CASE NO. 1872 CRB-1-93-10
COMPENSATION REVIEW BOARD
WORKERS’ COMPENSATION COMMISSION
DECEMBER 1, 1995
JOHN K. BRUCE
BERT MILLER ASSOCIATES
CIGNA INSURANCE CO.
SECOND INJURY FUND
The claimant was not represented at oral argument, nor did he appear at the formal hearing below.
The employer was not represented at oral argument. At trial, it was represented by Bertrand Miller, President, Bert Miller Associates, Inc., 104 Park Road #24, West Hartford, CT 06117-1750.
The insurer was represented by Diane D. Duhamel, Esq., Trowbridge, Schoolcraft & Bazine, P. C., 207 Main St., Hartford, CT 06106-5314.
The Second Injury Fund was represented by Brewster Blackall, Esq., Assistant Attorney General, 55 Elm St., P. O. Box 120, Hartford, CT 06141-0120.
This Petition for Review from the September 28, 1993 Findings and Dismissal of the Commissioner acting for the First District was heard December 2, 1994 before a Compensation Review Board panel consisting of the Commission Chairman Jesse M. Frankl and Commissioners Angelo L. dos Santos and Nancy A. Brouillet.
JESSE M. FRANKL, CHAIRMAN. The respondent insurer has petitioned for review from the September 28, 1993 Findings and Dismissal of the Commissioner acting for the First District. The insurer argues on appeal that the commissioner erred in finding that the insurer was not entitled to reimbursement from the employer in light of her finding that there was no insurance coverage on the date of the claimant’s injury. We affirm the decision of the trial commissioner.
The commissioner found the following facts: Bertrand Miller, the president of the corporate employer, began negotiating with his insurance agent, B. Perkins & Company, regarding workers’ compensation insurance on or about July 19, 1990. At the time, the employer did not have workers’ compensation insurance. Kate Houlihan, a representative of the insurance agent, accepted a $5,840 premium check from the corporate employer as partial premium payment on September 5, 1990. In turn, the agent submitted a check and an insurance application to the Northeastern Council on Compensation Insurance (NCCI), which were resubmitted on September 21, 1990, along with a letter from Bertrand Miller explaining why a required tax form had been omitted.
NCCI then informed the agent that Miller’s letter lacked the required notarized signature, and indicated that if the application was resubmitted by October 10, 1990, the insured would be able to obtain a policy with an effective date of September 10, 1990. The agent did not resubmit the application until October 24, 1990, however, and the employer was issued a binder with that date as the effective date. The risk was assigned by NCCI to INA, a division of the respondent insurer CIGNA. Bertrand Miller received notification of coverage on November 6, 1990. He testified that Kate Houlihan assured him that the October 24, 1990 effective date was a mistake, and that injuries occurring prior to that date were indeed covered.
Meanwhile, the claimant, John Bruce, accepted employment as a stage manager with the corporate employer on or about September 4, 1990. During the course of his employment, he injured his lower back while lifting a steel ramp onto the back of a truck. The First Report of Injury submitted to INA indicated an injury date of October 29, 1990. After investigating the claim, INA found it to be compensable and paid the claimant’s medical bills and temporary total disability benefits from the date of injury through April 6, 1991. In February of 1991, INA discovered that some of the medical bills indicated a date of service of October 19, 1990. After further investigation, INA determined that the actual date of injury was indeed October 19, 1990, five days before the employer’s insurance coverage became effective. INA then sought reimbursement from the employer and/or the Second Injury Fund for payments made because of the injury.
The commissioner concluded that the claimant was injured on October 19, 1990, and that he was totally disabled from October 29, 1990 to April 6, 1991, thus entitling him to compensation. The commissioner further found that Bertrand Miller believed he had workers’ compensation insurance based on the insurance agent’s cashing of his check on September 5, 1990 and on her representation that prior injuries were covered. Although INA did not insure the employer on the actual date of the claimant’s injury, they nevertheless mistakenly administered his claim.
