CASE NO. 4676 CRB-7-03-6
COMPENSATION REVIEW BOARD
WORKERS’ COMPENSATION COMMISSION
JULY 27, 2004
BUY, SELL OR HOLD COMPANY
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
SECOND INJURY FUND
The claimant was represented by Lawrence Engle, Esq., Gioffre & Gioffre, 2900 Westchester Avenue, Suite 206, Purchase, NY 10577 who did not appear at oral argument.
The respondents were represented by Dominick Statile, Esq., Montstream & May, P.O. Box 1087, 655 Winding Brook Drive, Glastonbury, CT 06033-6087.
The Second Injury Fund was represented by Lisa Weiss, Assistant Attorney General, 55 Elm Street, P.O. Box 120, Hartford, CT 06141-0120.
This Petition for Review from the June 2, 2003 Finding and Award of the Commissioner acting for the Seventh District was heard January 23, 2004 before a Compensation Review Board panel consisting of the Commission Chairman John A. Mastropietro and Commissioners A. Thomas White and Charles F. Senich.
JOHN A. MASTROPIETRO, CHAIRMAN. The respondent, Second Injury Fund, has appealed from the June 2, 2003 Finding and Award of the Commissioner acting for the Seventh District. We affirm the decision of the trial commissioner.
The pertinent facts are as follows. The claimant, William DeGruchy, was injured on July 25, 2000 as a result of a motor vehicle accident in the State of New York while employed by Buy, Sell or Hold Company [hereinafter “B.S.H.C.] As a result of the Second Injury Fund’s allegation that St. Paul Fire and Marine Insurance Company [hereafter “St. Paul”] insured B.S.H.C., St. Paul was cited as a party to this claim. Debra DiPace, St. Paul’s Underwriting Director, testified that St. Paul did not insure B.S.H.C. on the date of injury.
There was the appearance of a policy issued and reported to the National Council of Compensation Insurance (hereinafter “N.C.C.I.”) as a result of Ms. DiPace’s staff reporting in error that a policy existed instead of reporting that a quote was requested. St. Paul had never issued a binder which would legally obligate St. Paul to insure B.S.H.C. The quote was processed and St. Paul issued a policy with an effective date of July 19, 2000. This policy issuance resulted in a notice to N.C.C.I. which indicated an insurance policy existed between St. Paul as the insurer and B.H.S.C. as the insured. This information was only available in the State of Florida. In September 2000 a notice of non-payment of premium was sent to B.S.H.C. B.S.H.C. had not made the requested payment as of November 2000. This resulted in an automatic cancellation of said policy. St. Paul discovered that the policy should never have been issued and should have been “cancelled flat,” a cancellation that would have taken effect on the policy’s inception date. Therefore, the policy was cancelled flat on February 21, 2001.
The founder, Chairman and CEO of B.S.H.C., Matthew Totty, testified that his company was a Florida corporation which was insured for Workers’ Compensation coverage with St. Paul. However, he said he had cancelled this policy on or about July 2000 due to lack of funds and employees.
The trial commissioner found that no policy existed between St. Paul and B.S.H.C. on July 25, 2000. Furthermore, he found the only record of the erroneously issued policy was in the State of Florida. He found, “the purpose of notice to NCCI is to make an authentic record of Coverage, so that any employee or prospective employee might ascertain whether the employer is insured and, if so, by what company. Connecticut law deals with Connecticut employees and could only anticipate that notice of coverage would be available in Florida, but not in Connecticut.” Findings, ¶ D.
It is within a trial commissioner’s purview to decide whether an insurance contract existed at the date of a claimant’s injury. O’Connell v. Indian Neck General Store, 6 Conn. Workers’ Comp. Rev. Op. 42, 530 CRD-3-86 (Oct. 6, 1988); Thibodeau v. Rizzitelli, 3373 CRB-4-96-7 (October 14, 1997). “. . . workmen’s compensation insurance is a peculiar type of insurance. To every policy each employee of the insured is, in a very real sense, a party; by statute he is given a direct right of recovery from the insurer, the terms of the policy are given a certain fixed significance by a conclusive presumption, and the defenses the insurer may make against him are restricted.” Piscitello v. Boscarello, 113 Conn. 128, 130 (1931).
