Walter Sroczynski v. John Milek

SUPREME COURT CASES

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State: New Jersey

Docket No: A-68/77-07

Case Date: 12/17/2008

SYLLABUS

(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).

Walter Sroczynski v. John Milek (A-68/77-07)

Argued May 5, 2008 -- Decided December 17, 2008

PER CURIAM

The issue in this appeal is whether a workers’ compensation insurance carrier satisfied or substantially complied with the statutory requirements set forth in N.J.S.A. 34:15-81 for cancelling a policy, by its use of the electronic file transfer protocol (FTP) established by the New Jersey Compensation Rating and Inspection Bureau (CRIB) to transmit notice of cancellation to the New Jersey Commissioner of Banking and Insurance.

Under N.J.S.A. 34:15-81, to cancel workers’ compensation coverage, the insurance carrier must send notice of cancellation to the employer by certified mail. It also must file with the Commissioner “like notice” and a “certified statement” that the carrier provided the required notice to the employer. N.J.S.A. 34:15-89 provides that CRIB is responsible for establishing rules and regulations for workers’ compensation insurance. The Commissioner supervises CRIB’s actions, including the adoption of the rules contained in CRIB’s Workers’ Compensation and Employers’ Liability Insurance Manual (the Manual). The Manual, which incorporates by reference all of the relevant statutes, authorizes carriers to submit cancellation notices through CRIB’s FTP system. That system permits only the transfer of data, not documents.

New Jersey Manufacturers Insurance Company (NJM) issued a workers’ compensation and employer’s liability policy to John Milek Construction (Milek) covering the period from May 6, 2003 to May 6, 2004. In August 2003, NJM sent Milek a certified mail notice of cancellation for nonpayment of premiums. NJM also sent notice of the cancellation to the Commissioner, using the FTP established by CRIB. In February 2004, Walter Sroczynski, an employee of Milek, was injured on the job. In March 2004, he filed a claim with the Division of Workers’ Compensation.

NJM moved to be relieved of responsibility for coverage, arguing that it had properly canceled Milek’s policy six months earlier. Sroczynski and the Uninsured Employer’s Fund (UEF) opposed NJM’s motion. The Judge of Compensation ruled that NJM failed to cancel the policy because NJM did not file a “certified statement” when it transmitted data using the FTP. The judge also held that the Manual does not relieve a carrier from its obligation to certify the information, and that strict compliance with the cancellation statute was necessary to avoid allowing a carrier to evade its responsibilities.

The Appellate Division affirmed. 396 N.J. Super. 248 (2007). NJM had argued that because it complied with the Manual, it complied with the statute. The panel rejected NJM’s argument because it would require the court to ignore the “certified statement” portion of the statute and a key provision of the Manual requires compliance with all sections of the workers’ compensation statutes. The panel also found that the case does not satisfy the purpose of the substantial compliance doctrine, which is to “avoid the harsh consequences that flow from technically inadequate actions that nonetheless meet a statute’s underlying purpose.” Finally, the panel awarded counsel fees and costs to Sroczynski and the UEF.

The Supreme Court granted NJM’s motion for leave to appeal from the judgment and the award of attorney’s fees. 192 N.J. 591 (2007); 193 N.J. 272 (2007).

HELD: A carrier does not satisfy N.J.S.A. 34:15-81 merely by transmitting electronic notice of cancellation of coverage to the Commissioner by way of the FTP. The statute clearly requires that to effectuate the cancellation, a carrier also must file a statement certified by an employee that the required notice was provided to the insured.

1. The language of N.J.S.A. 34:15-81 is clear, requiring carriers to file a certified statement with the Commissioner to effectuate the cancellation of coverage. Although CRIB could create an alternate mechanism by which insurers could comply with the statute, it could not adopt a protocol that allows the cancellation of coverage without submission of some version of the statutorily required certification. Use of the FTP system to transmit data about policy cancellations, without any accompanying certification, cannot be effective in light of the unambiguous demands of N.J.S.A. 34:15-81. (p. 8)

2. This case does not satisfy the purposes of the substantial compliance doctrine. The Legislature commanded that the insurer provide to the Commissioner a certification by an employee attesting to the truthfulness of the fact that proper notice was sent to the insured. The purpose of that provision was to place personal responsibility on an employee of the insurer to assure that proper notice of cancellation was given and to require that employee to certify to that fact, recognizing the legal implications of a false certification. Providing electronic information to the Commissioner, without a certification, completely defeats the notion of personal responsibility that the certification provision was intended to secure. It was not simply a technical misstep. (p. 8-9)

