219 N.C. App. 570
N.C. Ct. App.2012Background
- Smith started Smith's Home Repair in 2006 and obtained an assigned risk workers' compensation policy with Travelers through MPP financing.
- MPP's power-of-attorney allowed cancellation of Smith's policy for nonpayment; Smith signed neither Travelers' policy nor MPP agreement; policy documents were signed by Smith's agent.
- MPP cancelled the policy in November 2006 for nonpayment; policy was reinstated after Smith paid; January 2007 nonpayment led to a 10-day notice.
- MPP issued a Notice of Cancellation January 15, 2007; Travelers received a copy; cancellation provisioned by the financing agreement was triggered.
- Travelers issued a Notice of Cancellation February 1, 2007, back-dated to January 25, 2007, mailed to last known address; Smith did not receive the notice; refund of unearned premiums followed an audit.
- Diaz suffered a work injury July 20, 2007 and timely claimed workers' compensation; Travelers denied coverage; subsequent Commission found cancellation valid, Smith liable for benefits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Diaz is a party aggrieved and has standing to appeal | Diaz is aggrieved as the cancellation affects his benefits and treatment | Diaz is not aggrieved since benefits were awarded to him | Diaz is a party aggrieved and has standing to appeal |
| Which statute governs cancellation of the policy | 58-36-105 governs cancellation | 58-35-85 governs when a premium-finance company cancels | 58-35-85 governs cancellation when a premium finance company with power of attorney initiates |
| Whether the premium-finance company could cancel under the power of attorney | MPP could cancel only with insured's consent | MPP could cancel as Smith's agent under power of attorney | MPP could cancel; policy effectively cancelled via 58-35-85(3) |
| Whether notice requirements of 58-36-105(b) apply | Notice required since cancellation occurred pre-expiration | Notice not applicable because cancellation was by MPP under 58-35-85 | Not applicable; 58-36-105(b) does not apply when cancellation is by premium-finance company under 58-35-85 |
| Disposition of liability for benefits | Travelers liable; policy in effect for injury date | Smith liable; cancellation valid under MPP authority | Industrial Commission proper; policy cancelled by MPP; Smith liable; Diaz awarded benefits |
Key Cases Cited
- Cahoon v. Canal Ins. Co., 140 N.C.App. 577 (2000) (premium financer authority to cancel under power of attorney)
- Unisun Ins. Co., 117 N.C.App. 454 (1994) (premium finance cancellation authority; policy cancelled as if insured requested)
- Graves v. ABC Roofing Co., 55 N.C.App. 252 (1981) (predecessor statute applied to workers' comp policies)
- Morton Bldgs., Inc. v. Tolson, 172 N.C.App. 119 (2005) (consideration of cross-jurisdictional authorities in WC appeals)