A Florida Appellate Court Ruled Cancellation of a Workers’ Compensation Policy for Nonpayment Was Effective, Even Though the Insured Employer Had a Certificate of Insurance

Written by: Rayford Taylor, Esq.

The First District Court of Appeal recently issued an opinion in the case of Dennis F. Scott v. James A. Jones Construction Co. v. Central Florida Siding Pros, LLC, et al., Case No. 1D20-689 (Fla. 1st DCA March 16, 2021).  While the instant case did not create any new law, it did reaffirm that receipt of a notice of cancellation of workers’ compensation insurance for non-payment of insurance premium requires an employer to take immediate action to either resolve the dispute with the insurance company or obtain new coverage.  That apparently did not happen in the instant matter.

This case involved a Claimant, Mr. Dennis F. Scott (Scott), and James A. Jones Construction Co. (Jones), a general contractor, appealing the judge of compensation claims (JCC’s) ruling that the Claimant was employed by Central Florida Siding Pros, LLC (CFSP), a subcontractor, and statutorily employed by Jones.  The complicating factor was that neither Jones nor CFSP had workers’ compensation coverage at the time of the accident.

CFSP had a workers’ compensation policy, but a notice of cancellation of the policy was issued on January 24, 2018 with an effective date of February 10, 2018.  Despite the impending cancellation, a Certificate of Liability Insurance (COI) was issued for CFSP to Jones on February 6, 2018 indicating the policy went into effect April 29, 2017 and would expire on April 29, 2018.  Scott’s accident occurred on April 24, 2018.  The JCC ruled the policy was not in effect on the date of accident because it had been cancelled for nonpayment of premium two months earlier.  This ruling placed the risk for payment of benefits to the Claimant on the general contractor (Jones) pursuant to Section 440.10(1)(b) Fla. Stat. (2018).

Both the Claimant and Jones argued cancellation of the policy was ineffective because the policy contained a condition precedent to cancellation which was not met.  They argued that the policy gave CFSP the opportunity to pay the unpaid premium before the policy was cancelled pursuant to language stating that the unpaid premium is “immediately due and payable” when “payroll deduction is terminated or suspended for any reason.”

The First District Court of Appeal ruled the policy’s only stated condition precedent to cancellation was the ten days’ notice to the policy holder.  That condition was met when the notice of cancellation was mailed to CFSP at its last-known address on January 24, 2018 with the cancellation becoming effective February 10, 2018.  That action satisfied the insurance carrier’s obligation to provide notice of cancellation for nonpayment of premium as required under the insurance policy and Section 440.42(3) Fla. Stat. (2018).

The Claimant and Jones also argued they were entitled to insurance protection pursuant to the Doctrine of Promissory Estoppel.  The District Court ruled the doctrine did not apply in the instant matter.  Since the insurance carrier had met its statutory obligation to CFSP regarding cancellation and no premium payments had been made, there was no policy in effect on the date of the accident because the carrier had cancelled it for non-payment of premium.  As a result, the burden to provide workers’ compensation benefits fell upon the general contractor.

For more information on this case or other Florida workers’ compensation questions, please contact Attorney Rayford Taylor, Esq. at (404) 954-6949 or send an e-mail to rtaylor@hallboothsmith.com.