HattenÓs knowledge of both the

individuals on the worksite, and the activities in which they

were engaged, was based solely on Mr. WoodallÓs field interview

worksheet, which was not introduced in evidence.

3 8 . The DepartmentÓs evidence was neither clear nor

convincing that the individuals listed on the penalty

calculation workshee t were RespondentÓs employees.

3 9 . Even if the De partment had met its burden to establish

that the listed individuals were RespondentÓs employees, the

record contains insufficient evidence to support that the

workers were engaged in stucco work. The only evidence on that

issue was Mr. HattenÓs hearsay b ased on Mr. WoodallÓs notes,

which were not offered in evidence.

40 . Taken together, the evidence adduced at the final

hearing did not produce a firm belief or conviction in the mind

of the undersigned that the individuals listed on the

DepartmentÓs pen alty worksheet, with the exception of the three

corporate officers, were RespondentÓs employees.

4 1 . The Department carried its burden to establish that

Respondent failed to secure workersÓ compensation insurance for

its three corporate officers for the period s of non - compliance

listed in the penalty calculation worksheet.

RECOMMENDATION

Having considered 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 order finding

that Respondent, Craftmaster Plastering and Stucco, Inc., failed

to secure and maintain required workers Ó compensation insurance

for its employees, and impose a penalty of $1,259.64.

DONE AND ENTERED this 13 th day of Novembe r , 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 13 th day of November , 2017 .

COPIES FURNISHED:

Michael Joseph Gordon, Esquire

Department of Financial Services

200 East Gaines Street

Tallaha ssee, Florida 32399 - 4229

(eServed)

Rasheem Kincey

Craftmaster Plastering and Stucco, Inc.

129 Nann Street

Enterprise, Alabama 36330

Julie Jones, CP, FRP, Agency Clerk

Division of Legal Services

Department of Financial Services

200 East Gaines Street

T allahassee, 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.