On appeal from the New Jersey Department of Labor, Division of Workers' Compensation.
The opinion of the court was delivered by: Fuentes, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Wefing, Fuentes and Graves.
By leave granted, the Pennsylvania Manufacturers Association Insurance Group ("PMA") appeals from the order of the Workers' Compensation Court, denying its motion to dismiss a claim asserted by plaintiff Manuela Carreon, seeking coverage under a workers' compensation insurance policy issued by PMA.
The court of compensation found that the policy issued by PMA to plaintiff's employer, Hospitality Linen Services of New Jersey, LLC ("Hospitality"), was in effect on February 9, 2002, the date of the accident, because PMA had failed to send Hospitality a notice of cancellation. The court of compensation reached this conclusion despite the fact that the request to cancel the policy was made by First Insurance Funding Corp., ("First"), acting as Hospitality's attorney-in-fact.
This appeal requires us to determine the interplay between the procedures for canceling a workers' compensation insurance policy, N.J.S.A. 17:16D-13, provided in the Insurance Premium Finance Company Act, N.J.S.A. 17:16D-1 to -16, and the notice of cancellation requirements in the Workers' Compensation Act, N.J.S.A. 34:15-81. This is the question before us: Is a carrier required under N.J.S.A. 34:15-81a to notify its insured of the cancellation of the policy, when such cancellation was triggered by the request of the insured's premium finance company, acting as the insured's attorney-in-fact, and following the procedures outlined in N.J.S.A. 17:16D-13? We now answer this question in the negative.
We hold that when a carrier receives a request to cancel a workers' compensation policy from the insured's premium finance company, acting as the insured's attorney-in-fact pursuant to a premium finance agreement, the carrier is not required to send the insured the notice of cancellation provided in N.J.S.A. 34:15-81a. Under these circumstances, the premium finance company has legally "stepped into the shoes" of the insured, thereby transforming the request to cancel as if originating from the insured himself. N.J.S.A. 17:16D-13(c).
We will address and analyze this issue in the following factual context.
On or about April 24, 2001, Hospitality entered into a premium financing agreement with First to finance the $28,057 premium for the workers' compensation policy it obtained from PMA. Commencing May 11, 2001, Hospitality was required to make monthly installment payments of $3,240. Under the financing agreement Hospitality gave First a power of attorney to cancel the policy in the event it failed to make the monthly payments or was otherwise in default. The power of attorney provision in the contract reads:
RIGHT TO CANCEL If the Insured does not make a payment when it is due, or if Insured is otherwise in default under this agreement, FIRST may cancel the policies and act in Insured's place with regard to the policies, including endorsing any check or draft issued in the Insured's name for funds assigned to FIRST as security herein. This right given by Insured to FIRST constitutes a "Power of Attorney". Before FIRST cancels the policies, FIRST will provide notice to the Insured, as required by law. Insured agrees that this right to cancel which Insured has granted to FIRST cannot be revoked, and that FIRST's right to cancel will terminate only after all of Insured's indebtedness under this agreement is paid in full.
Hospitality made its monthly payments for May, June, July, August, and September of 2001. It did not make the October payment. First issued a notice of cancellation to Hospitality for non-payment on October 21, 2001. The notice indicated that unless payment was received, the policy would be cancelled effective October 31, 2001. On October 25, 2001, Hospitality's insurance broker ...