The Superior Court of New Jersey, Appellate Division, issued a decision in Davis v. Yassien Mobility Assistance & Ambulance Inc., Zurich et al remanding the matter to the Division of Workers’ Compensation for dismissal of the claim petition as to Zurich. This decision, issued May 5, addressed whether the insurance carrier who did not properly comply with the cancellation requirements of N.J.S.A. 34:15-81 could be dismissed where the petitioner waited seven years before challenging whether the policy was properly cancelled.
Zurich had issued a policy to Yassien, the employer, effective November 8, 2005, to July 23, 2006. A notice of cancellation for non-payment of the premium, effective March 1, 2006, was sent by Zurich to Yassien. An electronic transmission was also sent by Zurich to the New Jersey Commissioner of Banking and Insurance, however, it did not include the certified statement required under N.J.S.A. 35:15-81(b). That section of the statute required a certified statement that 10 days’ notice was provided in writing of the cancellation of the policy to the insured by registered mail.
The employee was involved in a work-related accident on April 23, 2007, more than a year after the policy was cancelled. Yassien filed an answer asserting there was no insurance carrier and as such the Uninsured Employer’s Fund was joined. The employee filed two amended claim petitions on July 7, 2007, and August 26, 2011. Both indicated there was no insurance carrier. Interestingly, Zurich was not a party to the claim until February 19, 2013, when Yassien motioned to amend its answer to join Zurich and argued the policy was not effectively cancelled.
Zurich simultaneously filed an answer and motion to dismiss contending the policy had been cancelled before the accident. Zurich’s motion was denied by the Judge of Compensation who found Zurich did not strictly comply with N.J.S.A. 34:15-81 as it had failed to file the required certified statement.
The Appellate Division found the Judge incorrectly interpreted Sroczynski v. Milek. In Sroczynski, the court found the insurance carrier acted in good faith when it notified the Commissioner of a policy cancellation through the electronic transmission even though no certified statement was provided. The Court held “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.” Under Sroczynski, relief was allowed only in the cases where cancellation was challenged before Sroczynski was decided.
Here, the policy was cancelled by Zurich two years before the decision in Sroczynski. Yassien had not challenged the cancellation until seven years after it was cancelled and five years after Sroczynski. Therefore, Yassien had not challenged the policy cancellation prior to Sroczynski and as such waived its right to challenge Zurich’s cancellation. If Yassien challenged cancellation of the policy when Davis first amended her claim petition on July 7, 2007, it would have been a party “who previously raised the notice issue” and therefore Zurich would not have been dismissed. However, if it waited until Davis amended her claim petition for a second time on August 26, 2011, the challenge would be post Sroczynski and as such Yassien would have waived its right to challenge.
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Sara L. De Long