CASE NO. 3970 CRB-07-99-02
COMPENSATION REVIEW BOARD
WORKERS’ COMPENSATION COMMISSION
MARCH 2, 2000
BARNES PAGE WIRE PRODUCTS
HARTFORD ITT INSURANCE GROUP
AETNA CASUALTY & SURETY/TRAVELERS PROPERTY CASUALTY
OHIO CASUALTY GROUP INS. CO.
SECOND INJURY FUND
The claimant was not represented at oral argument. Notice sent to Daniel Benjamin, Esq., Benjamin & Gold, 350 Bedford Street, Suite 403, Stamford, CT 06901.
The respondent employer was represented by Leo Gold, Esq., Mackler & Gold, P.C., 460 Summer Street, Stamford, CT 06901.
The respondent insurers Hartford ITT Insurance Group and Aetna/Travelers were represented by Margaret McGrail, Esq., Pomeranz, Drayton & Stabnick, 95 Glastonbury Boulevard, Glastonbury, CT 06033.
The respondent insurer Ohio Casualty Group Ins. Co. was represented by Thomas J. Hagarty, Esq., Halloran & Sage, One Goodwin Square, 225 Asylum Street, Hartford, CT 06103-4303.
The Second Injury Fund was not represented at oral argument. Notice sent to Brewster Blackall, Esq., Assistant Attorney General, 55 Elm Street, P. O. Box 120, Hartford, CT 06141-0120
This Petition for Review from the January 21, 1999 Finding and Order of the Commissioner acting for the Seventh District was heard September 10, 1999 before a Compensation Review Board panel consisting of the then Commission Chairman, Jesse M. Frankl and Commissioners Angelo L. dos Santos and Stephen B. Delaney.
JESSE M. FRANKL, COMMISSIONER. The respondent Barnes Page Wire Products has petitioned for review from the January 21, 1999 Finding and Order of the Commissioner acting for the Seventh District. It contends on appeal that the trier erred by ruling that none of the prospective workers’ compensation insurers listed as parties to this action were liable for the claimant’s compensable injury. Though we do not agree with all of the appellant’s contentions, we do find error, and we order that this case be remanded to the trial commissioner for further proceedings.
The claimant’s August 10, 1993 injury was previously found compensable in a July 15, 1996 Finding and Award. The issue here is whether the employer, Barnes Page Wire Products (Barnes Page), was covered by a workers’ compensation insurance policy on the date of that incident. In general, the trial commissioner has jurisdiction under § 31-348 to determine whether an insurance policy exists on the date of a claimant’s injury. O’Connell v. Indian Neck General Store, 6 Conn. Workers’ Comp. Rev. Op. 42, 44, 530 CRD-3-86 (Oct. 6, 1988), citing Piscitello v. Boscarello, 113 Conn. 128 (1931). This board, in turn, has the authority to review such a decision under § 31-301, subject to the well-established standard of deference we grant to the trier of fact’s decisions regarding the credibility of the evidence and the proper factual inferences to be drawn from it. See, e.g., Pallotto v. Blakeslee Prestress, Inc., 3651 CRB-3-97-7 (July 17, 1998). Barnes Page alleges that there are three different insurance companies who, because of their acts, omissions, or the actions of their agents, are precluded by the Workers’ Compensation Act from denying liability for the instant claim. The best way to address this somewhat complicated appeal is to treat separately the facts and law surrounding each of these insurer’s relationships with Barnes Page as of the date in question.
Chronologically, of the three insurers named as respondents in this action, Aetna/Travelers (Aetna) became involved with the situation first. This corporation had underwritten the risk for Barnes Page’s workers’ compensation liability immediately prior to the disputed period of coverage. On December 3, 1992, Barnes Page received a document entitled “Notice of Cancellation or Nonrenewal” from Aetna stating that the policy would be cancelled upon its expiration date of February 26, 1993. BPW Exhibit 1. The notice explained that Aetna was unwilling to continue providing coverage because of the insured’s adverse loss experience. Channing Brown, a principal of Barnes Page, testified that he contacted his insurance agents upon receipt of this notice, and requested that they look for new insurance. Findings, ¶ 7; January 8, 1998 Transcript, 32-33. Brown also stated that, due to subsequent assurances by another insurance agent that a replacement policy had been obtained, he believed that he had coverage with someone other than Aetna as of February 26, 1993. Findings, ¶ 10; Transcript, supra, 34.
