The Tribunal, not the Board, must decide whether the insurer’s conduct after the cancellation of the policy was negligent

Claims that a workers’ compensation insurer’s conduct after canceling a policy was negligent must be decided by a court, not the state’s workers’ compensation board, the Connecticut Court of Appeals has ruled.

Liberty Mutual Insurance Co. succeeded both before the Connecticut Workers’ Compensation Review Board (WCB) and on appeal in the dismissal of an injured worker’s claim. The insurer won on the basis that it effectively canceled the employer’s policy due to issues with an audit, despite also sending conflicting notices that the employer claimed led it to believe the policy was still in effect.

After the claim denial and policy cancellation were upheld, the employer, The Grotto, proceeded with a lawsuit alleging that Liberty Mutual’s conduct after the policy cancellation was negligent misrepresentation. Grota pointed to letters she received from the insurer following the cancellation notice, which she claims were false and led her to believe that the policy was still in force at the time of the injury and that she should not take any measure to prevent coating decay. The employer said he paid the premium.

A trial court granted Liberty Mutual’s motion for summary judgment to dismiss The Grotto lawsuit. This court concluded that the employer’s action was barred by the doctrine of res judicata, which holds that a party is precluded from bringing a claim after that claim has been the subject of a final judgment in a prior suit. The trial court held that the questions raised were settled when the appellate court upheld the WCB’s ruling that the policy was properly canceled and therefore benefits were not available.

However, the appeals court has now rejected the argument that res judicata applies to the claims in The Grotto’s lawsuit because none of the claims made by The Grotto fall within the scope of the workers’ compensation act, and none of the claims has not been previously addressed.

Not Traditional

The appeals court explained that the injuries complained of by The Grotto do not allege a compensable personal injury under the Workers’ Compensation Act and differ from traditional claims litigated under the Act because they involve issues of misrepresentation and negligence by an insurance provider as to the employer. , “the solution of which requires the application of laws that are not part of the act”.

The appellate court noted that the narrow issue before the WCB and maintained on appeal was whether Liberty Mutual actually canceled the policy. The WCB did not entertain any cause of action related to Liberty Mutual’s conduct after the effective date of the cancellation. The WCB itself stated that whether Liberty Mutual “was justified in canceling its policy or whether it breached its contract with Grotto in doing so are questions to be determined in another forum.”

The appellate court found that the trial court incorrectly concluded that res judicata barred The Grotto’s action and improperly granted summary judgment in favor of Liberty Mutual. The court vacated the summary judgment and remanded the case for further proceedings.

In earlier proceedings, The Grotto argued that communications from Liberty Mutual after the asserted cancellation notice led it to believe that the policy was still in effect at the time of the injury. The WCB did, in fact, agree that there was sufficient evidence to support a finding that The Grotto “reasonably believed” the policy was still in effect, but that this was irrelevant to whether the policy had actually been cancelled.

Letters of Liberty

In the administrative hearing on the workers’ compensation claim, the workers’ compensation commissioner made several findings of fact, including that Liberty Mutual issued The Grotto a workers’ compensation policy that was due to expire on August 20, 2016. The commissioner noted that Liberty Mutual claimed to have canceled this policy on October 14, 2015, but the National Council for Compensation Insurance (NCCI) said the policy was canceled on November 3, 2015. Grota claimed to have paid the full premium before the date of the accident and I reasonably believed the policy was still in effect.

In his findings, the commissioner cited several examples of communications from Liberty Mutual to The Grotto, which he considered “inconsistent at best.” On February 18, 2016, Liberty Mutual issued a new approval and sent it to The Grotto. Liberty Mutual then sent a letter to The Grotto on February 24, 2016, requesting a response to an audit report warning that failure to submit the audit report “may result in the cancellation of your existing policy.” However, a different letter sent by Liberty Mutual to The Grotto on the same day stated that the policy was canceled on November 3, 2015. This letter also noted the result of an audit determining that there was an underpayment of $5 of the first

On March 15, 2016 Liberty Mutual sent two additional letters. One letter, referencing a revised audit, referred to the policy as canceled on November 3, 2015. The other said The Grotto’s self-audit was incomplete and requested additional materials be sent. On March 17, 2016, Liberty Mutual sent The Grotto a letter stating that a policy issued to them expired on August 20, 2015, and a final audit determined that there was a $12 underpayment of premium.

On April 15, 2016, Liberty Mutual returned to The Grotto a prorated portion of the premium that had been paid for the policy in the amount of $3,151.86.

TOPICS
Carriers