3. Although the industry acted in good faith in its approach to the issue in reliance on CRIB’s confusing advice, the fact remains that the clear requirements of N.J.S.A. 34:15-81 were not satisfied, nor was substantial compliance effectuated. This is not a new rule of law to be applied prospectively; rather, the Court has merely confirmed the meaning of the clear statute. Nevertheless, the Court is concerned that the decision that the FTP system has been ineffective to achieve cancellation will cast doubt on thousands of policy cancellations in spite of the fact that they were never challenged. Thus, Sroczynski and any other party who previously raised the notice issue should be granted relief from the improper cancellations, but those cancellations that were never challenged should stand because the policyholders waived their right to do so. (p. 9-11)

4. The award of counsel fees to Sroczynski is affirmed. The award of fees to UEF is reversed. The Court’s analysis of Rule 2:11-4(b), Rule 2:11-4(a), and Rule 4:42-9(a)(8) reveals no ground on which to sustain such an award to UEF. (p. 11-12)

The judgment of the Appellate Division is AFFIRMED in part and REVERSED in part.

JUSTICE RIVERA-SOTO filed a separate opinion CONCURRING IN PART and DISSENTING IN PART, in which JUSTICE HOENS joins, expressing the view that in these unique circumstances, driven in large measure by the acts of the statutorily created entity responsible for compliance with the statute, the carrier substantially complied with the admittedly clear and unambiguous statutory requirements for the cancellation of a workers’ compensation insurance policy; and, thus, judgment should be entered in favor of the carrier.

CHIEF JUSTICE RABNER and JUSTICES LONG, ALBIN, and WALLACE join in the Court’s opinion. JUSTICE RIVERA-SOTO has filed a separate opinion, concurring in part and dissenting in part, in which JUSTICE HOENS joins. JUSTICE LaVECCHIA did not participate.

SUPREME COURT OF NEW JERSEY

A-68/ 77 September Term 2007

WALTER SROCZYNSKI,

Petitioner-Respondent,

JOHN MILEK, t/a JOHN MILEK CONSTRUCTION,

Respondent,

and

NEW JERSEY MANUFACTURERS INSURANCE COMPANY,

Respondent-Appellant,

and

UNINSURED EMPLOYER’S FUND,

Respondent-Respondent,

and

ROBERT WOOD JOHNSON UNIVERSITY HOSPITAL,

Intervenor-Respondent.

Argued May 5, 2008 – Decided December 17, 2008

On appeal from the Superior Court, Appellate Division, whose opinion is reported at 396 N.J. Super. 248 (2007).

Michael J. Marone argued the cause for

appellant (McElroy, Deutsch, Mulvaney &

Carpenter, attorneys; Mr. Marone and Richard

J. Williams, Jr., of counsel and on the

briefs).

David Hoffman argued the cause for respondent Walter Sroczynski (Wysoker, Glassner, Weingartner, Gonzalez & Lockspeiser, attorneys).

William L. Boyan argued the cause for respondent Uninsured Employer’s Fund.

Donna Marie Montano argued the cause for intervenor-respondent Robert Wood Johnson University Hospital (Celentano, Stadtmauer & Walentowicz, attorneys; Steven Stadtmauer, of counsel and on the briefs).

Jerome J. Graham, Jr., submitted a brief on

behalf of amici curiae Property Casualty

Insurers Association of America and

Insurance Council of New Jersey (Graham

Curtin, attorneys; Mr. Graham and George C. Jones, on the brief).

PER CURIAM

New Jersey Manufacturers Insurance Company (NJM) issued a standard Workers’ Compensation and Employer’s Liability Insurance Policy to John Milek Construction (Milek) covering the period from May 6, 2003 to May 6, 2004. Milek ceased making payments on the policy after the initial premium was satisfied. As a result, on August 14, 2003, NJM sent Milek a notice of cancellation by certified mail. On August 15, 2003, NJM notified the New Jersey Commissioner of Banking and Insurance of the cancellation, using an electronic file transfer protocol (FTP) established by the New Jersey Compensation Rating and Inspection Bureau (CRIB).1

On February 28, 2004, petitioner, Walter Sroczynski, an employee of Milek, sustained a work-related injury. On March 17, 2004, Sroczynski filed a claim with the Division of Workers’ Compensation, seeking workers’ compensation benefits.

NJM moved to be relieved of responsibility for providing coverage, arguing that it had properly canceled Milek’s policy almost six months earlier. Opposing NJM’s motion was Sroczynski and the Uninsured Employer’s Fund (UEF). Because of the significant medical costs incurred in caring for Sroczynski after his injury, the trial judge also granted Robert Wood Johnson University Hospital (RWJH) intervenor status.