The commissioner then found that INA had ample time to discern the true date of injury before February 12, 1991, and that its failure to do so was tantamount to a negligent mistake. The insurer did not allege fraud by the claimant or employer. The commissioner concluded that the claim for reimbursement “did not arise out of a factual or legal situation where the insurer failed to pay; or was, or is unable to pay compensation due.” Reasoning that §§ 31-354 and 31-355 C.G.S. provide no authority to order the Second Injury Fund to reimburse an insurer for payments made by mistake, and that the injury itself was deemed compensable by the carrier, the commissioner dismissed the insurer’s claims. The insurer has appealed from that decision.
Our initial task on review is to determine the scope of the commissioner’s jurisdiction over the arguments surrounding the employer’s insurance policy. The insurer argues that the commissioner had jurisdiction to determine only whether or not an insurance policy existed on the date of injury, and did not have the authority to address issues between the employer and insurer as to possible claims or defenses as to coverage or the lack thereof. “[O]nce the question of lack of jurisdiction of a court is raised, ‘[i]t must be disposed of no matter in what form it is presented,’ . . . and the court must ‘fully resolve it before proceeding further with the case.’” Castro v. Viera, 207 Conn. 420, 429 (1988) (citations omitted). The jurisdiction of a Connecticut workers’ compensation commissioner is confined by the Workers’ Compensation Act and limited by its provisions. Id., 430; Gagnon v. United Aircraft Corporation, 159 Conn. 302, 305 (1970).
In discussing a commissioner’s jurisdiction to consider the existence of a workers’ compensation insurance policy, we begin by noting two statutes. Section 31-343 C.G.S. provides that, as between employee and insurer, an insurance contract is conclusively presumed to cover the entire liability of the insured, and “no question as to breach of warranty, coverage or misrepresentation by the insured shall be raised by the insurer in any proceeding before the compensation commissioner or on appeal therefrom.” Section 31-348 C.G.S. sets forth the requirement that every insurance company writing workers’ compensation insurance report to the chairman of this commission whenever a policy becomes effective or is canceled. The cancellation of a policy under that statute is ineffective until fifteen days after notice of such cancellation is filed with the chairman.
In O’Connell v. Indian Neck General Store, 6 Conn. Workers’ Comp. Rev. Op. 42, 530 CRD-3-86 (Oct. 6, 1988), this board held that a commissioner has jurisdiction to determine whether or not an insurance policy existed on the date of an employee’s injury. Relying on Piscitello v. Boscarello, 113 Conn. 128 (1931), and Rossini v. Morganti, 127 Conn. 706 (1940), we distinguished among the interpretation of an insurance contract, the determination of whether there were “breach of warranties, coverage or misrepresentation by the insured” defenses available to the insurer, and the determination of the existence of an insurance contract. Although the first and second of those issues are beyond the scope of a commissioner’s subject matter jurisdiction, we held that the last one is properly before a workers’ compensation commissioner under § 31-348.
Subsequently, we were confronted with a case where a commissioner declined to look beyond the official records of this Commission in determining whether insurance was in effect on the date of injury. Vernon v. V.J.R. Builders, Inc., 11 Conn. Workers’ Comp. Rev. Op. 237, 1360 CRD-7-91-12 (Nov. 8, 1993). There, the § 31-348 notices received by the commission showed that coverage had either expired or been canceled well before the date of injury, and the commissioner did not go beyond those documents in deciding that there was a gap in the employer’s insurance coverage. The employer argued to this board that the commissioner’s jurisdiction to decide whether an insurance contract existed was not limited to those records, and that the commissioner should also consider extenuating circumstances that surrounded the past payment of premiums.
