Court Trusts the United States Postal Service
For an insurance contract to exist consideration – premium – must be paid. When an insured fails to pay the premium as required by the policy the insurer had the unquestioned right to cancel the policy it had issued.
State legislatures, like that of the state of New York, attempt to protect people insured from cancellation of insurance policies by insurers for no reason or claims of cancellation only after a loss by requiring a mailing to the insured and proof that the notice of cancellation was mailed to the insured. Invariably, the insured finding he, she or it no longer has insurance, will claim that the notice of cancellation was not received. The burden falls on the insurer to prove it gave proper notice.
In In the Matter of the Claim Of Yerly Osorio v. M & L Express, Inc., and Continental Indemnity Company, c/o Applied Risk Services, Workers’ Compensation Board, 524441, 2017 NY Slip Op 07667, Appellate Division of the Supreme Court of the State of New York (November 2, 2017) the insured’s policy was cancelled for non payment of premium and the insured claimed it was entitled to coverage because the notice was not received.
The insured was found to have coverage and the insurer and employer appealed from the decision of the Workers’ Compensation Board which ruled that the employer’s workers’ compensation carrier was responsible for claimant’s claim.
Claimant Osorio filed a claim for workers’ compensation benefits based on allegations that he injured his head, neck and back in a work accident in July 2014. In its report of the accident, the employer acknowledged that the injuries were work-related. A hearing was held on the issue of whether the employer’s one-time workers’ compensation carrier had effectively canceled the employer’s policy and complied with the notice requirements of Workers’ Compensation Law. A Workers’ Compensation Law Judge determined that the carrier remained liable for claimant’s claim because it had not properly canceled the employer’s policy. The Workers’ Compensation Board affirmed finding that the carrier had produced insufficient proof to establish a nexus between its cancellation notice and its proof of mailing.
The state of New York requires that the statutory elements of cancellation of a workers’ compensation insurance coverage must be strictly observed. Pursuant to Workers’ Compensation Law “[w]hen cancellation is due to non-payment of premiums and assessments, such cancellation shall not be effective until at least  days after a notice of cancellation of such contract, on a date specified in such notice, shall be filed in the office of the chair and also served on the employer.”
The statute further provides that “[s]uch notice shall be served on the employer by delivering it to him, her or it or by sending it by mail, by certified or registered letter, return receipt requested, addressed to the employer at his, her or its last known place of business” (Workers’ Compensation Law § 54 ). The carrier has the burden of establishing its compliance in regard to notice of cancellation of coverage.
At the hearing, the carrier produced a letter providing notice of cancellation of the policy to the employer. The letter was dated January 15, 2014 and notified the employer that the policy was being canceled, due to the nonpayment of premiums, effective January 31, 2014. The insurer produced a record of a “certified mail . . . receipt” from the United States Postal Service (hereinafter USPS) that specified that an item was sent to the employer, and the same receipt contained the notation “eff. 1/31/14.” A USPS “[p]roduct [t]racking & [r]eporting” record reflects that the mailing with the same tracking number as this receipt was signed for by the owner and president of the employer on January 25, 2014. Considered as a whole, the record contains uncontraverted proof that the mailed item was correctly addressed and sent by certified mail, return receipt requested, to the employer.
Further, the notation on the USPS receipt referencing the same effective cancellation date as set forth in the notice of cancellation establishes that the mailed item was that notice. Accordingly, the Board’s determination that the carrier failed to meet its burden of establishing the nexus between its notice of cancellation and its mailing proof is not supported by substantial evidence.
The insurer, by using trackable certified mail, return receipt requested, established that the notice required by the statute was mailed and received by the insured. Why the trial court had trouble finding that evidence sufficient is difficult to understand, but the appellate court made the obvious the rule of law.
© 2017 – Barry Zalma
This article, and all of the blog posts on this site, digests and summarizes cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www.nationalunderwriter.com/ZalmaLibrary The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=214624, or 800-285-2221 which is presently available and “Diminution of Value Damages” available at http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=203226972 Mr. Zalma’s three new e-books were recently added and are available at http://zalma.com/zalma-books/
The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.