The Full Board, at its meeting held on June18, 2013, considered the above captioned case for Mandatory Full Board Review of the Board Panel Memorandum of Decision filed September 24, 2012.
The issue presented for Mandatory Full Board Review is whether the claimant was covered under his workers' compensation policy with the State Insurance Fund (SIF).
The Workers' Compensation Law Judge (WCLJ) found that the claimant was covered under his workers' compensation policy with SIF based upon a reformation of the insurance policy due to a mutual mistake.
The Board Panel majority reversed the WCLJ's decision, finding that the claimant was not covered under the policy issued by SIF, and disallowed the claim.
The dissenting Board Panel member would have affirmed the WCLJ.
The claimant filed an application for Mandatory Full Board Review on October 17, 2012.
SIF filed a rebuttal on November 19, 2012.
Upon review, the Full Board votes to adopt the following findings and conclusions.
The claimant, a taxi cab driver, filed a Form C-3 (Employee Claim) on June 7, 2010, asserting that he sustained injuries in a motor vehicle accident on April 26, 2010 while working for "Blue United Taxi Company." The claimant stated that he gave notice to his supervisor.
The carrier for Blue Star Niagara Company (Blue Star) filed a Form C-7 (Notice that Right to Compensation is Controverted) on June 22, 2010, raising several defenses, including employer-employee relationship, proper employer and proper carrier. The carrier for Blue Star asserted that the claimant was an independent contractor with separate workers' compensation insurance. SIF, which had previously insured Blue Star and was also the claimant's workers' compensation carrier, filed a Form C-7 on July 14, 2010, asserting that it no longer provided coverage to Blue Star and raising defenses of cancellation of coverage and proper carrier.
The case folder contains a letter from Blue Star dated July 19, 2010, asserting that the claimant was not employed by Blue Star, but rather paid a weekly fee for dispatch services.
The claimant, as well as two underwriters employed by SIF, testified at a hearing on June 20, 2011. The claimant testified that he went to SIF's offices to obtain workers' compensation insurance in January 2010 because the City of Niagara Falls required that he obtain such insurance in order to register his taxi cab for operation within the city. The claimant stated that he completed the application for coverage in SIF's offices with the help of a friend. He believed that he was covered under the policy. The claimant noted that he had to bring a copy of his certificate of coverage to the Department of Motor Vehicles, which requires automobile and workers' compensation insurance in order to register his vehicle to operate as a taxi cab. The claimant testified that he did not specifically ask to be covered under the policy because he believed that he was covered since the policy stated that it covered all drivers. The claimant admitted that he did not read the policy when he received it in the mail and also did not read a notice sent to him by SIF advising him that he was not covered and, since he did not have any employees, he could cancel coverage.
SIF's underwriter responsible for accepting applications (Intake Underwriter) testified that she did not have an independent recollection of the claimant, but she was assigned to his application. The Intake Underwriter stated that SIF employees were prohibited from filling out an application on behalf of an applicant, and the claimant completed the application himself. She noted that business owners sometimes exclude themselves from coverage and insure only their employees. The Intake Underwriter also noted that people starting a business will often apply for workers' compensation insurance before actually hiring employees. The Intake Underwriter testified that SIF sent the claimant a letter on January 19, 2010, advising him that he was not covered under the policy and no employees were listed. The letter advised the claimant that he could avoid paying premiums by cancelling the policy.
SIF's underwriter responsible for issuing policies (Policy Underwriter) testified that oftentimes taxi cab drivers lease their vehicles to others. Therefore, SIF bases its premiums for taxi cab owners on the number of vehicles rather than the amount of payroll or number of employees. Thus, in the claimant's case, whether or not he had any employees at the time of the application was irrelevant for purposes of determining the premium. However, the premium did not include coverage for the claimant. The Policy Underwriter noted that SIF's investigator advised that the claimant did not have any taxi cabs or livery vehicles registered to him, but did have a personal vehicle registered. The Policy Underwriter assumed that the claimant was applying for the workers' compensation policy because he intended to register his personal vehicle as a taxi cab. The Policy Underwriter testified that she met with the claimant on April 5, 2010, because the claimant had questions regarding his premium bill. The Policy Underwriter noted that they did not discuss coverage, but the claimant appeared to understand her discussion with him. The Policy Underwriter noted that the claimant applied to include himself under the policy on October 15, 2010, and later cancelled the policy in January 2011.
SIF offered several documents into evidence at the hearing. The application completed by the claimant is dated January 11, 2010. It lists the employers as "Blue Cab" and the claimant. In the area where the application asks whether the applicant wishes to exclude officers of the company from coverage, the claimant checked "No." In the area where the application asks whether the applicant wishes to obtain coverage for partners, members or self-employed persons, the claimant checked "No." The application indicates that the claimant owns one taxi cab, and that no sub-contractors or independent contractors are used.
