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Employer Waived Its Objection to Policy Cancellation by Waiting Seven Years before Raising Issue of Proper Cancellation

By on May 8, 2015 in Key Defenses with 0 Comments

Janice Davis was injured on April 23, 2007 in a work-related accident.  She filed a claim petition promptly against Yassien Mobility Assistance & Ambulance, Inc., her employer.  On October 1, 2007, Yassien filed an answer stating that it had no insurance for workers’ compensation.  The Uninsured Employers’ Fund (UEF) was joined in the matter as an additional party.

Yassien had previously obtained workers’ compensation insurance from Zurich American Insurance Company, which cancelled coverage in March 2006.  The accident happened over a year after the cancellation.

Subsequent to these events, the Supreme Court of New Jersey held that cancellation of insurance policies will only be upheld if all aspects of the statute are strictly followed.  N.J.S.A. 34:15-81 requires that the notice of cancellation be filed in the Office of the Commissioner of Banking and Insurance, together with a certified statement that the notice provided for in the statute has been given.  The Supreme Court of New Jersey in Sroczynski v. Milek, 197 N.J. 36 (2008) stated that even a minor deviation such as not filing the certified statement will void the cancellation.

In this case, Zurich did not file the certified statement required under N.J.S.A. 34:15-81, but Yassien failed to argue this issue until 2013.  The workers’ compensation case dragged on for many years until Yassien on February 9, 2013 filed a motion to amend its answer to the claim petition to join Zurich as an additional party.  This was the first time Yassien formally contended that Zurich failed to properly cancel its policy in 2006.

The Judge of Compensation ruled in favor of Yassien and held that Zurich failed to properly cancel the policy and would therefore have to pay the workers’ compensation claim.  Zurich appealed and argued that Yassien waited far too long to raise this issue — seven years, in fact.  The Appellate Division reversed and held that Zurich was correct in arguing that Yassien waived its argument for improper cancellation by waiting seven years.

The Appellate Division reasoned that it would not be fair to carriers if employers could challenge proper cancellation many years after the cancellation occurred.  The Court noted that Yassien did not raise the improper cancellation argument in 2007 or 2008 before the Sroczynski decision came down.   The Court suggested that if Yassien had raised this issue in 2007 or 2008, before the Sroczynski case had been decided, its position would have been stronger.  By waiting until 2013 to raise the improper cancellation issue for the first time, Yassien waived its right to challenge the cancellation.

The case can be found at Davis v. Yassien Mobility Assistance & Ambulance, Inc., A-0356-14T3 (App. Div. May 5, 2015).

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John H. Geaney

About the Author

About the Author:

John H. Geaney, a shareholder and co-chair of Capehart Scatchard's Workers' Compensation department, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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