At issue in the case was whether NJM satisfied N.J.S.A. 34:15-81, which sets forth the specific requirements for cancellation of a workers’ compensation policy of insurance:

Any contract of insurance issued by a stock company or mutual association against liability arising under this chapter may be canceled by either the employer or the insurance carrier within the time limited by such contract for its expiration.

No such policy shall be deemed to be canceled until:

a. At least ten days’ notice in writing of the election to terminate such contract is given by registered mail by the party seeking cancellation thereof to the other party thereto; and

b. Until like notice shall be filed in the office of the commissioner of banking and insurance, together with a certified statement that the notice provided for by paragraph “a” of this section has been given; and

c. Until ten days have elapsed after the filing required by paragraph “b” of this section has been made.

The provisions “b” and “c” of this section shall not apply where the employer has replaced the contract to be canceled by other insurance, and notice of such replacement has been filed with the Commissioner of Banking and Insurance. In such event the notice required by provision “a” may, if given by the insurance carrier, recite as the termination date the effective date of the other insurance, and the contract shall be terminated retroactively as of that date. No notice of cancellation of any such contract need be filed in the office of the Commissioner of Banking and Insurance where the employer is not required by any law of this State to effect such insurance.

[N.J.S.A. 34:15-81 (emphasis added).]2

At a plenary hearing, the Judge of Compensation heard testimony from an assistant vice president of NJM. He testified that NJM was aware of the procedures required by N.J.S.A. 34:15-81 to cancel workers’ compensation coverage and that the notice of cancellation sent to Milek by certified mail satisfied the statute. He also claimed that NJM complied with the “like notice” and “certified statement” requirements of N.J.S.A. 34:15-81(b) by the electronic transfer to CRIB.

The Judge of Compensation ruled that NJM failed to cancel the policy because, as NJM acknowledged, it did not file a written “certified statement” when it transmitted data by way of the FTP. Further, the judge discounted NJM’s reliance on the CRIB Manual because it “outlines the manner in which the notice is to be filed and in no way relieves the carrier from its obligation to certify the information.” Finally, based on the public policy favoring the provision of workers’ compensation insurance, the judge found that strict compliance with the cancellation statute was necessary to avoid allowing a carrier to evade its responsibilities and “deny the insured worker the recovery promised to him by the law.”

NJM appealed, arguing that its cancellation of Milek’s policy satisfied the statute and, alternatively, that the doctrine of substantial compliance applies. In rejecting those arguments, the panel focused exclusively on the purpose and meaning of the “certified statement” requirement of N.J.S.A. 34:15-81(b) and declared that NJM’s argument would require it “to ignore a portion of the statutory scheme that the Legislature believed was important, and would in effect constitute a rewriting of the statute.” Sroczynski v. Milek, 396 N.J. Super. 248, 256 (App. Div. 2007). The panel also rejected NJM’s argument that because NJM complied with the CRIB Manual, it complied with the statute, stating “NJM’s argument ignores one of the key provisions of the manual[,]” id. at 255, which requires compliance with all sections of the workers’ compensation statutes. Further, the panel rejected NJM’s substantial compliance argument, concluding that the case does not satisfy the purpose of the substantial compliance doctrine, which is to “avoid the harsh consequences that flow from technically inadequate actions that nonetheless meet a statute’s underlying purpose.” Galik v. Clara Maass Med. Ctr., 167 N.J. 341, 352 (2001). Finally, it awarded counsel fees and costs to Sroczynski and the UEF.

We granted NJM’s motion for leave to appeal from the judgment and the award of attorneys’ fees to Sroczynski and to the UEF. 192 N.J. 591 (2007); 193 N.J. 272 (2007). We also granted leave to the Property Casualty Insurers Association of America (PCIA) and the Insurance Council of New Jersey (ICNJ) to participate as amici curiae.

Before us, the parties maintain the positions they advanced below. NJM argues that it complied, or at least complied substantially, with the statute, and that any contrary holding would, at best, be a new rule of law requiring purely prospective application, and that counsel fees are not authorized. Amici PCIA and ICNJ side with that view.

Sroczynski and the UEF counter that the statute was not satisfied because of the absence of a “certified” statement, that the CRIB Manual specifically incorporates the statutory requirements, and that this case does not involve the kind of technical slip-up that substantial compliance was meant to address. In addition, they urge us to conclude that their interpretation is not a new rule of law and that counsel fees are authorized. Amicus RWJH supports that view.

We have carefully reviewed this record in light of the claims advanced and, except with respect to the award of counsel fees to the UEF, have concluded that there is no warrant for our intervention. We therefore affirm the judgment of the Appellate Division in Sroczynski’s favor substantially for the reasons expressed in Judge Baxter’s opinion.

