(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).
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 12:0l 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 12:0l 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 after November 28, 1987 but on or before December 3, 1987. Moreover, there is no basis in
the record for the Appellate Division's observation that Re-Insurance violated the Plan by failing to use its
best efforts to effect insurance. (pp. 10-12)
3. The matter is remanded to the Division of Workers' Compensation for further proceedings consistent
with this opinion. The Division of Workers' Compensation shall afford Baldino the opportunity to prove at
an evidentiary hearing that payment of the renewal deposit premium was made prior to the date of
Romanny's injury and that, pursuant to the Plan, Re-Insurance was required to issue a renewal policy on or
before December 7, 1987. Absent such proof, the Division shall enter judgment dismissing the claim against
Re-Insurance. (p. 12)
Judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Division
of Workers' Compensation for further proceedings consistent with this opinion.
CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI and
COLEMAN join in JUSTICE STEIN's opinion.
SUPREME COURT OF NEW JERSEY
A-
16 September Term 1995
GINO ROMANNY,
Petitioner,
v.
STANLEY BALDINO CONSTRUCTION
CO.,
Respondent-Respondent,
v.
NEW JERSEY RE-INSURANCE CO.,
Appellant.
Argued September 12, 1995 -- Decided December 5, 1995
On certification to the Superior Court,
Appellate Division.
Francis T. Giuliano argued the cause for
appellant.
John J. Baldino argued the cause for
respondent.
The opinion of the Court was delivered by
STEIN, J.
This appeal presents a challenge to the determination of the
Division of Workers Compensation that New Jersey Re-Insurance Co.
(Re-Insurance) must provide workers' compensation coverage for
injuries sustained by an employee of Stanley Baldino Construction
Co. (Baldino). The employee, Gino Romanny (Romanny), was injured
after the expiration of Baldino's initial policy but before the
effective date of Baldino's renewal policy. The parties
submitted conflicting affidavits to the workers' compensation
judge concerning the timeliness of Baldino's mailing of the
renewal deposit premium. Re-Insurance asserted that the renewal
premium was not received until December 9, 1987. Accordingly,
Re-Insurance renewed Baldino's policy on December 9, 1987, two
days after the accident that gave rise to the employee's claim
for compensation benefits. Baldino claimed that its payment of
the premium was timely. Without an evidentiary hearing, the
workers' compensation judge determined that Re-Insurance was
required to provide coverage.
In an unreported opinion, the Appellate Division affirmed
the order mandating coverage, concluding that the carrier had
violated the "letter and spirit" of the New Jersey Workers'
Compensation Plan (Plan). See N.J.S.A. 34:15-89. Specifically,
the Appellate Division noted that Re-Insurance had demanded
payment of the renewal premium by November 28, 1987, five days
prior to the initial policy's expiration date, whereas the Plan
requires renewal if the appropriate premium is paid at any time
prior to the renewal date. Noting that the carrier had not
reminded the insured of the impending lapse between November 28
and December 3, 1987, the Appellate Division concluded that Re-Insurance had attempted to "shed the risk," rather than use its
"best efforts to effect insurance." We granted Re-Insurance's
Petition for Certification,
142 N.J. 448 (1995).
We extract our summary of the facts from the certifications submitted by the parties to the Division of Workers Compensation. Re-Insurance had issued a workers' compensation policy to 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 its policy for an annual premium of $16,427, and informing Baldino that coverage would lapse unless a "deposit premium" (equal to one-half the annual premium) was received by November 28, 1987. The renewal quotation contained this statement:
The captioned Workers' Compensation policy will expire at 12: 01 A.M. on 12/03/87. If required, a renewal policy will be issued provided the deposit premium is received in this office prior to the indicated due date. * * * IMPORTANT NO FURTHER REQUESTS WILL BE SENT FOR THE DEPOSIT PREMIUM QUOTED ABOVE AND NO POLICY WILL BE ISSUED UNLESS THE FULL DEPOSIT PREMIUM IS PAID. PLEASE BE GUIDED ACCORDINGLY.