We stated, “[w]hile it is clear from Piscitello and Rossini that an insurer may not resort to evidence extraneous to the records created and maintained pursuant to Sec. 31-348 in order to deny the existence of a policy shown by the records to be effective on the date of injury, those cases do not address the issue of whether an employer may prove the existence of such a contract by resort to such additional evidence.” Id., 241 (emphasis in original). Relying on language in Witchekowski v. Falls Co., 105 Conn. 737 (1927), we held that the commissioner possessed “broad authority . . . to assert jurisdiction to resolve the issue of whether an insurance policy covering workers’ compensation liability was in effect on the date of injury.” Vernon, supra, 242. Noting the observation of Professor Larson that the compensation commission generally has authority to pass on questions such as the cancellation or validity of an insurance contract when an employee’s right to recover is concerned, we cited with approval the idea that workers’ compensation insurance is not just an independent contractual matter between the insurer and insured. Id., citing 4 A. Larson, Workmen’s’ Compensation Law § 92.41, pp. 17-44 to 17-54. See also Stickney v. Sunlight Construction Co., 12 Conn. Workers’ Comp. Rev. Op. 364, 366-68, 1738 CRB-6-93-5 (Aug. 2, 1994) (insurer estopped to deny truth of formal record only where claimant’s right to recovery would be diminished by leaving claimant without recourse to any compensation insurer; attempt to substitute other compensation insurance policy permissible and consistent with commissioner’s equitable powers).
In this case, the trial commissioner was able to determine that the policy issued by INA did not take effect until October 24, 1990, five days after the date of injury.1 Such a conclusion was clearly permissible under O’Connell, supra. The commissioner went on to determine that the conduct of the insurer in administering the claim and in failing to ascertain the true date of injury, as well as the conduct of the insurance agent, did not entitle the insurer to reimbursement from either the employer or the Second Injury Fund for benefits mistakenly paid. These considerations are similar to the extraneous circumstances in Vernon, supra, 239-40, that we held should be considered by the commissioner in determining the existence of an insurance contract. As the insurer’s claim for reimbursement is an equitable one in this case, see Stickney, supra, 368, it would be inappropriate to deem the conduct of the insurer and employer outside the scope of the commissioner’s inquiry. Therefore, we hold that the commissioner had jurisdiction to consider the circumstances surrounding the issuance of the policy and the insurer’s investigation of the claim in determining whether reimbursement was justified.
A similar reimbursement claim was made in Soares v. Glass Industries, 12 Conn. Workers’ Comp. Rev. Op. 189, 1377 CRB-3-2-91 (May 4, 1994). There, an insurer who had been making payments pursuant to a voluntary agreement claimed that, at the time the agreement was reached, it was unaware of certain facts concerning a second injury that another insurance company would have covered. The insurer admitted that the injury was compensable, but argued on equitable grounds that its payments were made by mistake and that it should be reimbursed for them. (The commissioner had found that the second injury was a recurrence rather than a new injury.)
Although the appellant did not seek to reopen or modify the award under § 31-315 C.G.S., this board dismissed the appeal in reliance on Hayden v. Wallace & Sons Mfg. Co., 100 Conn. 180 (1923), which stated that “[e]quity will not, save in rare and extreme cases, relieve against a judgment rendered as a result of a mistake on the part of party or his counsel, unless the mistake is ‘unmixed with negligence. . . .’” Id., 186-87. As the insurer had not raised the mistake until four years after the injury occurred, we stated that “the chronology of events on its face would seem to be negligence. But whether negligence or mistake, Hayden holds the distinction is not fundamental. It is too late to open a judgment or to seek equitable reimbursement.” Soares, supra, 192. We also held that there was an evidential basis to support the decision that the disability was due to a recurrence of the previous injury rather than the second injury.
Hayden and Soares are not directly on point here, because there was no voluntary agreement or judgment entered in the instant case. Therefore, the “final judgment” obstacle present in those cases need not be overcome by the insurer here. Nevertheless, as in Soares, the insurer in this case still had the burden of proving that equity warranted reimbursement from the employer. The commissioner found that Bertrand Miller believed that his company was covered by workers’ compensation insurance on the date of injury, and that the insurer mistakenly administered the claimant’s claim. Both of these findings are adequately supported by the evidence. See Fair v. People’s Savings Bank, 207 Conn. 535, 539 (1988).
