Argued / Briefed by Nicholas A. Dibble, Esq.
The Appellate Division recently affirmed the decision of the trial court terminating benefits for fraud pursuant to N.J.S.A. 34:15-57.4(c)(1) when a claimant made a false statement in obtaining benefits.
While cutting down a tree, the petitioner sustained severe injuries and filed a claim for medical and disability benefits. The respondent denied coverage on the grounds that the petitioner misrepresented that his company was an LLC with no employees. The petitioner, who was personally involved in the procurement of workers’ compensation insurance, owned and worked at Treeminator Tree Service. Treeminator was organized in 2007 as a corporation and by 2012, the year of the accident, the company had no fewer than four employees including the petitioner and his girlfriend. A workers’ compensation policy was issued for Treeminator in 2012, the year of the accident, for a limited liability company with no employees and only a minimum premium.
At trial, this matter was bifurcated by the Honorable Virginia Dietrich to first address the issue of insurance coverage. The petitioner and his girlfriend testified as well as three individuals from the Barry Rose Insurance Agency who handled Treeminator’s insurance needs. After hearing all five witnesses over four days of trial Judge Dietrich found that the petitioner made material misrepresentations concerning the nature of his business and the number of his employees. The Judge of Compensation noted that although the policy procured by Treeminator was for a landscaping company with no employees, Treeminator employed multiple individuals and was actually involved in the far more dangerous business of tree trimming. As such, Judge Dietrich ordered the immediate denial of benefits due to the false information provided to the insurance carrier during the procurement of the policy. The petitioner appealed arguing that he had a reasonable expectation of coverage by virtue of paying a premium and a mistake was made by either the insurance broker or the insurance company in issuing a policy for an LLC rather than a corporation. Since this was not his error, the petitioner posited that he should be afforded coverage. Finally, the petitioner argued that he never opted out of coverage for himself.
The Appellate Division found that false information was given to the insurance broker during the procurement of the insurance policy. The Appellate Division affirmed the findings of Judge Dietrich noting that when the petitioner was appraised of the increased costs of insuring a company with employees, the petitioner chose to “take coverage as cheaply as he could find it. He wanted to pay the least and hoped for the best.” The Appellate Division ultimately held that Judge Dietrich’s findings were based upon sufficient credible evidence and supported the immediate dismissal of the petitioner’s claim pursuant to the fraud provision found at N.J.S.A. 34:15-57.4(c)(1) of the workers’ compensation statute.