Workers' Compensation: Insurance Snafu Leaves Trucking Company on the Hook

A New Jersey appellate court held that an insurance company failed to terminate coverage properly, and the injured worker was classified as a special employee.

Termination of Insurance Coverage:

The court found that Hartford Underwriters Insurance failed to properly terminate its workers' compensation insurance policy covering Triple Star Transport. The critical points on this issue were:

1. Under N.J.S.A. 34:15-81, insurers must strictly comply with statutory requirements to cancel workers' compensation policies, given the public policy favoring coverage.

2. Hartford failed to meet the requirement in N.J.S.A. 34:15-81(b) that it file a certified statement with the Bureau of Workers' Compensation affirming proper notice was given to the insured.

3. The court cited Sroczynski v. Milek, which held that the certification must be from someone with personal knowledge and that proper notice was given to ensure "personal responsibility."

4. Hartford's witness who signed the certification (Johnson) admitted he had no personal knowledge of whether cancellation notice was actually mailed to Triple Star.

5. The court found Hartford's procedures inadequate to satisfy the strict compliance required for cancellation under the statute.

Special Employee Status:

The court found that the deceased worker (Urena) was a "special employee" of A&D Freight Logistics, making A&D liable for workers' compensation benefits. Key points:

1. The court applied the three-factor test from Volb v. G.E. Capital Corp. to determine special employment:

a) Contract of hire (express or implied)

b) Work being done is essentially that of the special employer

c) Special employer has the right to control details of the work

2. The court found evidence supporting all three factors, including:

- Lease agreement between A&D and Triple Star

- Urena was hauling exclusively for A&D

- A&D controlled details like delivery times/locations

3. The court also considered additional factors from Vitale v. Schering-Plough Corp.:

- A&D paid Urena's wages

- A&D had the power to terminate the relationship

4. Despite the lease agreement labeling Urena an independent contractor, the court found the evidence supported special employment status.

Conclusion:

The court strictly applied statutory requirements for insurance cancellation, finding Hartford's procedures inadequate. It also broadly interpreted special employment factors to find A&D liable as a special employer, despite contractual language to the contrary. This reflects the court's overall approach of interpreting workers' compensation law liberally to maximize coverage for workers.

Juana Polanco Urena v, A&D Freight Logistics, LLC, A-2302-21 (N.J. Super. Ct. App. Div. 2024)

UNPUBLISHED OPINION. CHECK COURT RULES BEFORE CITING.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

This opinion shall not “constitute precedent or be binding upon any court.” Although it is posted on the

internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

Superior Court of New Jersey, Appellate Division.

Recommended Citation: Gelman, Jon L., Insurance Snafu Leaves Trucking Company on the Hook, www.gelmans.com (07/30/2024) https://workers-compensation.blogspot.com/2024/07/insurance-snafu-leaves-trucking-company.html

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ORDER NOW

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*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (West-Thomson-Reuters). For over five decades, the Law Offices of Jon Gelman 1.973.696.7900
jon@gelmans.com has represented injured workers and their families who have suffered occupational illnesses and diseases.