The commissioner also found that the insurer had squandered several months in which it could have determined the true date of injury, including an instance on November 20, 1990 when the insurer’s adjuster failed to ask the claimant when he was injured during a lengthy conversation between the two. The commissioner characterized this failure as being “tantamount to negligent ‘mistake.’” Although we agree with the insurer’s contention that negligence could not be determined by the commissioner without evidence as to the appropriate standard of care, we do not think that the commissioner found negligence in this case. Instead, the commissioner was attempting to describe the egregious nature of the insurer’s conduct as it impinged upon the equitable justification for reimbursement. The fact that this board might have decided this case differently is not relevant. The commissioner had the power to determine whether equity required the reimbursement of the insurer, and there is evidence to support the factual findings.
The trial commissioner’s decision is affirmed.
Commissioner Nancy A. Brouillet concurs.
COMMISSIONER ANGELO L. dos SANTOS, CONCURRING. I concur in the result. However, I do not agree with the majority’s analysis.
The facts as found by the trial commissioner indicate that although the employer did not have workers’ compensation insurance on October 19, 1990, the date of the claimant’s accident, the insurer (INA) had administered the claim in full. INA had paid over $28,000.00 in benefits and medical costs to the claimant. INA contended at the formal hearing before the commissioner that it was entitled to reimbursement from the employer because there was no insurance coverage on the date of the claimant’s injury. Both the trial commissioner below and the majority in this decision have examined and ruled upon INA’s request for reimbursement. By considering and ruling upon the issue of reimbursement between the employer and its insurer, the majority has extended the jurisdiction of the trial commissioner beyond the statutory scheme of Chapter 568.
This tribunal has ruled that a trial commissioner has subject matter jurisdiction to “resolve the issue of whether an insurance policy covering workers’ compensation liability was in effect on the date of injury.” Stickney v. Sunlight Construction Co., 12 Conn. Workers’ Comp. Rev. Op. 364, 366, 1738-CRB-6-93-5 (Aug. 2, 1994). In that decision, the Compensation Review Board reaffirmed the rule that where an insurance policy was recorded pursuant to § 31-348, it “cannot be open to attack [by an insurer] upon the ground that a policy which it has reported to be in effect is not so....” Id., citing Piscitello v. Boscarello, 113 Conn. 128 (1931). The board stated that this estoppel rule derived from § 31-348 must be limited to the facts of Piscitello, a case where the insurer’s efforts to refute liability would have the effect of “leaving the employer without any insurance.” Stickney, at 367. Ultimately, the Stickney case was determined on equitable grounds and considerations of fairness.
In the instant case, if INA prevailed on its claim for reimbursement, the effect would be to leave the employer without any insurance for the claim. Such a result is analogous to the situation which the Piscitello decision sought to prevent. Moreover, the trial commissioner correctly found that neither § 31-355 nor § 31-354 apply to the case at hand because neither of these sections provide that the Second Injury Fund will reimburse an insurer for a claim which has been mistakenly or negligently paid. Thus, by allowing INA to argue that it was not legally responsible for the claim, the claimant’s right to recovery was not enhanced but was potentially diminished.
I conclude that INA’s claim for reimbursement from the employer was outside the scope of the trial commissioner’s jurisdiction, and should have been brought before the appropriate trial court rather than this forum.
1 The Second Injury Fund argues in its brief that the insurer failed to show that it had notified the Commission of the policy and the effective date of its coverage pursuant to § 31-348, thereby depriving the commissioner of subject matter jurisdiction pursuant to § 31-343. Although § 31-348 requires an insurer to notify the chairman of the details of a new compensation policy, it does not condition the effectiveness of such policy on that notification the same way it conditions cancellation of a policy upon such notification. Thus, if the insurer indeed ignored § 31-348, it risked being fined for noncompliance; however, the commissioner was not required to presume full coverage pursuant to § 31-343. In determining whether there was a contract of insurance, the commissioner was entitled to look outside the formal notice (or absence of such notice) required by § 31-348. Vernon v. V.J.R. Builders, 11 Conn. Workers’ Comp. Rev. Op. 237, 241-42, 1360 CRD-7-91-12 (Nov. 8, 1993). Part of determining that there was an insurance contract would necessarily be the effective date of that contract. BACK TO TEXT