Order denying motion to dismiss for lack of coverage and finding an employer liable as a special employer affirmed by the Appellate Division.

In Urena v. A&D Freight Logistics, LLC, et al., Hartford Underwriters Insurance (Hartford) appealed from a February 15, 2022, order, denying its motion to dismiss for lack of coverage. A&D Freight Logistics, LLC (Freight) cross-appealed from the January 19, 2022, and February 15, 2022, orders, finding it was liable for dependency benefits as the decedent’s employer.

The underlying claim resulted from a fatal accident involving the decedent on March 31, 2017. The decedent was the owner-operator of Triple Star Transport, LLC and was assigned to transport materials through the companies A&D Container Logistics, LLC and Freight. Triple Star was insured by Hartford, A&D Container was insured by New Jersey Casualty Insurance Company (NJCIC), and Freight was insured by New Jersey Property Liability Insurance Guarantee Association (NJPLIGA). The petitioner (the decedent’s wife) filed dependency claims against all three companies and their insurers (later amended to include NJM as A&D Container’s insurer). NJM, NJCIC and A&D Container filed answers, claiming Freight was the employer. Freight filed an answer denying employment, and Hartford moved to dismiss for lack of coverage.

In January 2020, after the petitioner’s testimony, the defendants conceded the issue of dependency, and the judge also issued an interim order that Hartford would pay benefits without prejudice, subject to reimbursement, if another party was found liable later. Hartford then presented witnesses on the issue of cancellation of its policy, and the judge found it failed to properly effectuate cancellation per the statute. The judge also determined all three companies were liable to pay dependency benefits under the theory of dual employment.

Hartford moved for reconsideration, and additional discovery and witness testimony were allowed. Subsequently, on January 19, 2022, the judge rendered a supplemental decision, finding there was improper cancellation. On February 15, 2022, the court entered an order denying Hartford’s motion to dismiss and finding all three employers had to pay dependency benefits equally.

With regard to the cancellation issue, Triple Star obtained insurance through Hartford, who issued the policy from May 5, 2016, to May 5, 2017. This was done through New Jersey Workers’ Compensation Insurance Plan (Plan), established by the New Jersey Compensation Rating and Inspection Bureau (Bureau) for employers that were unable to find coverage by at least three carriers. Triple Star did not respond to requests for an audit, and the Bureau got involved, noting Hartford could cancel coverage if the employer failed to respond. In November 2016, notice of cancellation, with an effective date of January 20, 2017, was sent to Triple Star. 

The petitioner also testified about her knowledge of whom she believed the decedent’s employer was, noting Freight’s decal was on the decedent’s truck and that he received paychecks from both Freight and A&D Container. In addition, the court noted $140 was deducted every week by Freight for workers’ compensation coverage. Also, under the lease agreement, the decedent’s truck was insured through Hartford as well as A&D Container’s policy. Based on these facts, the judge found all three companies were employers. As for the cancellation issue, the judge noted Hartford failed to properly cancel its policy under the strict requirements of N.J.S.A. 34:15-81.

Hartford appealed, and Freight cross-appealed. Under the limited review standard and giving the judge substantial deference, the Appellate Division found Hartford failed to provide proof that there was personal knowledge of the notice of cancellation being sent to the employer. As such, Hartford failed to meet its burden of proper cancellation. As for Freight’s arguments that there was no special employee relationship, as both parties recognized the relationship as an independent contractor one, the Appellate Division rejected same, noting the three factors to establish the special employee relationship were present: contract of hire, work essentially that of a special employer and right to control. As such, the Appellate Division affirmed the order denying Hartford’s motion to dismiss for lack of coverage and finding Freight liable for dependency benefits as the decedent’s special employer. 

_{What’s Hot in Workers’ Comp, Vol. 28, No. 9, September 2024, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}