20-004535 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. David Cooper's Construction, Inc. Status: Closed Recommended Order on Tuesday, January 26, 2021.

Summary: Petitioner proved by clear and convincing evidence that Respondent failed to secure workers' compensation insurance for its employees during the audit period; and Petitioner correctly calculated the penalty to be imposed.

S TATE OF F LORIDA

D IVISION OF A DMINISTRATIVE H EARINGS

D EPARTMENT OF F INANCIAL S ERVICES ,

D IVISION OF W ORKERS ' C OMPENSATION ,

Petitioner ,

vs. Case No. 20 - 4535

D AVID C OOPER ' S C ONSTRUCTION , I NC . ,

Respondent .

/

R ECOMMENDED O RDER

A duly - noticed hearing was held in this case on December 11, 2020 , via

Zoom conference before Suzanne Van Wyk , an Administrative Law Judge

with the Division of Administrative Hearings.

A PPEARANCES

For Petitioner : Rean Knopke, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

For Respondent David Cooper , pro se

David CooperÔs Construction, Inc.

2449 Hayes Avenue

Port St. Joe , Florida 32 4 56

S TATEMENT OF T HE I SSUE S

Whether David CooperÔs Construction, Inc. (ÑRespondentÒ), failed to

secure the payment of workersÔ compensation insurance coverage for its

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

of Workers Ô Compensation (ÑPetitionerÒ or ÑDepartmentÒ), correctly calculated

the penalty to be assessed against Respondent.

P RELIMINARY S TATEMENT

On August 12, 2016 , the Department served Respondent with a Stop -

Work Order and Order of Penalty Assessment, pursuant t o chapter 440,

Florida Statutes, for failing to secure workersÔ compensation for its

employees. Following the receipt of business records from Respondent, the

Department issued a Second Amended Order of Penalty Assessment on

December 29, 2016.

On Septembe r 28, 2020 , Respondent requested a hearing to dispute the

Stop - Work Order and Second Amended Order of Penalty Assessment. 1 On

October 13, 2020 , Petitioner referred this matter to the Division of

Administrative Hearings (ÑDivisionÒ) for assignment of an Adm inistrative

Law Judge to conduct a final hearing in the matter.

The case was assigned to the undersigned and the final hearing was

scheduled for December 11, 2020. Prior to commencing the final hearing, the

Department sought to amend its penalty assessmen t. The undersigned

granted the DepartmentÔs motions to amend, culminating in the

DepartmentÔs filing a Fourth Amended Order of Penalty Assessment on

November 17, 2020.

At the final hearing, Petitioner presented the testimony of Carl Woodall ,

compliance in vestigator ; and Lynne Murcia, penalty auditor . PetitionerÔs

Exhibits 1 through 13 were admitted in evidence.

Respondent offered the testimony of its owner, David Cooper, and did not

introduce any exhibits into evidence.

1 The record is insufficient to explain the gap between the date of issuance of the Second

Amended Order of Penalty Assessment and RespondentÔs hearing request. However, the

Department did not contest the hearing r equest as untimely.

A one - volume Transcript of the pr oceedings was filed on December 18,

2020 . Petitioner timely filed a Proposed Recommended Order, which ha s been

considered by the undersigned in preparing this Recommended Order.

Respondent did not make any post - hearing filing.

Unless otherwise indicated, all references to the Florida Statutes herein

are to the 2016 version , which was in effect when the alleged violations

occurred.

F INDINGS OF F ACT

1. The Department is the state agency charged with enforcing the

statutory requirement that employers in Flor ida secure workersÔ

compensation coverage for their employees. See § 440.107(3), Fla. Stat.

2. Respondent is a Florida corporation engaged in the business of

residential construction in Port St. Joe, Florida.

3. At all times relevant hereto, Carl Woodall w as a workers Ô compensation

compliance investigator employed by the Department.

4. Employers may comply with the workersÔ compensation coverage

requirement by obtaining a workersÔ compensation insurance policy or an

employee leasing agreement. Corporate off icers and members of limited

liability companies can elect an exemption from workersÔ compensation

coverage. See § 440.05, Fla. Stat.