Notification procedures for workers’ compensation insurers are set forth in § 31-348 C.G.S., which provides:
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. Any insurance company violating any provision of this section shall be fined not less than one hundred nor more than one thousand dollars for each offense.
The aforementioned “rules” direct insurers to send all notices regarding coverage to the National Council of Compensation Insurance (NCCI), a computer database that serves as the official notification unit for this commission. Cf. Thibodeau v. Rizzitelli, 3373 CRB-4-96-7 (Oct. 14, 1997) (NCCI also administers workers’ compensation insurance assigned risk pool in Connecticut). Bertrum Martus, a special investigator for the state, testified that NCCI’s records showed no insurance in effect for Barnes Page as of August 10, 1993. Findings, ¶ 11; Transcript, supra, 42. Martus also testified, as the NCCI records indicate, that Aetna’s policy had an expiration date of February 26, 1993. Findings, ¶ 12; Transcript, supra, 42-43; AET Exhibit 2. The trial commissioner eventually found that Aetna did not cover Barnes Page for workers’ compensation liability on August 10, 1993. Though, at Barnes Page’s request, he later corrected his findings to reflect that Aetna did not file a notice of cancellation with this commission or NCCI pursuant to § 31-348; see Motion to Correct, ¶ 9; the trier did not alter his ultimate legal conclusion.
Barnes Page urges that the document sent by Aetna on December 3, 1992 was technically a notice of cancellation, which under § 31-348 cannot become effective until fifteen days after such notice has been filed with the Chairman. Because no such notice was ever filed with NCCI, Barnes Page would have this board conclude that Aetna’s policy remained in effect on the date of injury. See Thibodeau, supra (failure to report cancellation renders it ineffective against employee claiming compensation), citing Rossini v. Morganti, 127 Conn. 706, 707 (1940); Piscitello, supra, 130-31. We disagree with the appellant’s analysis of the legal effect of Aetna’s notice, as we do not believe that the insurer was attempting to cancel its policy within the meaning of § 31-348.
The Piscitello decision, supra, provides an instructive guide to our discussion of this matter:
[W]orkmen’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. [Sections 31-340, 31-342, 31-343 C.G.S.] 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. Obviously, to be of value, such a record made by the insurer cannot be open to attack upon the ground that a policy which it has reported to be in effect is not in fact so . . . . It may be that if a policy, though issued by the insurer, never became binding because of the failure of the insured to accept it or for other such reasons, the provision of the statute that no cancellation should become effective until [fifteen days] after notice was filed would not apply and the report might be withdrawn; but so long as it remains of record the insurer cannot deny that the policy reported is in effect.
Id., 130-31. The Piscitello Court held that, where an insurer’s agent had sent a card to this commission stating that a one-year renewal policy had been issued to the employer, the insurer became responsible for notifying us that it wished to terminate the policy because the employer did not in fact want it. This decision, and others that follow it, clearly contemplate that the cancellation notice requirement of § 31-348 is implicated only when this commission has reason to believe that a workers’ compensation insurance policy is in effect. See, e.g., Rossini, supra (insurer bound by mistake in cancellation date listed in its written notice); Dengler v. Special Attention Health Services, 3780 CRB-3-98-2 (June 15, 1999) (notice that coverage would terminate unless insured paid overdue premiums did not constitute notice of cancellation); Thibodeau, supra (new 15-day term of coverage was not created where a previously cancelled policy was reactivated on insurer’s computer for maintenance purposes, and re-cancelled the next day).
In this case, NCCI’s records unequivocally indicated that a subsidiary of Aetna was insuring Barnes Page from February 26, 1992 through February 26, 1993. There is no evidence that anyone told NCCI that this policy was being renewed. Hence, there was no need for Aetna to inform this commission of its intent to discontinue insuring Barnes Page once the existing policy expired. Absent further notification, our assumption would be that Aetna’s coverage would cease once the policy ran its course, based upon the expiration date provided by Aetna when it initially informed this commission of the insurance contract as required by § 31-348. There is also no evidence that Barnes Page was somehow misled by Aetna’s “Notice of Cancellation or Nonrenewal,” thereby preventing it from obtaining replacement workers’ compensation coverage. Any argument regarding the ambiguity of that notice is thus of no consequence in this forum.1 We affirm the trial commissioner’s holding that Aetna did not insure the appellant’s workers’ compensation liability on August 10, 1993.