We add the following. The language of N.J.S.A. 34:15-81 is clear and unambiguous, allowing for no interpretation other than that filing a certified statement with the Commissioner is a prerequisite to effectuating the cancellation of coverage. In light of the clarity of that part of the statute, CRIB lacked the authority to relieve the insurers of their obligation to comply with the requirement for filing a certification. Although CRIB could, consistent with its legislative mandate, create an alternate mechanism by which insurers could comply with the statute, it could not adopt a protocol that operated to allow the cancellation of coverage without submission by the insurers of some version of the statutorily required certification. In short, the Appellate Division correctly concluded that the use of the FTP system to transmit data about policy cancellations, without any accompanying certification, cannot be effective in light of the clear and unambiguous demands of N.J.S.A. 34:15-81(b).

Regarding substantial compliance, although we might not have parsed the elements of the doctrine exactly as the Appellate Division did, we too have concluded that this is not a case that satisfies the policies that inform the substantial compliance doctrine. Here, the Legislature did not simply require notice to the Commissioner but also commanded that the insurer provide a certification by an employee attesting to the truthfulness of the fact that proper notice was afforded the insured. Although the legislative history of the Act is sparse, it seems obvious that the purpose of that provision was to place personal responsibility on an employee of the insurer to assure that proper notice of cancellation was given and to require that employee to certify to that fact, recognizing the legal implications of a false certification. The electronic provision of information to the Commissioner, without a certification, completely defeats the notion of personal responsibility that the certification provision was intended to secure. It was, thus, not simply a technical misstep. As such, the insurer could derive no comfort from a substantial compliance analysis which is meant to ameliorate the harsh consequences of actions that meet the spirit of a law but technically fall short.

To be sure, the industry acted in good faith in its approach to the issue in reliance on CRIB’s, at best, confusing advice. Nevertheless, the fact remains, as the Appellate Division pointed out, that the clear requirements of N.J.S.A. 34:15-81 were not satisfied, nor was substantial compliance effectuated.

NJM and the amici argue that such a decision constitutes a new rule of law which should be applied prospectively. We disagree. In ruling, we have merely confirmed the meaning of a clear statute. Thus, there is no warrant for a retroactivity analysis. State v. Burstein, 85 N.J. 394, 403 (1981) (holding retroactivity analysis relevant only in cases involving departure from existing law). Where a ruling is not a break from the past, we construe it as “one that has always applied.” State v. Calbert, 190 N.J. 14, 22 (2007).

Nevertheless, we are concerned over the amici’s argument that the practical effect of invalidating all prior cancellations with respect to which notice was electronically afforded would be to create chaos in the workers’ compensation insurance industry. Although the magnetic tape option allowed by CRIB does permit transmission of certifications as the statute requires, many insurers have been relying on the FTP system and therefore have not complied with that part of the statute at all.3 The decision that the FTP system has been ineffective to achieve cancellation thus will cast doubt on thousands of policy cancellations in spite of the fact that they were never challenged. Had those cancellations been challenged in a timely fashion, the insurer might have been able to reconstruct the records and provide an employee’s certification. Whether that would be possible now seems problematic. That is an untenable state of affairs. Thus, we have concluded that Sroczynski and any other party who previously raised the notice issue should be granted relief from the improper cancellations but that those cancellations that were never challenged should stand because the policyholders waived their right to do so.

That outcome is not perfect, but it rewards those who pursued their legal options; leaves those who waived a challenge with the results of their waiver; and does not throw into chaos an industry that adopted a mistaken plan of action in good faith reliance on official misinformation.

With respect to counsel fees, we affirm regarding the award to Sroczynski. We find no basis on which to conclude that the Appellate Division abused its discretion in its grant of fees to Sroczynski or in the quantum thereof. See R. 2:11-4(a) (incorporating statutory bases for award at trial level, R. 4:42-9(a) thus encompassing N.J.S.A. 34:15-64).

We reach a different conclusion in respect of the Appellate Division’s award of counsel fees to the UEF. Our analysis of R. 2:11-4(b) reveals no ground on which to sustain such an award on an appeal. Although broad in its description of workers’ compensation appeals, the rule suggests that the award of fees is intended for the benefit of the injured worker and thus provides no ground for an award in favor of UEF. See R. 2:11-4(b).

Nor do we find authority in the more general subpart of the Rule which refers to “actions in which an award of counsel fees is permitted by R. 4:42-9(a).” R. 2:11-4(a). That Rule, which allows an award of fees to a successful claimant in actions based on indemnity or liability insurance policies, see R. 4:42-9(a)(6), has no application because the Fund does not qualify as such a successful claimant. See Messec v. USF&G Ins. Co., 369 N.J. Super. 61, 64 (App. Div. 2004) (“Fees should not be awarded [under Rule 4:42-9(a)(6)] when an insurer loses a dispute with another insurer . . . .”).

