On certification to the Superior Court, Appellate Division.
The opinion of the Court was delivered by Stein, J. Chief Justice Wilentz and Justices Handler, Pollock, O'hern, Garibaldi and Coleman join in Justice STEIN's opinion.
The opinion of the court was delivered by: Stein
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
GINO ROMANNY V. STANLEY BALDINO CONSTRUCTION V. NEW JERSEY RE-INSURANCE Co. (A-16-95)
Argued September 12, 1995 -- Decided December 5, 1995
STEIN, J., writing for a unanimous Court.
New Jersey Re-Insurance Co. (Re-Insurance) had issued a workers' compensation policy to Stanley Baldino Construction Co. (Baldino), that expired at 12:01 a.m. on December 3, 1987. On October 29, 1987, Re-Insurance issued a renewal quotation to Baldino, offering to renew his policy for a quoted premium and informing Baldino that coverage would lapse unless a deposit premium was received by November 28, 1987. Re-Insurance also noted in its quotation that no further request would be sent for the deposit premium and that the policy would not be issued unless the full deposit premium was paid. Re-Insurance did not receive Baldino's deposit premium by December 3, 1987; therefore, Re-Insurance, on that day, sent a notice to Baldino stating that the deposit premium had not been received, that the prior policy expired on 12:01 a.m. on December 3, 1987, and that no renewal coverage was in effect. On December 7, 1987, Gino Romanny sustained an injury at work that led to his filing of a workers' compensation claim against Baldino, his employer.
The parties submitted conflicting affidavits to the Workers' Compensation Judge in respect of the timeliness of Baldino's mailing of the renewal deposit premium. Baldino claimed that initial checks were sent on November 26, 1987 and therefore, were timely. Re-Insurance asserted that the renewal premium was not received until December 9, 1987 in an envelope postmarked December 8, 1987. Because Re-Insurance's practice was to affect coverage on the day after an insured's premium payment had been mailed, Re-Insurance issued its renewal policy to Baldino effective as of 12:01 a.m. on December 9, 1987. Romanny's accident occurred on December 7, 1987, during the period between the expiration of the original policy and the effective date of the renewal policy Re-Insurance disclaimed coverage with respect to Romanny's compensation claim.
Without an evidentiary hearing, a workers' compensation Judge denied Re-Insurance's motion to dismiss Baldino's claim, concluding that, on the basis of the conflicting certifications, the "equities of the case" required Re-Insurance to provide coverage. The court denied Re-Insurance's motion for reconsideration of the coverage determination.
The Appellate Division, acknowledging that a testimonial hearing ordinarily would have been required to ascertain the credibility of Baldino's assertion that the mailing of the renewal premium was timely, affirmed the order mandating coverage. The court concluded that Re-Insurance's conduct in respect of the renewal policy violated both the "letter and spirit" of the New Jersey Workers' Compensation Plan (Plan). The Appellate Division noted that Re-Insurance had demanded payment of the renewal deposit premium on November 28, 1987, five days prior to the initial policy's expiration date, whereas the Plan requires renewal if the appropriate premium is paid any time prior to the renewal date. The Court concluded that Re-Insurance's failure to send a reminder notice during the five days to alert Baldino of the pending lapse was an attempt by Re-Insurance to "shed the risk, "rather than use its "best efforts to effectuate insurance coverage," as required under the Plan.
The Supreme Court granted certification.
HELD: The record in this case reveals no failure by New Jersey Re-Insurance Co. to comply fully with the statutory and regulatory mandates concerning renewal of workers' compensation policies.
1. The legislative and regulatory scheme governing the entitlement of workers to workers' compensation benefits mandates that employers assure the availability of those benefits for their injured workers. Under that regulatory scheme, the carrier must provide timely notice of the pending policy expiration and of the required renewal deposit premium. If the deposit premium is paid on time, the renewal policy must be issued without lapse. If the deposit premium is late, but is paid within sixty days of the prior policy's expiration, the renewal policy must be issued not later than 12:01 a.m. on the day after payment is received. There is significant responsibility imposed on insurers to afford timely notice of a policy's expiration and of the prerequisites to a renewal. Consistent with the provisions of the Plan, caselaw recognizes that an insurer that provides timely notice of renewal is not obligated to renew the policy if the renewal premium is not paid. (pp. 6-10)
2. The Appellate Division erred in concluding that Re-Insurance failed to comply with the Plan's requirement concerning renewal of workers' compensation policies. The establishment of a due date in a renewal quotation that precedes the policy expiration date by five days constitutes a benign effort by the carrier to provide the insured with a protective cushion in order to avoid an inadvertent non-renewal, rather than a calculated attempt by the insurer to avoid renewing the policy. The Plan does not prohibit an insurers' use of a slightly accelerated renewal premium payment date. It merely requires that carriers notify or arrange, approximately thirty days prior to the renewal date, the renewal of the insurance and that the renewal policy issue without lapse if the renewal premium is paid prior to the policy expiration date. Nothing in the record suggests that Baldino's policy would not have been renewed if the deposit premium had been paid ...