We mentioned above that, after Aetna sent its Notice of Cancellation or Nonrenewal to Barnes Page, the appellant began to look for a replacement insurer. Channing Brown, the company president (see January 31, 1995 Transcript, 51), initially contacted his insurance agent, who apparently obtained a quote for him. January 8, 1998 Transcript, 32-33. During the process of pricing insurance rates, someone from Barnes Page contacted George Cahill, an insurance agent who represented the respondent Ohio Casualty, along with other companies. Findings, ¶ 13-14. Cahill requested a premium quotation from Ohio Casualty on January 28, 1993. Within the week, the insurer responded by declining to provide either a rate quote or coverage for Barnes Page.
Nevertheless, on or about February 3, 1993, Cahill gave Barnes Page a quote for one year of coverage at $56,741.00, including workers’ compensation and other insurance. Findings, ¶ 16-17. Though the quote did not include the name of the insurer, it was written on Ohio Casualty stationery. Subsequently, Cahill issued a statement to Barnes Page listing Ohio Casualty as its new insurance carrier, and sent the wire products manufacturer a bill for $56,741.00. When Barnes Page sent Cahill its payment, he gave it fraudulent certificates of insurance in exchange, and converted all of the money to his personal use. Findings, ¶ 20; Motion to Correct, ¶ 3. Ohio Casualty received no cash, nor did it issue an insurance policy. Thus, as noted earlier, NCCI’s records showed no insurance in effect for Barnes Page as of August 10, 1993. The trier concluded that, as a Workers’ Compensation Commissioner, he lacked jurisdiction to adjudicate the employer’s claims against Ohio Casualty based on the actions of its agent, as these claims sounded in tort, contract and agency law. Accordingly, he did not assign liability for the claimant’s injury to Ohio Casualty.
The appellant now seeks to persuade this board that, because Cahill was a licensed agent of Ohio Casualty who had ostensibly issued a certificate of insurance to Barnes Page, the commissioner had the authority to determine that there was insurance in effect. Under this reasoning, though the issue of fraud or misrepresentation by Cahill is indeed outside of our jurisdiction, that matter was raised as a defense by Ohio Casualty, and is solely between the insurer and its agent. Contrarily, as evidenced by §§ 31-286a and 31-286b, a certificate of insurance issued by a licensed agent has “special significance” within the Workers’ Compensation Act, as it establishes prima facie proof of insurance before the commissioner. Brief, 12. Barnes Page contends that the presence of a “rogue agent” in this case was the insurer’s problem, which should not be “foisted upon the fault-free employer or its employee.” Brief, 15. Ohio Casualty rejoins that a certificate of insurance is not the equivalent of an insurance policy, and requests that we affirm the trier’s ruling that it did not confer workers’ compensation liability coverage.
Built into § 31-348 is the notion that, once an insurance carrier has reported coverage to this commission, it cannot be cancelled without 15 days prior notice. Our records presumptively establish the insurer’s obligation. See Piscitello, supra. However, a trial commissioner is not prohibited from considering evidence extraneous to the information in NCCI’s computer database in determining whether an insurance contract existed on a given date, so long as the insurer is not attempting to disprove coverage in a situation where the records reflect that coverage was in effect on the date of injury. Thibodeau, supra; Vernon v. V.J.R. Builders, Inc., 11 Conn. Workers’ Comp. Rev. Op. 237, 241, 1360 CRD-7-91-12 (Nov. 8, 1993). We must now decide whether this extraneous evidence may include facts that require the trier to apply legal principles foreign to workers’ compensation, such as contract law and agency law, where the employer currently lacks insurance to cover the claimant’s July 15, 1996 temporary total disability award—an award that specifically reserved for future hearings issues concerning additional benefits, including permanent partial disability.
The fact that the central issue in this action continues to be the claimant’s entitlement to benefits is significant, given our Supreme Court’s pronouncement in the recent case of Stickney v. Sunlight Construction, Inc., 248 Conn. 754 (1999). There, this board had determined that a trial commissioner had jurisdiction under § 31-315 to open and modify a voluntary agreement on behalf of an insurer that claimed it had mistakenly accepted liability for an injury that was actually the responsibility of another carrier. Stickney, 12 Conn. Workers’ Comp. Rev. Op. 364, 1738 CRB-6-93-5 (Aug. 2, 1994). The Appellate Court reversed our ruling; Stickney, 48 Conn. App. 609 (1998); and its holding was affirmed by the Supreme Court, which stressed the jurisdictional limitations that the legislature has placed on administrative agencies such as this commission. Id., 248 Conn. 754-55.