The only other potentially applicable rule refers to statutes that specifically allow counsel fees, see R. 4:42-9(a)(8). However, there is neither a basis for such an award in the UEF statute (N.J.S.A. 34:15-120.1 to -120.30) nor in the workers’ compensation statute (N.J.S.A. 34:15-64). Lacking a basis in law, we reverse the award of counsel fees to the UEF.

The judgment of the Appellate Division in favor of Sroczynski is affirmed and the award of counsel fees to the UEF is reversed, for the reasons to which we have adverted.

SUPREME COURT OF NEW JERSEY

A-68/ 77 September Term 2007

WALTER SROCZYNSKI,

Petitioner-Respondent,

JOHN MILEK, t/a JOHN MILEK CONSTRUCTION,

Respondent,

and

NEW JERSEY MANUFACTURERS INSURANCE COMPANY,

Respondent-Appellant,

and

UNINSURED EMPLOYER’S FUND,

Respondent-Respondent,

and

ROBERT WOOD JOHNSON UNIVERSITY HOSPITAL,

Intervenor-Respondent.

JUSTICE RIVERA-SOTO, concurring in part and dissenting in part.

On February 28, 2004, Walter Sroczynski was injured while in the employ of John Milek, t/a John Milek Construction (Milek). Two and one-half weeks later, Sroczynski filed a workers’ compensation claim against his employer. Then unknown to Sroczynski, his employer’s workers’ compensation insurance had been cancelled almost six months earlier by New Jersey Manufacturers Insurance Company (NJM), his employer’s workers’ compensation insurance carrier, for non-payment of premiums. In doing so, the workers’ compensation insurance carrier sent a timely certified mail notice of cancellation to its insured -- Sroczynski’s employer – and, in accordance with the then-obtaining protocols, also sent an electronic notice of cancellation to the New Jersey Commissioner of Banking and Insurance.

In this appeal, Sroczynski -- who was a stranger to the transactions between his employer and its workers’ compensation insurance carrier as well as the transactions between that insurance carrier and its State regulators -- acknowledges that the electronic notice of cancellation issued by the workers’ compensation insurance carrier satisfied the notice transmission requirements promulgated by the New Jersey Compensation Rating and Inspection Bureau (CRIB). Sroczynski contends, however, that the electronic notice of cancellation issued by the insurance carrier did not satisfy statutory requirements and, hence, was ineffective. Thus, he claims that he is entitled to workers’ compensation benefits that are greater than what he has received as an uninsured worker from the State’s Uninsured Employer’s Fund (Fund).

The governing statute is clear: N.J.S.A. 34:15-81 requires that, in order to cancel a workers’ compensation insurance policy, the carrier must (1) provide its insured -- the covered employer -- “[a]t least ten days’ notice in writing of the election to terminate such contract . . . by registered mail” and (2) file a “like notice” with the Commissioner of Banking and Insurance, “together with a certified statement that the [statutorily required registered mail] notice [to its insured] has been given[.]” The majority concludes that “[t]he language of N.J.S.A. 34:15-81 is clear and unambiguous, allowing for no interpretation other than that filing a certified statement with the Commissioner is a prerequisite to effectuating the cancellation of coverage.” Ante at ___ (slip op. at 8). That conclusion is unassailable and, to the extent the majority so holds, I concur.

The majority likewise holds that “[i]n light of the clarity of that part of the statute, CRIB lacked the authority to relieve the insurers of their obligation to comply with the requirement for filing a certification.” Ibid. With that conclusion, I also agree. The majority further reasons that “[a]lthough CRIB could, consistent with its legislative mandate, create an alternate mechanism by which insurers could comply with the statute, it could not adopt a protocol that operated to allow the cancellation of coverage without submission by the insurers of some version of the statutorily required certification.” Ibid. Again, I agree. Finally, the majority concludes that “the use of the FTP system to transmit data about policy cancellations, without any accompanying certification, cannot be effective in light of the clear and unambiguous demands of N.J.S.A. 34:15-81(b).” Ibid. Once again, I concur.4

I must part company with the majority in two fundamental but related respects: its rejection of the application of the doctrine of substantial compliance in these circumstances, as well as in its unexplained embrace of the doctrine of waiver to conclude that “Sroczynski and any other party who previously raised the notice issue should be granted relief from the improper cancellations but that those cancellations that were never challenged should stand because the policyholders waived their right to do so.” Id. at ___ (slip op. at 11). In my view, this case presents a textbook set of circumstances that cry out for the application of the doctrine of substantial compliance. In these unique circumstances, driven in large measure, by the acts of the statutorily created entity responsible for compliance with the statute itself, the workers’ compensation carrier substantially complied with the admittedly clear and unambiguous statutory requirements for the cancellation of a workers’ compensation insurance policy. Hence, the almost six-months’ earlier cancellation of the policy at issue here for the non-payment of premiums was effective, requiring that the judgment of the Appellate Division be reversed and that judgment be entered in favor of the workers’ compensation insurance carrier. Therefore, I respectfully dissent.