SIF also offered into evidence the January 19, 2010, letter from SIF to the claimant, advising him that he was not covered under the policy. The letter advises that the claimant may elect to be covered under the policy by completing an enclosed form and returning it to SIF. The letter also advises that if the claimant has no employees and does not wish to obtain coverage for himself, he could avoid premium charges by cancelling the policy.
Finally, SIF offered into evidence a copy of the policy endorsements as of January 12, 2010. The form lists two endorsements. The first endorsement states that the policy does not cover the claimant "with respect to bodily injury sustained by any self-employed person." The second endorsement states that the policy covers "bodily injury to all [the claimant's] drivers of dispatched cards, limousines and taxis."
In a reserved decision filed on August 22, 2011, the WCLJ found that the contract must be reformed based upon a mutual mistake. The WCLJ concluded that the parties would not conceivably enter into an insurance contract that did not cover anyone and therefore found that the claimant was covered under the policy.
WCL § 54(8) provides, in relevant part, that,
A self-employed person, a partner of a partnership, a partner of a registered limited liability partnership, a member of a limited liability company or a member of a professional service limited liability company having no other persons who are employees required to be covered under this chapter shall be deemed to be excluded from coverage under this chapter unless he or she elects to be covered. Such coverage may be effected by obtaining an insurance policy.
Here, the record is clear that claimant never elected to be covered by the policy he obtained. Claimant nonetheless maintains that the terms of the policy should be reformed to find that the policy covered his injury.
Although insurance policies are to be construed liberally in favor of the insured and strictly against the insurer, provisions in the policy that are clear and unambiguous "must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement" (Government Empls. Ins. Co. v Kliger, 42 NY2d 863 ). Where no coverage exists under a policy as written, "the doctrines of waiver or estoppel may not be invoked to create coverage" (Sena v Nationwide Mut. Fire Ins. Co., 224 AD2d 513 ).
"A party seeking reformation must establish, by clear and convincing evidence, that the writing in question was executed under mutual mistake or unilateral mistake coupled with fraud" (Herron v Essex Insurance Co., 34 AD3d 913  quoting Leavitt-Berner Tanning Corp. v American Home Assur. Co., 129 AD2d 199 ). To prove a mutual mistake, the party seeking reformation must show that "the parties have reached an oral agreement and, unknown to either, the signed writing does not express that agreement" (Chimart Assoc. v Paul, 66 NY2d at 573; accord Phillips v Phillips, 300 AD2d 642, 643 ), whereas to prove a unilateral mistake, the party seeking reformation must show that one party to the agreement fraudulently misled the other, and that the subsequent writing does not express the intended agreement (see Rosen Auto Leasing, Inc. v Jacobs, 9 AD3d 798, 800 ; New York First Ave. CVS v Wellington Tower Assocs., 299 AD2d 205 , lv denied 100 NY2d 505 ). "It is to be presumed that the written instrument was carefully and deliberately prepared and executed and, therefore, is evidence of the highest character and will be regarded as expressing the intention of the parties to it until the contract appears in the most satisfactory manner." (Porter v Commercial Casualty Ins. Co., 292 NY 176, 182 ). The Board "may not make or vary the contract of insurance to accomplish [its] notion of abstract justice or moral obligation" (Teichman v Community Hosp. of W. Suffolk, 87 NY2d 514, 520 , quoting Breed v Insurance Co. of N. Am., 46 NY2d 351, 355 ).
In the present case, the evidence does not support a finding that a mutual mistake occurred. While the claimant testified that he believed that the insurance contract covered him, no evidence supports a finding that SIF believed the claimant to be covered. Additionally, although SIF's representative testified that she believed that the claimant may be hiring employees in the future, no evidence suggests that SIF believed the claimant to have employees at the time the policy was issued. Thus, the record does not support a finding that SIF made any mistake in regard to issuing the policy and no mutual mistake occurred.
Furthermore, nothing in the record supports a finding that the SIF acted in a fraudulent manner in issuing the policy. The claimant does not dispute that he indicated on his application that he wanted to exclude himself from the policy or that the SIF sent him a letter asking whether he wished to cancel the policy because he was not covered under it and he had indicated that he had no employees. While the claimant argues that he was unable to understand the application and the letter because of a language barrier, this is not a mistake entitling him to reformation of the insurance contract (see Curanovic v New York Cent. Mut. Fire Ins., 307 AD2d 435 ).
Finally, the claimant's argument that the policy issued by the SIF violated New York State Insurance Law does not identify what statute prohibits the SIF from issuing the policy in question. Furthermore, if the claimant were found to have a statutory employee (see WCL § 2,  and ), that employee would be covered by the SIF policy and therefore, contrary to the claimant's argument, the policy may have at a future time "paid out."
Therefore, the Full Board finds that the preponderance of the evidence in the record supports a finding that the claimant was not covered under the workers' compensation policy issued by SIF.
ACCORDINGLY, the WCLJ reserved decision filed on August 22, 2011, is REVERSED. This claim is disallowed.