NJ Supreme Court Holds Electronic Insurance Policy Cancellations Invalid

In a sweeping, decision that may have impact on thousands of cases, the NJ Supreme ruled that an electronic cancellations of a workers’ compensation policies was not in compliance with the statute.

The Court ruled that the NJ Compensation, Rating and Insurance Bureau (CRIB) established a protocol called an FTP transfer to cancel policies by insurance carriers that was not in compliance with the law. NJ CRIB, the rate setting agency in NJ for workers’ compensation premiums, has been under investigative attack and legislative review. Recent legislation increased the governance to include some non-insurance affiliated members.

The NJ Supreme Court held, “…[that 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, carrier also must file a statement certified by an employee that the required notice was provided to the insured.”

“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).”

“… 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.”

Walter Sroczynski v. John Milek (A-68/77-07) December 17, 2008

Click Here: Supreme Court of New Jersey Oral Argument May 5, 2008