Much of the majority’s analysis is driven by the abbreviated statement of facts on which it relies. Because a more robust exposition of the facts leads to a better informed view of the issues joined, I present those facts -- which are not disputed -- in greater detail.

At all times relevant to the issues in this appeal, Sroczynski was employed by Milek. NJM, through one of its subsidiaries, issued a Workers’ Compensation and Employers Liability Insurance policy to Milek with an effective policy period of May 6, 2003 to May 6, 2004. Milek paid the initial premium for the coverage, but failed to continue making the premium payments when due. On August 14, 2003, NJM sent Milek a notice of cancellation of the policy by certified mail. The next day, NJM used CRIB’s electronic file transmission protocol -- the FTP system -- to transmit electronic notice of that cancellation, with an effective date of September 5, 2003, to the Commissioner.

Almost six months later, on February 28, 2004, Sroczynski sustained a work-related injury while employed by Milek. A few weeks later, he filed a claim petition in the Division of Workers’ Compensation, seeking benefits. NJM responded to that petition by moving to be relieved of responsibility for covering the claim. NJM asserted that the policy had been cancelled well before Sroczynski’s injury and that it had complied with the statutory notice requirements by using the FTP system to notify the Commissioner of the cancellation. Sroczynski and the Fund opposed NJM’s motion, as did intervenor Robert Wood Johnson University Hospital (the Hospital), where Sroczynski had undergone significant treatment for which the Hospital remained unpaid.

The Judge of Compensation convened a plenary hearing to consider the arguments being advanced. The only witness was an assistant vice president of NJM who testified about the reason for the cancellation of the policy, explained the manner in which Milek was notified, and described the FTP system through which NJM filed its notice of the cancellation with the Commissioner. The Judge of Compensation concluded that the use of the FTP system to transmit the policy cancellation data did not suffice to meet the statute’s command that the carrier submit a “certified statement” that notice had been given to the employer as a prerequisite for cancellation. He therefore concluded that NJM had not cancelled the policy and, thus, denied NJM’s motion to be relieved of any obligations on the claim.

The Appellate Division granted NJM’s motion for leave to appeal and, in a published opinion, affirmed. Sroczynski v. Milek, 396 N.J. Super. 248 (App. Div. 2007). It rejected both NJM’s argument that actual notice of cancellation to Milek met the statute’s essential purposes, id. at 255, and NJM’s alternate contention that it should have the benefit of the doctrine of substantial compliance, id. at 257-59. Thereafter, the panel granted separate motions filed by Sroczynski and the Fund seeking attorneys’ fees.

This Court granted NJM’s motion for leave to appeal from the judgment and the award of attorneys’ fees to Sroczynski, 192 N.J. 591 (2007), and we granted leave to the Property Casualty Insurers Association of America and the Insurance Council of New Jersey to participate as amici curiae. We thereafter granted NJM’s second motion for leave to appeal the award of attorneys’ fees to the Fund, 193 N.J. 272 (2007), as well as NJM’s additional motion for leave to supplement the record with materials relating to the way in which the FTP system operates.

In 1917, New Jersey adopted its Workers’ Compensation Act. L. 1917, c. 178. That legislative enactment included a mechanism to cancel a workers’ compensation insurance policy: it required that the workers’ compensation carrier file a notice of cancellation with the Commissioner of Insurance and serve it on the employer by hand-delivery or registered mail. Id. at Art. I, § 7. In 1937, the Workers’ Compensation Act was amended to eliminate the option of delivery to the employer -- thus requiring written notice only by registered mail -- and to add the requirement at issue in this appeal: that the insurance carrier seeking to cancel workers’ compensation coverage also file a certified statement of compliance with the statutory provision regulating the manner of providing notice of the cancellation to the employer. L. 1937, c. 134, § 1.

Two other provisions of the 1917 Act are relevant to our analysis. First, the 1917 Act included a section that created CRIB, it defined the role CRIB was to play, and set forth the general subjects on which CRIB was to focus its efforts. N.J.S.A. 34:15-89 (codifying L. 1917, c. 178, Art. II, § 1). Second, it required all insurers to become CRIB members in order to remain authorized to issue workers’ compensation coverage. N.J.S.A. 34:15-90 (codifying L. 1917, c. 178, Art. II, § 2).