Because Re-Insurance did not receive Baldino's deposit premium by
December 3, 1987, it issued on that date a notice to Baldino
stating that the deposit premium had not been received, that the
prior policy expired at 12:01 a.m. on December 3, 1987, and that
"no renewal coverage is in effect." On December 7, 1987, Romanny
sustained the injury that led to his filing of a workers'
compensation claim.
The parties sharply dispute the facts concerning payment of
the renewal deposit premium. According to the certification
filed by Baldino, on November 26, 1987, it mailed to Re-Insurance
a check dated November 26, 1987 and numbered 1775 for $8,214, the
amount of the deposit premium on the renewal policy. On an
unspecified date, Baldino mailed a second check to Re-Insurance,
also dated November 26, 1987, and numbered 1776, in the amount of
$11,903 and representing the balance due on the prior policy
calculated on the basis of an audit. Baldino's certification
alleged that on December 8, 1987, its bookkeeper received the
notice from Re-Insurance that the deposit premium on the renewal
policy had not been received. She asserted that she telephoned
Re-Insurance and was instructed to stop payment on the deposit
premium check and issue a new check. The bookkeeper's
certification alleges that on December 8, 1987, she stopped
payment on the renewal premium check (and apparently on the check
for the audit premium as well), and on the same day sent
replacement checks numbered 1782 and 1783, in the same amounts as
the original checks, to Re-Insurance by Federal Express. Baldino
asserts that it received back the original checks from Re-Insurance on December 11, 1987.
According to Re-Insurance's certifications and briefs, it
received from Federal Express the two replacement checks numbered
1782 and 1783 on December 9, 1987, and also received on that day
the initial renewal deposit premium check in an envelope
postmarked December 8, 1987. Re-Insurance received the initial
audit premium check on December 10, 1987, in an envelope
postmarked December 9, 1987. Because Re-Insurance's practice was
to effect 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. The Plan
authorizes insurers to defer the effective date of renewal
insurance until 12:01 a.m. on the day following receipt of
payment, which would have permitted Re-Insurance to issue the
renewal policy effective December 10, 1987. New Jersey Workers'
Compensation & Employers' Liability Insurance Manual, Part Three,
§ 14, ¶ 11 (Jan. 1, 1981). Because 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.
In the workers' compensation claim proceeding initiated by
Romanny, Baldino asserted a claim for coverage against Re-Insurance. The workers' compensation judge denied Re-Insurance's
motion to dismiss Baldino's claim, concluding on the basis of the
conflicting certifications that the "equities of the case"
required Re-Insurance to provide coverage. Re-Insurance's motion
for reconsideration of the coverage determination also was
denied.
Although the Appellate Division acknowledged that a
testimonial hearing ordinarily would have been required to
ascertain the credibility of Baldino's assertion that its mailing
of the renewal premium was timely, that court determined that Re-Insurance's conduct in respect of the renewal policy violated
"both the letter and spirit of the Plan," and ordered Re-Insurance to provide coverage for Romanny's claim irrespective of
Baldino's alleged delay in forwarding the renewal deposit
premium. In the Appellate Division's view, Re-Insurance's notice
requiring payment of the renewal deposit premium on November 28,
1987, five days prior to the initial policy's expiration date,
would have been inconsistent with the Plan unless Re-Insurance
also had sent a reminder notice during the five days to alert the
insured to the pending lapse. Because no reminder notice was
sent, the court viewed Re-Insurance's conduct as an impermissible
attempt to "shed the risk," in conflict with its overriding duty
under the Plan to use its best efforts to effectuate insurance
coverage.
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. Pursuant to N.J.S.A. 34:15-71, every employer, except public entities, must insure its potential workers' compensation liability with an authorized insurance company, N.J.S.A. 34:15-78, unless the employer complies with the stringent self-insurance requirements prescribed by N.J.S.A. 34:15-77. Proof of compliance with the obligation to maintain workers' compensation insurance shall be filed by employers on demand of the Commissioner of Insurance, N.J.S.A. 34:15-73. An employer that fails to obtain insurance or to comply with the self-insurance requirement commits a crime of the fourth degree
and, if a corporation, its president, secretary and treasurer are
liable personally for the benefits not safeguarded by insurance.
