JANICE DAVIS v. YASSIEN MOBILITY ASSISTANCE & AMBULANCE

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

JANICE DAVIS,

Respondent,

v.

YASSIEN MOBILITY ASSISTANCE &

AMBULANCE, INC., MOHAMED

EIPALLA, JANELLE DEOSINGH and

UNINSURED EMPLOYERS' FUND,

Respondents,

and

ZURICH AMERICAN INSURANCE

COMPANY,

Appellant.

____________________________

Argued March 9, 2015 Decided May 5, 2015

Before Judges Simonelli and Leone.

On appeal from the New Jersey Department of Labor, Division of Workers' Compensation, Docket No. 2007-14416.

David J. Dering argued the cause for appellant (Leary, Bride, Tinker & Moran, P.C., attorneys; Mr. Dering, of counsel and on the brief).

Robert M. Strang, Deputy Attorney General, argued the cause for respondent Uninsured Employers' Fund (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Alan C. Stephens, Deputy Attorney General, on the brief).

Respondents Janice Davis, Yassien Mobility Assistance & Ambulance, Inc., Mohamed Eipalla, and Janelle Deosingh have not filed briefs.

PER CURIAM

By leave granted, appellant Zurich American Insurance Company (Zurich) appeals from the July 29, 2014 order of the Division of Workers' Compensation (Division), which determined that Zurich's March 2006 cancellation of a workers' compensation insurance policy issued to respondent Yassien Mobility Assistance & Ambulance, Inc. (Yassien) was ineffective under N.J.S.A. 34:15-81 and, consequently, Zurich was liable for coverage for an April 23, 2007 work-related injury sustained by Yassien's employee, Janice Davis (Davis). Zurich does not dispute that it failed to strictly comply with statute in cancelling the policy; however, Zurich contends in this appeal that Yassien's nearly seven-year delay in challenging the cancellation constituted a waiver of its right to do so. We agree and reverse.

In order to cancel a workers' compensation insurance policy, N.J.S.A. 34:15-81 provides as follows, in pertinent part

Any contract of insurance issued by a stock company or mutual association against liability arising under this chapter may be canceled by either the employer or the insurance carrier within the time limited by such contract for its expiration.

No such policy shall be deemed to be canceled until

a. At least ten days' notice in writing of the election to terminate such contract is given by registered mail by the party seeking cancellation thereof to the other party thereto; and

b. Until like notice shall be filed in the office of the commissioner of banking and insurance, together with a certified statement that the notice provided for by paragraph "a" of this section has been given; and

c. Until ten days have elapsed after the filing required by paragraph "b" of this section has been made.

[N.J.S.A. 34:15-81 (emphasis added).]

Zurich issued a policy to Yassien, effective November 8, 2005 to July 23, 2006. On February 14, 2006, after Yassien failed to pay the premium, Zurich sent Yassien a notice of cancellation for non-payment of premium, effective March 1, 2006. Zurich also notified the New Jersey Commissioner of Banking and Insurance (Commissioner) of the cancellation, using an electronic file transfer protocol (FTP) established by the New Jersey Compensation Rating and Inspection Bureau (CRIB). The electronic transmission did not include the certified statement required by N.J.S.A. 34:15-81(b). Yassien did not make any premium payments following the March 1, 2006 cancellation.

Davis suffered a work-related injury on April 23, 2007, over a year after the policy was cancelled. On May 22, 2007, she filed a claim petition for workers' compensation benefits, indicating there was no insurance carrier.1 On October 1, 2007, Yassien filed an answer, also indicating there was no insurance carrier. Because there was no insurance carrier, the Uninsured Employers' Fund (UEF) was joined in the claim petition as an additional party. The matter proceeded without Zurich's knowledge or participation until February 19, 2013, when Yassien filed a motion to amend its answer to the claim petition to join Zurich as an additional party, alleging that the policy was not effectively cancelled.

Zurich filed an answer to Davis's claim petition, asserting there was no coverage on the accident date. Zurich also filed a motion with the Division to dismiss, asserting the policy was cancelled prior to the date of the accident. In opposition, the UEF and Davis argued, in part, that the cancellation was ineffective because Zurich did not file the certified statement required by N.J.S.A. 34:15-81(b). Zurich responded that Yassien's seven-year delay in challenging the cancellation constituted a waiver of its right to do so.

The Judge of Compensation denied Zurich's motion, ruling there must be strict compliance with N.J.S.A. 34:15-81 and Zurich did not file the required certified statement. Interpreting Sroczynski v. Milek, 197 N.J. 36 (2008), the judge concluded that waiver did not apply because Zurich was able to reconstruct its paper file, and thus, was not prejudiced by the delay. This appeal followed.

Our review of workers' compensation cases is "'limited to whether the findings made could have been reached on sufficient credible evidence present in the record . . . with due regard also to the agency's expertise[.]'" Hersh v. Cnty. of Morris, 217 N.J. 236, 242 (2014) (alterations in original) (quoting Sager v. O.A. Peterson Constr., Co., 182 N.J. 156, 164 (2004)). However, a judge of compensation's "'interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Renner v. AT&T, 218 N.J. 435, 448 (2014) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)). Therefore, a judge of compensation's interpretation of the provisions of the Workers' Compensation Act, N.J.S.A. 34:15-1 to -142, is subject to de novo review. Ibid.; Hersh, supra, 217 N.J. at 243. We conclude the judge mistakenly interpreted Sroczynski in denying Zurich's motion.

In Sroczynski, the workers' compensation insurer notified the Commissioner of a policy cancellation, using CRIB's FTP, which did not include the certified statement required by N.J.S.A. 34:15-81(b). Sroczynski, supra, 197 N.J. at 39-40. The insurer sought to be relieved of responsibility for providing coverage for a worker's work-related injury that occurred six months after the cancellation, arguing it had properly cancelled the policy. Id. at 40.

The Court held "that filing a certified statement with the Commissioner is a prerequisite to effectuating the cancellation of coverage" and, without the certification, cancellation cannot be effective. Id. at 43. Nonetheless, because the workers' compensation insurance industry had acted in good faith in using CRIB's FTP system, which permitted the transfer of data not documents, the Court was concerned "that the practical effect of invalidating all prior cancellations with respect to which notice was electronically afforded would be to create chaos in the . . . industry." Id. at 44-45. The Court was also concerned that the failure to timely challenge the cancellations would impact the insurer's ability to reconstruct its records and provide an employee's certification. Id. at 45. The Court, however, did not limit its ultimate ruling to that rationale. Id. at 45. Rather, the Court held that "any . . . party who previously raised the notice issue should be granted relief from the improper cancellation but . . . those cancellations that were never challenged should stand because the policyholders waived their right[.]" Id. at 45 (emphasis added). The Court carved out no exception for pending claim petitions or matters involving the UEF. The Court's ruling allowed relief only if the cancellation had been challenged before Sroczynski was decided.

Here, Zurich cancelled the policy two years before Sroczynski was decided. Yassien did not challenge the cancellation until seven years thereafter and five years after Sroczynski was decided. Thus, when the Court decided Sroczynski, Yassien was not a party "who previously raised the notice issue." Id. at 45. Accordingly, Yassien waived it right to challenge Zurich's improper pre-Sroczynski cancellation. Id. at 45. We, therefore, reverse the denial of Zurich's motion to dismiss and remand to the Division to dismiss the claim petition as to Zurich.

Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

1 Davis filed amended claim petitions on July 7, 2007 and August 26, 2011, which also indicated there was no insurance carrier.