CRIB publishes the New Jersey Workers’ Compensation and Employers’ Liability Insurance Manual (the Manual), which describes the rules and regulations with which every workers’ compensation carrier in New Jersey must comply. The Manual expresses the general concept that compliance with its provisions does not relieve workers’ compensation carriers of their obligations to comply with the statute. In particular, Part 1, Section 1 of the Manual, titled “Promulgation and Approval of the Manual,” includes a section called “Statutes Read In.” That section purports to incorporate by reference all of the relevant statutes, thus making their requirements a part of the Manual itself.

However, the Manual also includes an Approved Form for Filing Notice of Cancellation by Carrier, known as “Form 116-B.” The version of Form 116-B approved for use by carriers when providing the statutory notice of cancellation during the time period relevant to this matter incorporates a certification by the carrier that “like notice of election to terminate the stated contract of insurance has been given the employer in accordance with [the] requirement[s] of [N.J.S.A.] 34:15-81.”5

In addition to Form 116-B, at all times relevant to this appeal, CRIB authorized carriers to submit cancellation notices by means of electronic transmission. Electronic submission of cancellation information could be made in either of two ways. First, the insurer could comply with its requirement of submitting cancellation notices in the form of a magnetic tape, as long as that tape included the data prescribed in the National Workers Compensation Data Specifications Manual. Second, the Manual provides that “[i]t is also permissible to submit cancellation notices via Electronic File Protocol[,]” or CRIB’s FTP system.6 That system is structured to permit only the transfer of data, allowing the insurer to submit information that identifies the specific policy it intends to cancel, the date when a cancellation notice was sent, and the reason for the cancellation. CRIB’s FTP system, however, cannot accomplish the transmission of documents, including either a completed Form 116-B or a separate certification.

In its 2005 Annual Report, however, CRIB expressed its preference for having insurers use electronic and magnetic tape transmissions, explaining:

Carriers are also encouraged to use policy and statistical electronic and magnetic tape filing methods. The flow of hard copy submissions increases expense costs for the sender and the recipient. Electronic and magnetic tape reporting, on the other hand, improves the timeliness of data submission and, at the same time, enhances the credibility and quality of the data being submitted. Standard national WCIO [Workers Compensation Insurance Organizations] data reporting specifications (WCPOLS [Workers Compensation Policy Reporting Specifications] and WCSTAT [Workers Compensation Statistical Reporting Specifications]) are in place and we are committed to assist any carrier to reduce and eliminate hard copy filings.

On October 9, 2006, after the filing of the complaint in this litigation challenging the adequacy of the FTP system to effectuate a cancellation of a policy, CRIB issued Advisory Bulletin #16. That Bulletin alerted the workers’ compensation carriers that “a question exists” regarding whether cancellation notices submitted by magnetic tape and FTP satisfy the requirements of N.J.S.A. 34:15-81(b). Advisory Bulletin #16 recommended that electronic filing of cancellation notices be accompanied by a transmittal letter containing a certification, in prescribed language, which included the “like notice” statement required by the statute and presumably previously included in Form 116-B.

There is no doubt about what the statute requires for effective cancellation of a policy. Similarly, there is no doubt about the sufficiency of Form 116-B for this purpose. At the heart of this dispute is whether complying with CRIB’s preferred method of transmission of data, through the use of the FTP system, without jointly or separately submitting Form 116-B or a similar writing, satisfies or substantially complies with the statute’s command that a certified statement be filed with the Commissioner. It is to that question that I now turn.

II.

The governing statute, N.J.S.A. 34:15-81, sets forth the specific requirements for cancellation of a workers’ compensation policy of insurance. It provides, in full, that

[a]ny contract of insurance issued by a stock company or mutual association against liability arising under this chapter may be canceled by either the employer or the insurance carrier within the time limited by such contract for its expiration.

No such policy shall be deemed to be canceled until:

a. At least ten days’ notice in writing of the election to terminate such contract is given by registered mail by the party seeking cancellation thereof to the other party thereto; and

c. Until ten days have elapsed after the filing required by paragraph “b” of this section has been made.

[N.J.S.A. 34:15-81 (emphasis supplied).]

Stated plainly, this statute requires two steps in order to validly and effectively cancel a workers’ compensation insurance policy: the carrier must give the employer written notice of the proposed cancellation by a prescribed means, and the carrier also must file with the Commissioner both “like notice” and a certified statement that the employer has been notified as required. Ibid.

