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Ongaro v. Country Flooring Enterprises

January 17, 2006


On appeal from the New Jersey Department of Labor, Division of Workers' Compensation, CP No.99-027072.

The opinion of the court was delivered by: Sabatino, J.S.C., (temporarily assigned)



Argued November 30, 2005

Before Judges Weissbard, Winkelstein*fn1 and Sabatino.

This appeal calls for us to consider whether a workers compensation insurer sufficiently complied with N.J.S.A. 34:15-81(b) in the policy cancellation notice that it transmitted to a unit of the Department of Banking and Insurance. The compensation judge ruled that the insurer failed to satisfy the statute because of two clerical errors contained in the typed notice that the insurer mailed to the Department. We reverse, concluding that the clerical errors did not materially impair the insurer's adherence to the statute.

The relevant facts are not complicated. Respondent Country Flooring Enterprises ("Country Flooring") procured workers compensation insurance coverage from appellant Fireman's Fund Insurance Company ("Fireman's Fund") in a policy effective from December 24, 1998 through December 24, 1999. Country Flooring fell behind its payments on that policy. This caused Fireman's Fund to send a cancellation notice by certified mail to Country Flooring on February 19, 1999, reciting a cancellation date of March 6, 1999.

Although Country Flooring did not receive or accept the certified mailing, that does not nullify the cancellation of its coverage. Under the applicable statutory provision, N.J.S.A. 34:15-81,*fn2 the canceling insurer is not obligated to secure the insured's acknowledgment that it actually received the notice. Rather, subsection (a) of the statute only requires the insurer to send the cancellation notice to the insured at the insured's address listed on the insurance policy. That was indisputably done here. Accord Cardinale v. Mecca, 175 N.J. Super. 8, 11-12 (App. Div. 1980)(certified mail deemed to satisfy the requirement of "registered mail" for cancellation notices under N.J.S.A. 34:15-81(a)).

There is also no dispute that Fireman's Fund afforded Country Flooring the full ten days notice required by N.J.S.A. 34:15-81(a). In fact, the cancellation date specified in the notice, March 6, 1999, was fifteen days after the date of Fireman's Fund's mailing to Country Flooring.

However, the statute prescribes a second step in order to make a policy cancellation effective. Specifically, subsection (b) of N.J.S.A. 34:15-81 also requires the insurer to transmit a "like notice" to the Department of Banking and Insurance, along with a certified statement verifying that the notice to the insured called for by subsection (a) has been issued. See N.J.S.A. 34:15-81(b). As an administrative matter, such companion notices are routed to the Compensation Rating and Inspection Bureau ("CRIB"), a unit within the Department.

Here, Fireman's Fund mailed such a companion notice to CRIB on April 7, 1999, informing the Department that it had canceled Country Flooring's coverage. However, as Fireman's Fund acknowledges, its typewritten notice to CRIB included two errors: (1) it listed the effective date of Country Flooring's one-year policy as "12-24-99" when it should have read "12-24-98"; and (2) it mistakenly stated that the employer's cancellation notice was mailed on "3-25-99" to Country Flooring, rather than the actual mailing date of February 19, 1999.

Based on these two errors in Fireman's Fund's notice to CRIB, the compensation court ruled that Fireman's Fund had failed to provide the Department the "like notice" required by the statute. Accordingly, the compensation court declared the policy cancellation ineffective. That ruling signified that Country Flooring continued to have compensation coverage with Fireman's Fund on May 5, 1999, the date on which its employee, petitioner Andrea Ongaro,*fn3 sustained a workplace injury.

We address the "like notice" issue on a clean slate. Although the relevant statute, N.J.S.A. 34:15-81, dates back to 1917, no reported case law identifies the elements of the "like notice" called for under subsection (b). Nor have counsel pointed us to any germane legislative history on that narrow issue.

As we understand it, from our reading of the statute as a whole and also from our colloquy with counsel at oral argument, the regulatory purpose of subsection (b) of the statute is to alert the State that an employer within New Jersey has caused its workers compensation coverage to lapse. Because such coverage provides employees in our State with an important safety net for workplace accidents, the Department has good reason to track which employers have active compensation coverage, and which ones do not. Such coverage through an insurance policy, or through a self-insurance fund, is mandatory for most employers in New Jersey. See N.J.S.A. 34:15-71 and -72. We were advised at oral argument that at times the ...

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