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NorGuard Insurance Co. v. Workers' Compensation Appeal Board6/11/2002
NorGuard Insurance Company (NorGuard) petitions for review from an order of the Workers' Compensation Appeal Board (Board) that affirmed the Workers' Compensation Judge's (WCJ) assessment of liability against NorGuard for the payment of compensation benefits.
George Dib (Claimant) worked for Compton Vaughn Construction Company (Employer) as a painter. On or about August 15, 1997, Claimant petitioned for compensation benefits and alleged that he sustained injuries after falling off a ladder on August 22, 1996. Employer filed a denial, and NorGuard alleged it was not the insurer at the relevant time.
On or about August 15, 1997, Claimant petitioned for penalties and alleged that "Defendant [Employer] violated Section 305(a)(1) of the [Workers' Compensation] Act by failing to carry workers' compensation insurance." Penalty Petition, August 15, 1997, at 1; Reproduced Record (R.R.) at 6a.
Claimant testified in support of his petitions. He also introduced an agency-brokerage agreement between The Selzer Company (Selzer) and Guard Insurance Group. This agreement indicated " he Companies will issue legal notice of cancellation or non-renewal in accordance with the policy terms and statutory requirements . . . ." Guard Insurance Group Brokerage Agreement, July 1, 1991, Paragraph 11(b), at 2; R.R. at 438a.
John Primerano (Primerano), a salesman for Selzer, explained the relationship between Selzer and NorGuard as follows: "Guard is one of the companies that we use as an insurance company for some of our clients for workers' compensation." Notes of Testimony, October 21, 1998, (N.T. 10/21/98) at 11; R.R. at 310a. The broker delivers the insurance policy from the insurance carrier to the client. N.T. 10/21/98 at 54; R.R. at 353a. Primerano stated that based on Employer's request, its policy was modified. N.T. 10/21/98 at 30; R.R. at 329a. In fact, Primerano reduced the premium from $33,000.00 to $13,000.00. N.T. 10/21/98 at 31; R.R. at 330a.
Andrew Vaughn Eisenstein (Eisenstein), Employer's owner as of August 22, 1996, testified that he obtained workers' compensation insurance through Guard Insurance Company, and Selzer was the broker. Notes of Testimony, August 31, 1998, (N.T. 8/31/98) at 17; R.R. at 239a. Although Eisenstein received the cancellation notice, he did not believe the policy would be cancelled. N.T. 8/31/98 at 32-33; R.R. at 254a-255a. Eisenstein explained:
I talked to him [Primerano]. I said is there a way that since I have already overpaid my premiums for my actual payroll that I can make sure that I don't have to pay an additional amount because they were sending me bills that weren't accurate with actual payroll. He said, "Yeah. You can have a mid-term audit." I said, can I self perform that audit. He said, "Yes. You can do that." So we went through, line by line, each item of our payroll. Each guide that worked for us. What there clarification was. Multiplied it all out. Sent it to Primerano and talked to him subsequent to that and he said fine. As long as you paid more. I said a couple of thousand more than what was owed. He said you are fine. N.T. 8/31/98 at 37; R.R. at 259a.
Brenda Navin, NorGuard's accounts underwriter, identified their internal cancellation system. Notes of Testimony, May 4, 1998, (N.T. 5/4/98) at 13; R.R. at 144a. See also Cancellation Notice. She testified that Employer's policy was cancelled effective August 18, 1996. N.T. 5/4/98 at 14; R.R. at 145a. Janice Davis (Ms. Davis), an accounts receivable supervisor for NorGuard, testified that as of August 18, 1996, amounts were owed on Employer's policy for the period from January 1996, to January 1997. Notes of Testimony, December 16, 19
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