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Grange Mutual Casualty Co. v. Bennett

Court of Appeals of Georgia, Fourth Division

June 19, 2019

GRANGE MUTUAL CASUALTY COMPANY
v.
BENNETT et al.

          DOYLE, P. J., COOMER and MARKLE, JJ.

          COOMER, JUDGE.

         Pursuant to our grant of a discretionary appeal, Grange Mutual Casualty Company ("Insurer") appeals the Hall County Superior Court's decision to affirm the State Board of Workers' Compensation's ("Board") ruling that: (1) the Insurer did not sufficiently raise a void policy defense before the administrative law judge, thus waiving the defense; and (2) on the merits, the insurance policy was not void. It also argues the superior court applied the incorrect standard of review in its analysis of the Board's findings. For the reasons that follow, we affirm.

In reviewing a workers' compensation award, this Court must construe the evidence in the light most favorable to the party prevailing before the appellate division. The findings of the State Board of Workers' Compensation, when supported by any evidence, are conclusive and binding, and neither the superior court nor this Court may substitute itself as a factfinding body in lieu of the State Board.

Laurens County Bd. of Ed. v. Dewberry, 296 Ga.App. 204, 205-06 (674 S.E.2d 73) (2009) (footnotes omitted).

         So viewed, the record shows that McCormick Enterprises ("Employer") was a small construction company primarily involved in greenhouse repair and maintenance. In 2014, the Employer had workers' compensation insurance through Liberty Mutual. When the Employer's insurance policy came up for renewal, the Employer contacted its insurance agent and asked if she could find cheaper insurance with the same coverage. The agent procured a quote from the Insurer.

         In completing the insurance application, the agent pulled the Employer's business information from the previous Liberty Mutual insurance policy. The Liberty Mutual insurance application indicated that the Employer performed work outside the state of Georgia. However, on the Insurer's application, the agent indicated that the Employer did not perform work outside of Georgia. The agent testified at the hearing before the administrative law judge ("ALJ") that she did not know that the Employer performed work outside of Georgia, and that she only reviewed the Liberty Mutual policy - but not the Liberty Mutual application - in completing the Insurer's application. The agent also classified the Employer's company as janitorial work on the Insurer's application based on the Liberty Mutual policy. She also said that she sent the completed application to the Employer for review, and that the Employer signed and returned the application. However, the owner of Employer testified that the agent emailed him a blank application to sign and that he did not review or approve the section indicating that his employees did not travel out of state. Ultimately, the application submitted to the Insurer indicated that the Employer provided janitorial services, the employees did not travel out of state, and that the employees did not perform any work above 15 feet.

         After the Insurer issued its policy to the Employer, an employee had an injury while working in Louisiana on August 8, 2014. Employer reported the injury to the Insurer. The Insurer eventually denied the claim because the injury occurred outside of Georgia. Employer's owner testified that he then told the agent that she needed to fix that issue with the insurance policy, because 85% of the Employer's work was outside of Georgia. The agent denied having that conversation and testified that she did not know the injury occurred out of state.

         After the August 2014 claim, the Insurer conducted an investigation of the Employer's business operations and its workers' compensation policy. An underwriter for the Insurer testified that the Insurer would not have issued the policy if the application correctly indicated that the Employer operated in 30 states, because the Insurer was not licensed to issue policies in all those states. The underwriter also testified that the Insurer would not have issued the policy if it had known that the Employer's employees were cleaning windows at heights over 15 feet.

         During its investigation after the August 2014 claim, the Insurer asked its general counsel and outside counsel whether the Employer's application was so inaccurate that it could immediately void or rescind the policy. The Insurer determined that it could not void the policy, so it sent a cancellation notice on December 18, 2014, with an effective cancellation date of March 8, 2015. The Insurer told the Employer that it was canceling the policy due to the Employer's out-of-state operations, and gave the Employer approximately 90 days to find alternative coverage.

         On March 7, 2015, Adam Bennett (the "Employee") was working for the Employer. He was hired for a snow-removal job in New York. The Employee was traveling to the job as a passenger in an Employer-owned truck. While en route, the truck was involved in an automobile accident. The Employee suffered extensive injuries to his skull and back. He then filed this worker's compensation claim.

         Following the ALJ hearing, Insurer submitted a brief, in which it argued, among other things, that: (1) its policy did not cover out-of-state work injuries; (2) Employer's owner was aware of the terms of the Insurer's policy yet did not advise the Insurer of his need for multi-state coverage; and (3) the Insurer would not have issued the policy if it had received an accurate description of the Employer's business operations.

         The ALJ found that the Insurer's policy covered the Employee's injury. Specifically, it found that the Insurer, in order to limit coverage to only accidents in Georgia, was required to amend or endorse the policy with that limitation. When the Insurer listed "Georgia" on the policy, the Insurer was agreeing to pay workers' compensation claims under the laws of Georgia. And, under Georgia law, the Employee's out-of-state injuries were compensable. The ALJ declined to resolve the conflicts in the testimony between the Employer and the Agent regarding the insurance application process because the main issue for resolution was whether the policy covered the Employee on March 7, 2015. That outcome was determined by the Insurer's action on December 18, 2017 without regard to the parties' actions during the application process.

         The Insurer then appealed the ALJ's decision to the Board. In its brief to the Board, the Insurer argued, among other things, that the insurance policy was void under OCGA § 33-24-7 due to the Employer's and the Agent's false representations on the application. The Board upheld the ALJ's finding that the Insurer's policy covered the Employee's injury. Using the same logic employed by the ALJ, the Board also found that it did ...


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