N.J.S.A. 34:15-79. A non-complying employer is also subject to
fines of $1000 for each ten-day period of non-compliance. Ibid.
Moreover, employers that obtain insurance coverage remain liable
to their injured workers until the required benefits have been
paid. N.J.S.A. 34:15-82. Accordingly, the statutory scheme is
designed to guarantee that workers receive compensation for their
work-related injuries by imposing on employers the non-delegable
obligation to maintain insurance coverage or to comply with the
statute's strict self-insurance standards.
Reflecting that statutory mandate, the New Jersey Workers'
Compensation Plan, compiled by the Compensation Rating and
Inspection Bureau pursuant to N.J.S.A. 34:15-89, sets forth
procedures designed to secure the timely renewal of workers'
compensation insurance policies. The Plan provides:
It shall be the obligation of the insurance
company to arrange to afford renewal
insurance for each employer insured by it in
accordance with the provisions of this Plan.
Approximately thirty days prior to the
renewal date, the insurance company shall
arrange for the particulars incident to the
renewal of the insurance and provided the
deposit premium is paid by the employer prior
to the renewal date, the renewal insurance
shall be issued without lapse.
In the event that the deposit premium is not
paid prior to the renewal date, the insurance
company is authorized to defer the effective
date of the renewal insurance until 12:01
A.M. on the day following receipt of payment.
If insurance is not effected within sixty days of expiration the insurance company
shall notify the Rating Bureau and furnish
complete particulars of its efforts to effect
insurance. The Rating Bureau shall inform
the employer and designate producer, if any,
and in the absence of premium payment leading
to the issuance of insurance shall relieve
the insurance company of any further
responsibility.
[New Jersey Workers' Compensation &
Employers' Liability Insurance Manual, Part
Three, § 14, ¶ 11.]
Thus, under the 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.
Our case law concerning renewal of liability and casualty
insurance, as well as workers' compensation insurance,
acknowledges the significant responsibility imposed on insurers
to afford timely notice of a policy's expiration and of the
prerequisites to renewal:
On the other hand, procedures concerning
renewal offers and nonrenewal notices
recognize the fact that insurance policies
afford coverage only for a specified period
of time and that coverage will cease unless
the policy is renewed. In order to prevent
"lapses in coverage" resulting from
"oversight by the insured" statutory and
regulatory provisions exist requiring
insurance companies to notify the insured
that the policy period is about to end but
that coverage will continue if the premium is
paid by a certain date (a renewal offer), or
that the policy period is about to end and
the insured does not intend to renew the
policy (a notice of nonrenewal).
[Lopez v. New Jersey Auto. Full Ins.
Underwriting Ass'n,
239 N.J. Super. 13, 19-20
(App. Div. 1990).]
See also Meric Trucking & Leasing Co. v. Philip Lehman Co.,
247 N.J. Super. 261, 265 (App. Div. 1991) (holding eighty-nine day
notice of non-renewal of workers' compensation policy complies
with Workers' Compensation Insurance Plan's requirement of not
less than thirty days notice); Barbara Corp. v. Bob Maneely Ins.
Agency,
197 N.J. Super. 339, 345 (App. Div. 1984) (holding that
insurance companies are obligated to notify insureds concerning
expiration of fire insurance policies and concluding that
statutory notice requirement was "designed to minimize lapses in
coverage regardless of whether the cancellation or nonrenewal was
caused by underwriting factors or oversight by the insured").
