17-006823 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Donald Steven Paul, D/B/A D.P. Painting Of Lakeland Status: Closed Recommended Order on Friday, April 20, 2018.

Summary: Petitioner proved by clear and convincing evidence that Respondent failed to carry workers' compensation coverage and the Division properly calculated and assessed a fine totaling $2,090.14.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS Ó

COMPENSATION,

Petitioner,

vs. Case No. 17 - 6823

DONALD STEVEN PAUL, d/b/a D.P.

PAINTING OF LAKELAND,

Respondent.

_______________________________/

RECOMMENDED ORDER

Administrative Law Judge Hetal Desai, of the Division of

Administ rative Hearings, held a final hearing in this cause by

video teleconference at sites in Tampa and Tallahassee, Florida,

on February 21, 2018.

APPEAR ANCES

For Petitioner: Christina Pumphrey, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent: Donald Steven Paul

D.P. Painti ng of Lakeland

5436 9th Street Southeast

Post Office Box 13

Highland City, Florida 33846

STATEMENT OF THE ISSUE S

Whether Respondent violated the provisions of chapter 440,

Florida Statutes (2017), by fai ling to secure the payment of

workers Ó compensation coverage as alleged in the Stop - Work Order

and Second Amended Order of Penalty Assessment and, if so, what

penalty is appropriate. 1/

PRELIMINARY STATEMENT

On August 14, 2017, Petitioner, the Department of Financial

Services, Division of Workers Ó Compensation (Department or DWC),

served a Stop - Work Order (SWO) on Respondent Donald Steven Paul

d/b/a/ D.P. Painting of Lakeland, due to an alleged failure to

secure workers Ó compensation insurance coverage for i ts

employees. The Department issued an Amended Order of Penalty

Assessment on October 16, 2017.

On November 21, 2017, the Department issued Respondent a

Second Amended Order of Penalty Assessment , and alleged therein

that Respondent owed a total penalty o f $ 2 , 090.14 .

Respondent disputed the allegations and penalty in the

Second Amended Order of Penalty Assessment and on December 18,

2017, DWC referred the matter to the Division of Administrative

Hearings (DOAH) for an administrative hearing and referral to an

Administrative Law Judge.

A pre - hearing conference was held telephonically on

February 19, 2018 , and the parties discussed the process of the

hearing and the admission of exhibits and testimony.

At the duly noticed final hearing on February 21, 2 018,

Petitioner presented the testi mony of two witnesses: Richard

Murvin (Inv estigator Murvin ) , a DWC compliance officer ; and Lynne

Murcia (Auditor Murcia), a DWC penalty auditor . Department

Exhibits 1 through 10 were admitted into evidence without

objec tion. 2 /

Respondent put on the testimony of Donald Steven Paul, the

owner of Respondent; and Michelle Paul, Mr. Paul Ó s ex - wife.

Respondent did not offer any exhibits.

A Transcript of the final hearing was filed on April 3,

2018. The Department timely fi led its Proposed R ecommended O rder

(PRO) on April 16, 2018; Respondent did not file a PRO. The

undersigned has considered the DepartmentÓs PRO in preparing this

Recommended Order.

FINDING S OF FACT

1. The Department is the state agency responsible for the

enforcement of the workers Ó compensation insurance coverage

requirements established in c hap ter 440.

2 . On September 14, 2017, Investigator Murvin conducted a

random workers Ó compensation compliance check at a residential

construction site at 8256 Lake J am es Drive in Lakeland, Florida.

3. During the course of the compliance check, Investigator

Murvin observed two individuals -- Donald Steven Paul, Jr. and

Dean Wayne Paul -- painting the home.

4. It is undisputed that Respondent had been subcontracted

to perform painting services at this site; and that these two

individuals w ere, at the time of Investigator Murvin Ó s visit,

employed by Respondent.

5. After speaking to Donald and Dean Paul , Investigator

Murvin used the Department Ó s database to verify that Respondent

did not have workers Ó co mpensation insurance coverage, nor did

Donald or Dean Paul have an exemption from the coverage

requirements .

6. D onald Paul admitted to Investigator Murvin at the

hearing that he did not have workers Ó com pensation covera ge for

himself or Dean Paul. Donald Paul explained that he believed

that his incorporation with the state and securing of liability

insurance provided compliance of all insurance requ irements.

7. Based on the information provided by Dean and Donald

Paul, and from the database , Investigator Murvin issued a SWO to

Respondent on the same day as the site visit .

8. A Request for Production of Business Records was also

issued to Respondent. In response to the request for

documentation, Respondent provided ba nk statements that indicated

the business began in August 1, 2016.

9. The bank statements also established that there was

money being deposited and being paid out, but there was no

indication what the money was for or how it was allocated. In

other words , there was no way to discern whether the money paid

out of the bank account was for employee salaries or other

business expenses .

10. In support of its Second Amended Order of Penalty

Assessment, the Department prepared a penalty calculation

worksheet s howing a total penalty owed of $2,090.14.

11 . At the hearing, Respondent did not challenge the

accuracy or method of calculating the assessed penalty, but only

asserted that it believed it had the appropriate coverage and

that the penalty wa s Ð too high. Ñ

12 . Based on the evidence, it is clear Respondent provides

construction services and has at least one employee; therefore,

it was required to secure workers Ó compensation insurance.

13 . The Department established by clear and convincing

evidence that Respondent failed to secure the payment of workers Ó

compensation as required by chapter 440.

14 . The Department has established through the records

submitted and testimony of Auditor Murcia, the appropriate

penalty for Respondent Ó s failure to obtain worke rs Ó compensation

coverage is $2,090.14 for the audit period of August 1, 2016 , to

August 14, 2017.