CRIB has been designated by the Legislature to promulgate the rules and regulations that will fulfill the statute’s requirements. N.J.S.A. 34:15-89 (providing that CRIB “shall establish and maintain rules, regulations and premium rates for workmen’s compensation and employer’s liability insurance”); N.J.S.A. 34:15-90 (providing that CRIB “shall adopt such rules and regulations for its procedure and provide such income as may be necessary for its maintenance and operation”). While great deference is generally afforded to the actions of administrative agencies in exercising their rulemaking functions, see, e.g., In re Freshwater Wetlands Prot. Act Rules, 180 N.J. 478, 489 (2004); In re Rulemaking, N.J.A.C. 10:82-1.2 & 10:85-4.1, 117 N.J. 311, 325 (1989), CRIB’s status does not necessarily entitle it to that deferential standard of review.

CRIB is not, strictly speaking, an administrative agency, operating instead more in the nature of an extended arm of the insurance industry. See Aetna Ins. Co. v. Trans Am. Trucking Serv., Inc., 261 N.J. Super. 316, 320 n.4 (App. Div. 1993). For example, although the Legislature has given CRIB the authority to establish rules and regulations governing workers’ compensation insurance, N.J.S.A. 34:15-89, those rules are not adopted in conformity with the New Jersey Administrative Procedure Act. See N.J.S.A. 52:14B-1 to -25 (setting forth scheme for regulatory rule-making). Further, once adopted, CRIB’s rules are not published in New Jersey’s Administrative Code, but instead are set forth in the Manual. See, e.g., N.J.S.A. 52:14B-7 (requiring that Director and Chief Administrative Law Judge of the Office of Administrative Law “shall compile, index and publish a publication to be known as the ‘New Jersey Administrative Code,’ containing all effective rules adopted by each agency”). Moreover, although CRIB falls generally under the supervision of the Commissioner, through its appointed chairman, CRIB member insurance companies are responsible for selecting the organization’s officers, committee members, and employees. N.J.S.A. 34:15-90.

There exists an inherent tension between CRIB’s performance of its functions as an administrative agency and its role in protecting the interests of its members. As a result, a review that is more searching than the deferential one usually employed in administrative agency appeals is appropriate. At the same time, because the facts are not in dispute and because the questions presented are purely legal in nature, no deference is owed to the reasoning or conclusions of the Judge of Compensation; review of that decision is de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). With these standards as our guide, I consider the issues presented.

I concur with the majority’s determination that the statute’s language is clear and unambiguous, allowing for no interpretation other than that a filed certified statement is a prerequisite to an effective cancellation of coverage.

Next, in light of the clarity of that part of the statute, CRIB lacked the authority to relieve wholesale the insurers of their obligation to comply with the requirement for filing a certification. This is so because, although we place great weight on “the interpretation of the agency charged with enforcing an act,” In re N.J. Tpk. Auth. v. Am. Fed’n of State, County, & Mun. Employees, Council 73, 150 N.J. 331, 351 (1997) (quoting Merin v. Maglaki, 126 N.J. 430, 436-37 (1992)), we afford no such deference if the “agency’s statutory interpretation is contrary to the statutory language, or if the agency’s interpretation undermines the Legislature’s intent[.]” Ibid.; see also In re Adoption of N.J.A.C. 7:26B, 128 N.J. 442, 450 (1992) (“Our deference does not go so far as to permit an administrative agency under the guise of an administrative interpretation to give a statute any greater effect than is permitted by the statutory language.”). Although CRIB, consistent with its legislative mandate, could have created an alternate mechanism by which insurers could comply with the statute, it was not free to adopt a protocol that operated to cancel coverage without submission by the insurers of some version of the statutorily required certification.

That said, CRIB’s expressed and reasonable preference for electronic filings inadvertently created an impression throughout the industry that use of the FTP methodology would be effective to cancel a policy without simultaneous submission of a separate, written certified statement.7 Under New Jersey’s statutory requirements, CRIB’s preferred system fell short of what is demanded. However, in light of the impression CRIB clearly created -- that compliance with the FTP transmission protocols would equal compliance with the statutory requirements for policy cancellation -- I must turn to whether NJM, relying on CRIB’s instructions, substantially complied with the statute’s requirements.

Relying on, but not discussing, the Appellate Division’s analysis, the majority concludes that, in the circumstances presented, “substantial compliance [was not] effectuated.” Ante at ___ (slip op. at 9). I disagree.

The lengthy history of the doctrine of substantial compliance need not be explored yet again; we recently described it as grounded in ancient English Common Law concepts. See Galik v. Clara Maass Med. Ctr., 167 N.J. 341, 351 (2001). Rather, our focus remains on the essential purpose of the doctrine: “to avoid the harsh consequences that flow from technically inadequate actions that nonetheless meet a statute’s underlying purpose.” Id. at 352. In general, resort to this doctrine has been had in order to permit relief from technical requirements “in a

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