The Court first noted that the issue underlying the motion to open was strictly a coverage issue, rather than a traditional Chapter 568 claim. The Court compared the case at bar to Hunnihan v. Mattatuck Mfg. Co., 243 Conn. 438 (1997), in which it had held that this commission had jurisdiction to interpret § 38a-838(6) of the Connecticut Insurance Guaranty Association Act (CIGA) because the legislature had expressly directed this commission to apply CIGA in the insolvency provision of § 31-355(e), even though the central issue in Hunnihan required the interpretation of provisions outside the Workers’ Compensation Act. Id., 763-64. After considering §§ 31-275(5), 31-278, 31-298, 31-315, and 31-342, the Court held that there was no similar authority in Chapter 568 that empowered this commission to grant the Stickney motion to open. “Such a question sounds in contract law, and requires examination of applicable policies in order to adjudicate the claim. . . . The question of [which insurer] should properly be on the risk is a question appropriate for another forum.” Id., 768-69.
However, en route to this holding, the Court inserted two footnotes into its opinion that leave open the question of whether we may address the common-law issues that underlie the claim of Barnes Page. First, the Court noted that our subject matter jurisdiction has properly encompassed the interpretation of statutory provisions such as the Internal Revenue Code and the Bankruptcy Code “when such interpretations have been incidentally necessary to the resolution of a case arising under [Chapter 568].” Id., 764 n. 5. Second, the Stickney Court noted that, at oral argument, the question had been raised as to whether this commission would have had jurisdiction to decide the coverage issue at bar if it had arisen at the time of the original adjudication of the claimant’s benefits. Id., 767 n. 6. Hunnihan, supra, was again cited, where the Court had observed that claimants will not always have received compensation in the instances that this commission is called upon to interpret other acts. Given the remedial purpose of our own Act, the Hunnihan Court favored a policy that affords the commissioner jurisdiction to make such interpretations in order to effectively resolve cases. See Hunnihan, supra, 447. The Stickney justices ruled that the achievement of this humanitarian policy was not threatened in the case before them, because § 31-342 provides for prompt payment when doubt arises as to the respective liability of two or more insurers. “Therefore, . . . we leave for another day the question of whether a common-law issue properly could be determined by the commissioner when incidentally necessary to the resolution of a claim arising under the act.” Stickney, supra, 767-68 n. 6.
In the opinion of this board, that day of reckoning is today. In order to determine whether any insurance coverage was in existence for the instant claim, it has become necessary for this commission to decide whether Cahill’s relationship with Ohio Casualty bound that insurer to assume the workers’ compensation risk for Barnes Page on the date of the claimant’s injury. To resolve that crucial question, the trier of fact will need to apply common-law (and possibly statutory) principles of agency and contract that are far removed from the traditional scope of workers’ compensation decisions.
We recognize that the resolution of such matters is normally the sole province of our courts of law, and that the Workers’ Compensation Act does not expressly place them within a commissioner’s purview. This agency does not wish to tread cavalierly on foreign ground. However, our only alternative to adjudicating the agency issue would be to order that the employer accept full responsibility for the claim (which, depending on its financial stability, could conceivably render the company insolvent), with secondary liability falling upon the shoulders of the Second Injury Fund pursuant to § 31-355(b)—an entity that already faces substantial unfunded claims for payment, and whose future claims liability was sharply curtailed by a recent legislative enactment. See, e.g., Cece v. Felix Industries, Inc., 248 Conn. 457, 463-64 (1999); Coley v. Camden Associates, Inc., 243 Conn. 311, 319-20 (1997). By failing to identify a potentially responsible insurer, such an order would also increase the risk that the claimant would not receive the compensation due him in a timely manner. Rather than compromise the interests of the claimant, this board opts to direct the commissioner to address Ohio Casualty’s liability for its putative agent’s actions by applying the relevant law. Thus, we reverse the trier’s ruling in ¶ C of his decision, and remand this case to him for such a determination.