5 . On August 12, 2016 , Mr. Woodall made an unannounced, random

inspection of a worksite at 2912 Garrison Avenue in Port St . Joe, Florida.

Mr. Woodall observed two men on the roof of an existing structure at that

address who appeared to be framing an addition to the structure.

6 . At Mr. WoodallÔs request, the two men identified themselves as David

Cooper and Macon Stewart.

7. Mr. Cooper identified himself as RespondentÔs owner and stated that

Mr. Stewart was working for him. Mr. Cooper informed Mr. Woodall that he

paid Mr. Stewart by check at the rate of $10 per hour.

8. While at the worksite, Mr. Woodall checked the Coverage a nd

Compliance Automated System (ÑCCASÒ) database, which tracks workersÔ

compensation insurance coverage and exemption data for employers in

Florida.

9. Mr. WoodallÔs search of CCAS revealed that Respondent did not have a

workersÔ compensation insurance pol icy to cover its employees nor an

employee leasing agreement. The search also revealed that Mr. Stewart did

not have an active workersÔ compensation exemption.

10 . Mr. Woodall personally served Mr. Cooper with a Stop - Work Order

(ÑSWOÒ) and Order of Penalty Assessment on August 12, 2016.

11. Respondent complied with the SWO by making a $1,000 down

payment toward the penalty assessment (which had yet to be calculated) and

agreeing not to allow Mr. Stewart to work for Respondent until such time as

Mr. Stewart obtained an exemption.

12 . The Order of Penalty Assessment include s a Request for Production of

Business Records (ÑRequestÒ) which could be used to calculate the amount of

the penalty. In response to the Request, Mr. Cooper provided the Department

with bil ling statements, handwritten time sheets, and certificates of

exemption for certain employees.

13 . Lynne Murcia is a Department penalty auditor. She is tasked with

reviewing business records provided by employers and calculating penalties

for employers who have been notified they are in violation of workersÔ

compensation coverage requirements. Ms. Murcia was assigned to calculate

the penalty to be assessed against Respondent.

14 . Ms. Murcia began by reviewing RespondentÔs business records for the

audit peri od, which is the two - year period immediately preceding the date of

the SWO. See § 440.107(7)(d), Fla. Stat. The audit period in this case is from

February 1, 2015 , through January 31, 2017.

15. The DepartmentÔs penalty is based on the employerÔs payroll to

employees during any periods during the audit period in which the employer

did not provide workersÔ compensation insurance coverage for its employees

(Ñthe period of non - complianceÒ). In this case , the period of non - compliance is

the same as the audit per iod.

16. An employerÔs payroll is the amount of wages or other compensation

made to employees during the period of non - compliance. See Fla. Admin.

Code R. 69L - 6.035. Transactions that are considered payroll include direct

payment for services rendered, as well as outstanding loans,

reimbursements, bonuses, and profit - sharing. Id.

17. Based upon the records received from Respondent, Ms. Murcia

identified RespondentÔs employees during the period of non - compliance as

Joseph Turner, Linda Cooper, and Macon Stew art. 2

18. Compensation paid to those employees during the period of non -

compliance was as follows: Joseph Turner, $11,740; Linda Cooper, $2,178;

and Macon Stewart, $60. Thus, RespondentÔs gross payroll for the period of

non - compliance was $13,978.

19. Next , Ms. Murcia consulted the Scopes Manual published by the

National Council on Compensation Insurance ( Ñ NCCI Ò ) to assign a class code

to each employee. The class codes correspond with the type of work performed

by an employee and establish the manual rate f or workersÔ compensation

insurance for that type of work.

20 . Based upon Mr. WoodallÔs observations of the work being performed at

the work site, Ms. Murcia assigned NCCI class code 5645, Carpentry, to

Mr. Stewart.

2 Ms. Murcia initially identified additional employees whose wages were included in the

Second and Third Amended Orders of Penalty Assessment. For purposes of this

Recommended Order, the relevant payroll is that identified in the Fourth Amended Order of

Penalty Assessment.

21. Based on Ms. CooperÔs description of h er job duties, Ms. Murcia

assigned NCCI class code 8810, Clerical, to Ms. Cooper.

