Insurer must Prove Notice of Cancellation after Notice was Electronically Mailed

 

September 18, 2017

 

Last month the Nebraska Supreme Court found that a workers compensation insurer had not provided sufficient evidence that it had cancelled a workers compensation insurance policy. The case is Greenwood v. J.J. Hooligan's, LLC, No. S-16-932 (Neb. Aug. 4, 2017).

 

The case arose after Lori Greenwood suffered an on the job injury during the course of her employment with J.J. Hooligan's. After Greenwood was injured, one of the owners of J.J. Hooligan's provided her with the contact information of the insurer who carried J.J's workers compensation policy, FirstComp. Greenwood was informed that the policy had been cancelled due to nonpayment of premium, and FirstComp was not the insurer at the time of the accident.

 

The district court found that FirstComp had provided sufficient notice to J.J. Hooligans. Greenwood appealed. At trial in the Nebraska Supreme Court, FirstComp argued that they were not the proper party to be sued because they were not the insurer at the time of the accident, as they had provided notice of cancellation due to a failure to pay the premium by mail, as required by statute.

 

Greenwood contended that FirstComp had not provided a return receipt or evidence of an office practice for sending mail. She also argued that having a tracking number did not prove that a specific notice of cancellation had actually been mailed.

 

The court determined that although a tracking number was provided, the statute required that the insurer leave the certified mail with a USPS official or depository, and there was no evidence, even testamentary evidence, that the notice had been left with an official or depository. The court declared that a tracking number alone does not establish certified mail service.

 

The court also determined that although FirstComp believed that the fact it used an electronic mailing system through USPS was evidence of its course of office practice, the court said that FirstComp “failed to make any description” of its electronic mailing system, and how the electronic mailing system is used by the company. The court said that based on the evidence provided, it could not determine how the electronic system sent a notice of cancellation through certified mail.

 

The court specifically said that it did not intend to discourage the use of electronic communications and mailing systems, but in order to prove that something had been sent via certified mail, the company using the electronic mailing system had to be able to prove that notice was sent in compliance with the applicable statutes.

 

Editor's Note: Although on its face this is a daunting court ruling for insurers, this ruling should not discourage them from using electronic mailing. As times change and more and more of the world's business becomes digitized, companies need to be cautious and continue to document everything in case the need to prove something in court arises.

The recent case Barnes v. American Standard Ins. Co. of Wis, No. S-16-854 (Neb. July 28, 2017) also discussed cancellation in Nebraska.