About six months after George Cahill issued the false Ohio Casualty insurance certificates to Barnes Page, the instant claimant suffered an injury that allegedly arose out of his employment. When Cahill was informed of the pending claim, he attempted to cover up his possible fraud by obtaining workers’ compensation insurance from the respondent Hartford Insurance Group (The Hartford) and submitting a claim to that insurer. Findings, ¶ 22. The Hartford’s policy went into effect on August 14, 1993, four days after the claimant’s injury. In response to the claimant’s September 29, 1993 Form 30C, The Hartford filed a timely Form 43 notifying this commission of its intent to contest liability to pay compensation. It appears from the record that the August 10, 1993 date of injury on the form was highlighted in salmon-colored ink, and a letter from a co-worker was attached that called the claimant’s veracity into question.
The trier did not discuss The Hartford’s potential liability extensively. He simply found that there was no insurance coverage on the date of injury, and that The Hartford’s filing of a Form 43 contesting the claim on its merits had no consequence. Findings, ¶ E. Barnes Page asserts on appeal that The Hartford is estopped from denying coverage because its Form 43 implicitly advised all parties that there was insurance available to pay the claim, and it failed to raise the coverage issue until June 1994. According to Barnes Page, The Hartford failed to file a proper notice of contest under § 31-294c(b), thereby waiving its right to raise the August 14, 1993 policy date as a defense.
The appellant has also moved to submit as additional evidence under Admin. Reg. § 31-301-9 a letter from The Hartford dated April 13, 1998, which was received after the close of the formal hearings. It appears to be an unsigned form letter that is automatically generated by The Hartford’s computer system, and sent to the employers it insures. The notice advised Barnes Page that a hearing had been scheduled on the Dibello claim, which the employer need not attend, as a representative from The Hartford would be present to represent “ours and your interests in this matter.” This letter was also referenced in, and attached to, the appellant’s trial brief, but was not referenced in the commissioner’s decision.
Given that these two parties were in the process of drafting these briefs when this letter was sent by The Hartford, we consider it highly unlikely that the employer was misled by this notice in any way. Barnes Page does not contend that it has received similar notices in the past, and The Hartford’s contest of this claim on insurance coverage grounds has been known to the employer since at least 1994. We do not believe that the notice is material to the outcome of the case, and decline to accept it as additional evidence under § 31-301-9. See, e.g., Abdule v. Walnut Hill Convalescent, 3383 CRB-6-96-7 (March 25, 1997).
As for the waiver issue, we disagree that The Hartford’s initial Form 43 somehow prevents it from raising the defense that it was not on the risk at the time of the claimant’s injury. The insurer had clearly informed the parties of its position by the time the first formal hearing was held in October 1994, which afforded Barnes Page several years to litigate this issue. NCCI’s records did not reflect that there was insurance in effect for Barnes Page on August 10, 1993; Findings, ¶ 11; and the evidence corroborates NCCI’s report that The Hartford’s policy went into effect on August 14, 1993. Thus, the employer cannot rely on the statutory presumption of § 31-343. See Piscitello, supra.
The mere fact that The Hartford did not unmistakably raise “no insurance” as a defense in its Form 43—which was filed less than a week after its receipt of the Form 30C—did not preclude it from focusing on that issue later during the preparatory stages of this case. Indeed, the Form 43 is generally filed by the insurer on the employer’s behalf, and is intended to timely apprise the employee of the reasons why the employer is contesting his claim. Menzies v. Fisher, 165 Conn. 338, 343-44 (1973). If a defense such as lack of coverage later arises between an employer and insurer, the contents of the Form 43 have little or no bearing upon the existence of a contract. The insurer need only raise the issue in a timely manner that affords the parties due process. That was done here. We thus find no error in the trier’s dismissal of the claim against The Hartford.
The trial commissioner’s decision regarding the insurers Aetna and The Hartford is hereby affirmed. With respect to the obligations of Ohio Casualty, the trier is ordered to conduct further proceedings on remand to determine whether the actions of the insurer’s agent require it to accept liability as the respondent employer’s workers’ compensation carrier.
Commissioners Angelo L. dos Santos and Stephen B. Delaney concur.
1 In its Motion to Correct, Barnes Page proposed that Aetna’s “improper notice of non-renewal created a mandatory renewal of the 1992-1993 policy for a term of not less than one year,” pursuant to § 38a-323(c). The trier declined to add such a finding to his decision. As the appellant did not brief this issue on appeal, or present oral argument regarding the proper interpretation of that statute, we have not addressed the potential applicability of § 38a-323(c) in our opinion. Maio v. L.G. Defelice, Inc., 13 Conn. Workers’ Comp. Rev. Op. 197, 198 n.1, 1734 CRB-5-93-5 (Mar. 22, 1995) BACK TO TEXT