22. RespondentÔs records did not identify the type of work performed by

Mr. Turner.

23. When the business records do not identify the type of work performed

by an employee, the Department must apply to the employee the highest

manual rate associated with any employeeÔs activities based on the

investigatorÔs personal observation of work activities. See Fla. Admin. Code

R. 69L - 6.035(4).

24. Ms. Murcia assigned class code 5645, Carpentry, to Mr. Turner

because that class code corresponds with a higher manual rate than 8810,

Clerical.

25. Using the gross payroll to each employee, multiplied by the applicable

manual rate, Respondent would have paid $1,897.51 in workersÔ

compensatio n insurance premiums to cover its employees during the period of

non - compliance (Ñthe avoided premiumÒ).

26. The statutory penalty to be assessed is twice the avoided premium.

See § 440.107(7)(d)1., Fla. Stat. Ms. Murcia calculated the penalty to be

assess ed as $3,795.

27. Ms. Murcia applied the correct approved manual rates and correctly

utilized the methodology specified in section 440.107(7) and Florida

Administrative Code Rules 69L - 6.027 and 69L - 6. 035 to determine the penalty

to be imposed.

C ONCLUSIONS OF L AW

28 . 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. (2020).

29 . Employers are required to secure payment of workersÔ compensation

for the ir employees unless exempted or excluded. See §§ 440.10(1)(a) and

440.38(1), Fla. Stat.

30 . ÑEmployerÒ includes Ñevery person carrying on any employment.Ò

§ 440.02(16)(a), Fla. Stat.

31 . ÑÓEmployeeÔ means any person who receives remuneration from an

employ er for the performance of any work or service while engaged in any

employment under any È contract for hire È whether express or implied,

oral or written[.]Ò £ 440.02(15)(a), Fla. Stat.

32 . ÑEmploymentÒ means Ñany service performed by an employee for the

p erson employing him or her.Ò £ 440.02(17)(a), Fla. Stat.

33 . Employers must s trict ly compl y with the WorkersÔ Compensation

statute. See C&L Trucking v. Corbett , 546 So. 2d 1185, 1187 (Fla. 5th DCA

1989).

34 . The Department has the burden of proof in this c ase and must show

by clear and convincing evidence that the employer violated the WorkersÔ

Compensation statute and that the Department correctly calculated the

penalty assessment to be imposed . See DepÔt of Banking and Fin. v. Osborne

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

292 (Fla. 1987).

35 . I n 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 follo ws:

[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 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).

36 . The Department proved by clear and convincing evidence that

Respondent is an employer subject to the WorkersÔ Compensation statute,

and that Mr. Turner, Mr. Stewart, and Ms. Cooper were RespondentÔs

employee s , who are requir ed to be covered by, or obtain an exemption from,

workersÔ compensation insurance during the period of non - compliance .

37 . The Department demonstrated by clear and convincing evidence that

Respondent failed to secure the payment of workersÔ compensation in surance

for its employees during the audit period as required by FloridaÔs WorkersÔ

Compensation statute .

38 . The Department likewise demonstrated by clear and convincing

evidence that it correctly calculated the penalty to be assessed against

Respondent .

R ECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

R ECOMMENDED that a final order be entered by the Department of Financial

Services, Division of WorkersÔ Compensation, finding that David CooperÔs

Construction, Inc., viol ated the workersÔ compensation insurance statute and

assessing a penalty of $ 3,795.

D ONE A ND E NTERED this 26th day of January , 2021 , in Tallahassee, Leon

County, Florida.

S

S UZANNE V AN W YK

Administrative Law Judge

1230 Apalachee Parkway

Tallahassee, Flo rida 32399 - 3060

(850) 488 - 9675

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 26th day of January, 2021 .

C OPIES F URNISHED :

David Cooper Rean Knopke, Esquire

David CooperÔs Construction, Inc. Department of Financial Services

2449 Hayes Avenue 200 East Gaines Street

Port St. Joe, Florida 32456 Ta llahassee, Florida 32399

Diane Wint, Agency Clerk

Division of Legal Services

Department of Financial Service

Room 612.14, Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

N OTICE OF R IGHT T O S UBMIT E XCEPTIONS

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.