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Sroczynski v. Milek

July 2, 2007


On appeal from the decision of the Department of Labor, Division of Workers' Compensation, Claim Petition No. 2004-10554.

The opinion of the court was delivered by: Baxter, J.A.D.



Argued June 6, 2007

Before Judges Winkelstein, Fuentes and Baxter.

By leave granted, New Jersey Manufacturers Insurance Company (NJM) appeals from the December 7, 2006 order by a judge of compensation denying its motion to be dismissed as the workers' compensation carrier for John Milek Construction (Milek). The order specified that because NJM had not fully complied with the provisions of N.J.S.A. 34:15-81 when it provided notice to Milek of the cancellation of its workers' compensation insurance policy due to non-payment of the premium, the attempted cancellation was ineffective. We reject NJM's arguments that its cancellation procedures substantially complied with N.J.S.A. 34:15-81 and that the judge of compensation erred when she concluded that NJM's cancellation of Milek's policy was ineffective, and affirm.


Petitioner Walter Sroczynski sustained a work-related injury on February 28, 2004, while employed by Milek. Shortly thereafter, on March 17, 2004, he filed a claim petition with the Division of Workers' Compensation. Previously, NJM had issued a standard Workers' Compensation and Employer's Liability Insurance policy to Milek with a policy period of May 5, 2003 to May 6, 2004. Although Milek paid an initial partial premium to NJM, it failed to continue making periodic payments. Consequently, NJM issued a notice of cancellation to Milek via certified mail on August 14, 2003, more than five months prior to Sroczynski's injury.

As required by the provisions of N.J.S.A. 34:15-81, NJM also filed "like notice" of that cancellation with the Commissioner of Banking and Insurance (Commissioner) by using an electronic file transfer protocol (FTP) established by the Compensation Rating and Inspection Bureau (CRIB). The "like notice" that was transmitted electronically by NJM on August 15, 2003, notified CRIB that the cancellation of Milek's policy was intended to be effective as of September 5, 2003.

After receiving notice from the Division of Workers' Compensation that Sroczynski sought coverage for his February 28, 2004 injury, NJM filed a motion to be relieved of any responsibility for providing coverage, arguing that it had canceled Milek's policy effective September 5, 2003, long before Sroczynski was injured.

NJM's motion was opposed by Sroczynski and by the Uninsured Employers Fund (UEF), the entity which would be responsible for paying workers' compensation benefits to Sroczynski were NJM's motion to be granted. The judge of compensation also permitted Robert Wood Johnson University Hospital (hospital) to intervene in light of the considerable medical bills that resulted from medical care it rendered to Sroczynski after his injury.

The judge of compensation set the matter down for a plenary hearing. The only witness who testified was Robert Murray, an assistant vice-president of NJM. Murray testified that NJM sent a notice of cancellation of the policy to Milek Construction, with an effective cancellation date of September 5, 2003, by certified mail, as required by N.J.S.A. 34:15-81(a). He further explained that NJM had complied with N.J.S.A. 34:15-81(b), which requires an insurer to provide "like notice" to the Commissioner whenever it has sent a notice of cancellation to an insured. In his testimony describing NJM's procedure for serving the "like notice" on the Commissioner, Murray explained that initially NJM enters into its own computer system data including the employer's name, the policy number, the "reason code" for cancellation, the date of actual cancellation and the effective date of such cancellation.

Murray further explained that this information is then electronically transferred through NJM's computer system to CRIB. That was the procedure NJM used on August 15, 2003, when it sent "like notice" to CRIB of NJM's cancellation of the policy issued to Milek. Murray testified that this type of notice of cancellation via transfer through the FTP was expressly authorized by the New Jersey Workers' and Employer's Liability Insurance Compensation Manual (Manual). He explained that although this transfer to CRIB through the FTP satisfies the portion of N.J.S.A. 34:15-81(b) that requires the insurer to provide "like notice" to the Commissioner, the FTP does not provide the insurer the opportunity to submit the "certified statement" to the Commissioner, as also required by subsection (b) of the statute. The purpose of the "certified statement" is to certify that notice of cancellation has been sent to the employer. Ongaro v. Country Flooring Enterprs., 382 N.J. Super. 359, 363 (App. Div.), certif. denied, 186 N.J. 604 (2006).

Murray testified that NJM had used the FTP without any problems for "probably ten years." He explained that the FTP sufficiently notifies the Commissioner of the cancellation of an employer's policy and provides the Commissioner with the date the "like notice" was sent to the employer. Murray acknowledged that a "certified statement" of the mailing of such notice is not part of the FTP, and that, to his knowledge, NJM has never sent the certified statement separately to CRIB. ...

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