Amfed National Insurance Company v. NTC Transportation, Inc.
196 So. 3d 947
| Miss. | 2016Background
- NTC, a nonemergency medical-transport provider, obtained workers’ compensation coverage through the Mississippi Assigned Risk Plan with AmFed beginning in 2000; policies renewed annually if premiums paid by the due date.
- AmFed mailed renewal notices to NTC 60 and 30 days before the January 19, 2004 expiration, stating payment must be received by January 19 to avoid lapse; NTC received those notices.
- NTC financed the premium; a check was mailed and received by AmFed on February 4, 2004 — two weeks after the due date.
- AmFed deposited the payment and issued a new policy effective February 4, 2004 through February 4, 2005; AmFed’s operations manager testified it had informed NTC’s agent the policy had expired before payment.
- An NTC employee was injured January 22, 2004; AmFed denied coverage for that injury on grounds the prior policy had lapsed for nonpayment.
- County court granted partial summary judgment for NTC (finding either an accepted counter-offer or that statutory notice requirements prevented lapse); circuit court affirmed; AmFed appealed to the Mississippi Supreme Court.
Issues
| Issue | Plaintiff's Argument (NTC) | Defendant's Argument (AmFed) | Held |
|---|---|---|---|
| Whether late premium payment constituted a counter-offer that AmFed accepted, creating coverage from Jan. 19, 2004 | Tendering the late check with the renewal payment stub was a counter-offer for retroactive coverage and deposit = acceptance | No meeting of the minds; payment stub did not propose retroactive dates; AmFed issued a new policy with Feb. 4 start date and had discretion under assigned-risk rules to allow a lapse | No — late payment did not form a contract for backdated coverage; no meeting of minds and AmFed permissibly issued a new policy with a lapse |
| Whether Miss. Code § 71-3-77 notice requirements prevented lapse absent personal/registered notice | AmFed failed to strictly comply with § 71-3-77, so prior policy continued despite nonpayment | § 71-3-77 applies only to insurer cancellations or manifested nonrenewal within the policy period, not to expirations/lapses caused by insured’s failure to pay | No — statute did not apply; policy lapsed by expiration for nonpayment, not by insurer cancellation or declared nonrenewal |
| Whether AmFed lacked an arguable basis to deny coverage (bad faith/attorneys’ fees) | AmFed had no legitimate basis and acted in bad faith | AmFed had arguable basis (lapse) to deny coverage | Court did not reach after dispositive ruling for AmFed (summary judgment for insurer should have been granted) |
| Venue (Hinds County proper) | NTC proceeded in Hinds County | AmFed sought transfer | Not addressed — appellate court declined to decide because coverage issue dispositive |
Key Cases Cited
- Lewallen v. Slawson, 822 So. 2d 236 (Miss. 2002) (standard of review for summary judgment)
- Prudential Ins. Co. of Am. v. Stewart, 969 So. 2d 17 (Miss. 2007) (insurance contract interpretation follows general contract rules)
- Struve Enters., Inc. v. Travelers Ins. Co., 243 Neb. 516 (1993) (renewal-notice statutes do not apply where policy simply lapses for nonpayment)
- Cooper v. Marathon Freight Lines, Inc., 635 So. 2d 855 (Miss. 1994) (distinguishes insurer cancellation/nonrenewal notice issues from lapses due to nonpayment)
- Luedke v. Audubon Ins. Co., 874 So. 2d 1029 (Miss. Ct. App. 2004) (distinguishing cancellation and expiration/lapse of policy)