Workers’ Compensation insurers are mandated to report their policies in the manner prescribed in § 31-348 C.G.S. which states in relevant part:
Every insurance company writing compensation insurance or its duly appointed agent shall report in writing or by other means to the chairman of the Workers’ Compensation Commission, in accordance with rules prescribed by the chairman, the name of the person or corporation insured, including the state, the day on which the policy becomes effective and the date of its expiration, which report shall be made within fifteen days from the date of the policy. The cancellation of any policy so written and reported shall not become effective until fifteen days after notice of such cancellation has been filed with the chairman.
“The purpose of the statute requiring notice of insurance effected or cancelled to be filed with the board of compensation commissioners is to make an authentic record of the insurance policies in existence, so that any employee or prospective employee may ascertain whether the employer is insured and if so in what company.” Piscitello, supra, 130, 131. The Chairman has mandated insurers to send all notices regarding coverage to the National Council of Compensation Insurance (N.C.C.I.). DiBello v. Barnes Page Wire Products, 3970 CRB-7-99-2 (March 2, 2000), aff’d, 67 Conn. App. 361 (2001); Thibodeau, supra. If, according to the N.C.C.I. records, an employer is insured by a workers’ compensation policy on the date of a claimant’s injury, the Commission is presumably aware of this record and prima facie evidence of insurance exists. Degnan v. Employee Staffing of America, Inc. a/k/a Labor Force of America, 4580 CRB-3-02-10 (October 27, 2003). Under existing case law an insurer is limited in its “ability to deny the existence of a workers’ compensation policy effective on the date of injury when the records created and maintained by the Commission pursuant to General Statutes Sec. 31-348 show otherwise.” Stickney v. Sunlight Construction Co., 12 Conn. Workers’ Comp. Rev. Op. 364, 1738 CRB-6-93-5 (August 2, 1994), rev’d, 48 Conn. App. 609 (1998), aff’d, 248 Conn. 754 (1999).
The commissioner cited Thibodeau, supra, as “instructive, if not determinative, in the case at bar.” Findings, ¶ E. In Thibodeau, magnetic tapes from N.C.C.I. showed that a policy was cancelled in May 1994, but subsequently reinstated and cancelled again solely so maintenance could be performed on the policy in order to adjust the agent’s commission. The issue in the case was whether the reinstatement of the policy on the proposed insurer’s computer system operated to create coverage. We found the trial commissioner had the authority to consider testimony of the insurer’s underwriting manager in regards to the meaning of the magnetic tapes sent to NCCI for the purpose of § 31-328 policy coverage reporting requirements. “We would be ignoring the reality of how computerized records are kept, altered and transmitted if we were to prevent the trial commissioner from examining the evidence offered by Granite State [the proposed insurer] to explain the meaning of the magnetic tapes sent to N.C.C.I.” Id. We affirmed the trial commissioner’s determination that based on the evidence no insurance coverage existed at the time of injury.
As in Thibodeau the policy here was issued without an actual insurance policy being requested by the proposed insured. This case can be distinguished from cases where a policy was in existence and, through neglect, confusion or inadvertence, cancellation was improperly delayed. See Rossini v. Morganti, 127 Conn. 706 (1940); Piscitello, supra; Bell v. Lombardo & Holt, 4065 CRB-2-99-6; 4152 CRB-2-99-11 (November 27, 2000); or cases where the insurance company took action on the claim despite the lack of coverage. See Hayden v. Wallace & Sons Mfg. Co., 100 Conn. 180 (1923); Bruce v. Bert Miller Associates, 15 Conn. Workers’ Comp. Rev. Op. 47, 1872 CRB-1-93-10 (December 1, 1995).
Furthermore, in the cases which the insurance company was held liable for an injury despite a lack of coverage, the reasoning behind that determination was that an employee or prospective employee might have relied on the records of policy under the provisions of the notice statute. Piscitello, supra, 131. In those cases an insurer would be estopped from denying the recorded policy whether or not the employee in fact reviewed the record. Id. In this case the trial commissioner found that the record of the mistakenly issued policy only existed in Florida. Findings, ¶ C. Therefore, there would be no reason to hold St. Paul liable for a record that was not readily available in Connecticut.
Therefore, we affirm the June 2, 2003 Finding and Award of the Commissioner acting for the Seventh District.
Commissioners A. Thomas White and Charles F. Senich concur.