CONCLUSIONS OF LAW

15 . The Division of Administrative Hearings has

jurisdiction over the subject matter and parties pursuant to

sections 120.569 and 120.57( 1), Florida Statutes.

16 . The Department is the agency of the State of Florida

charged with the duty to (1) e nforce workers Ó com pensation

coverage requirements; and (2) enforce record - keeping

requirements to accurately determine payroll and correctly assi gn

classification codes. § 440.107(3) , Fla. Stat.

17 . In addition to any other powers under chapter 440 , the

D epartment has the power to:

(a) Conduct investigations for the purpose

of ensuring employer compliance.

(b) Enter and inspect any place of b usiness

at any reasonable time for the purpose of

investigating employer compliance.

(c) Examine and copy business records.

* * *

(g) Issue stop - work orders, penalty

assessment orders, and any other orders

necessary for the administration of this

section.

(h) Enforce the terms of a stop - work order.

(i) Levy and pursue actions to recover

penalties.

(j) Seek injunctions and other appropriate

relief.

§ 440.107(3), Fla. Stat.

18 . The Department has the burden of proof in this case and

mus t show by clear and convincing evidence that Respondent

violated the Workers Ó Compensation Law during the relevant period

and that the penalty assessments are correct. § 120.57(1)(j),

Fla. Stat.; Dep Ó t of Banking & Fin., Div. of Sec. & Investigator

Prot. v. Osborne Stern & Co. , 670 So. 2d 932 (Fla. 1996); Ferris

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

19 . Clear and convincing evidence Ð requires more proof than

a Ò preponderance of the evidence Ó but less than Ò beyond and to

the exclusion of a reasonabl e doubt. ÓÑ In re Graziano , 696 So.

2d 744, 753 (Fla. 1997).

20 . The Department has Ð broad powers to investigate

employers, to halt any work where employers are not complying,

and to assess penalties on those who do not comply. Ñ Twin City

Roofing Constr. Specialists, Inc. v. Dep Ó t of Fin. Servs. , 969

So. 2d 563, 566 (Fla. 1st DCA 2007).

21 . Respondent does not contes t the facts it was an

employer. A s an Ð employer , Ñ p ursuant to sections 440.10 and

440.38, it was required to secure the payment of workers Ó

compensation for the benefit of its employees unless exempted or

excluded under chapter 440. See e.g . , Summit Claims Mgmt. v.

Lawyers Express Trucking, Inc. , 913 So. 2d 1182, 1185 (Fla. 4th

DCA 2005); C&L Trucking v. Corbitt , 546 So. 2d 1185, 1186 (Fla.

5th DCA 1989).

22 . Section 440.02(8) defines Ð construction industry Ñ to

mean Ð for - profit activities involving any building, clearing,

filling, excavation, or a substantial improvement in the size or

use of any structure or the appearance of any land. Ñ It is

undisputed that Respondent performed work in the Ð construction

industry Ñ during the period of non - compliance.

23 . Although Donald Paul believed incorporat ing Respondent

and obtaining liability insurance was sufficient to operate his

business , he was m istaken. The workers Ó compensation statutes ,

however, do not allow for ignorance of the coverage requirement s

to serve as a defense or a mitigating factor. Section

440.107(7)(a) provides, in part , as follows :

[W] henever the depa rtment 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 Ó

compensation required by this chapter . . .

such failure shall be deemed an immediate

serio us danger to public health, safety, or

welfare sufficient 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

iss ue a stop - work order within 72 hours.

(emphasis supplied).

Th e Department was required to issue a Stop - Work Order once it

discovered Respondent had not secured proper workers Ó

comp ensation coverage for its employee s.

24 . As for the penalty assess ed agai nst Respondent,

section 440.107 (7) (d)(1) provides, in part , that :

[ I ]n 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 chap ter a penalty equal to

2 times the amount the employer would have

paid in premium when applying approved manual

rates to the employer Ó s payroll during

periods for which it failed to secure the

payment of workers Ó compensation required by

this chapter with in the preceding 2 - year

period or $1,000, whichever is greater.

(emphasis supplied).

25 . The Ð shall Ñ language found in sections 440.107(7)(a)

and 440.107(7)(d)1. prevents the undersigned from reducing the

legislatively mandated penalty, and therefore, i t matters not,

for purposes of assessing the penalty, that Donald Paul believed

Respondent was compliant, or that the amount of the penalty may

have a detrimental effect on Respondent.

26 . Accordingly, the $2,090.14 penalty is lawful and shall

be assess ed against Respondent.

RECOMMENDATION

Based on the Findings of Fact and Conclusions of Law set

forth herein, it is

RECOMMENDED that the Department of Financial Services,

Division of Workers Ó Compensation, enter a final order finding

that Respondent, Donal d Steven Paul d/b/a/ D. P. Painting of

Lakeland , violated the provisions of chapter 440 by failing to

secure the payment of workers Ó compensation and assessing against

Respondent a penalty in the amount of $2,090.14 .

DONE AND ENTERED this 20th day of Apri l, 2018 , in

Tallahassee, Leon County, Florida.

S

HETAL DESAI

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Fili ng (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 20th day of April, 2018 .

ENDNOTE S

1/ All references to Florida Statutes are to the version in

effect in 2017, unless otherwise indicated.

2/ The last page of Exhibit 7, B at e - stamped 23, was not admitted

into evidence.

COPIES FURNISHED:

Donald Paul

Donald Steven Paul

D.P. Painting of Lakeland

5436 9th Street Southeast

Post Office Box 13

Highland City, Florida 33846

Christina Pumphrey, Esqui re

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 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.