Consistent with the provisions of the New Jersey Workers'
Compensation Plan, our case law recognizes that an insurer that
provides timely notice of renewal is not obligated to renew the
policy if the renewal premium is not paid. See Cervone v. New
Jersey Auto. Full Ins. Underwriting Ass'n,
239 N.J. Super. 25, 27
(App. Div. 1990); Lopez, supra, 239 N.J. Super. at 19-20, 22;
Insinga v. Hegedus,
231 N.J. Super. 562, 566-67 (App. Div. 1989);
cf. Bright v. T & W Suffolk, Inc.,
268 N.J. Super. 220, 224-27
(App. Div. 1993) (holding that insured's failure to make timely
payment of renewal deposit premium on workers' compensation
policy did not preclude coverage of post-expiration claim where
insurer failed to provide insured with statutory notice of
cancellation and failed to demonstrate use of "best efforts to
effect insurance").
Our review of this sparse record persuades us that the Appellate Division erred in concluding that Re-Insurance failed to comply with the Plan's requirement concerning renewals of workers' compensation policies. That conclusion was based primarily on Re-Insurance's renewal quotation requiring payment of the renewal deposit premium on or before November 28, 1987, five days earlier than the policy expiration date. Because Re-Insurance did not provide Baldino with a "reminder" during the five days between November 28 and December 3, 1987, the Appellate Division determined that the acceleration of the renewal premium due date constituted an attempt by the carrier to "shed the risk."
In our view, the establishment of a due date in the renewal quotation that precedes the policy expiration date by five days undoubtedly constituted a benign effort by the carrier to provide its insured with a protective cushion in order to avoid an inadvertent non-renewal, and not a calculated attempt by the insurer to avoid renewing the policy. The Plan does not prohibit insurers' use of a slightly accelerated renewal premium payment date. It merely requires that carriers "approximately thirty days prior to the renewal date . . . arrange for the particulars incident to the renewal of the insurance," and also mandates that
the renewal policy issue without lapse if the renewal premium is
paid prior to the policy expiration date. New Jersey Workers'
Compensation & Employers' Liability Insurance Manual, Part Three,
§ 14, ¶ 11. Nothing in this record remotely suggests that
Baldino's policy would not have been renewed if the deposit
premium had been paid after November 28 but on or before December
3, 1987. As noted, when Re-Insurance eventually received the
renewal deposit premium on December 9, 1987, it reinstated the
policy as of 12:01 a.m. on that day although the Plan permitted
Re-Insurance to reinstate the policy on the following day. Supra
at ___ (slip op. at 4). Moreover, we find no basis in this
record for the Appellate Division's observation that Re-Insurance
violated the Plan by failing to use its "best efforts to effect
insurance." To the contrary, the carrier provided its insured
with a timely renewal quotation, notified the insured immediately
when the policy expired because the renewal deposit premium had
not been received, and reinstated the policy immediately on
receipt of the renewal deposit premium.
We acknowledge the strong public policy favoring
uninterrupted workers' compensation coverage for all employers as
well as the principle that insurance companies must comply
strictly with all statutory and regulatory requirements relating
to cancellation or non-renewal of such policies. See Miller v.
Reis,
189 N.J. Super. 437, 444 (App. Div. 1983). We are
persuaded, however, that this record reveals no failure by Re-Insurance to comply fully with the statutory and regulatory
mandates concerning renewal of workers' compensation policies.
We reverse the judgment of the Appellate Division and remand the matter to the Division of Workers' Compensation for further proceedings consistent with this opinion. The Division shall afford Baldino the opportunity to prove at an evidentiary hearing that payment of the renewal deposit premium was made prior to the date of Romanny's injury and that pursuant to the Plan Re-Insurance was required to issue its renewal policy on or before December 7, 1987. Absent such proof, the Division shall enter judgment dismissing the claim against Re-Insurance.
CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, POLLOCK, O'HERN,
GARIBALDI and COLEMAN join in JUSTICE STEIN's opinion.
NO. A-16 SEPTEMBER TERM 1995
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
GINO ROMANNY,
Petitioner,
v.
STANLEY BALDINO CONSTRUCTION
CO.,
Respondent-Respondent,
v.
NEW JERSEY RE-INSURANCE CO.,
Appellant.
DECIDED December 5, 1995
Chief Justice Wilentz PRESIDING
OPINION BY Justice Stein
CONCURRING OPINION BY
DISSENTING OPINION BY