Estrada v. Timber Structures et al. – Lapse in Work Injury Insurance Coverage

By-and-large, companies in North Carolina are required to secure approved workers’ compensation coverage for their employees, or else face state regulatory sanctions plus possible lawsuits from employees.
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Part of the deal with workers’ compensation coverage is that workers don’t have to prove negligence, and employers don’t have to wrestle with work-related lawsuits. It’s intended to be a fast, no-fault way for workers to be compensated for their on-the-job injuries.

But when companies don’t hold up their end of the bargain, it can result in headaches for everyone, as the case of Estrada v. Timber Structures and American Zurich Insurance Co. reveals.

Our Greensboro work injury attorneys want to assure our clients that if your employer has failed to maintain adequate workers’ compensation coverage, we will fight to ensure you receive the compensation you deserve. One possible upside to this scenario is that because workers don’t have the benefit of insurance coverage, they are no longer bound by the exclusive remedy provision, meaning they can file a lawsuit against an employer for damages, often resulting in damages that exceed what they would have received had the insurance been available.

In Estrada, claimant was a laborer and carpenter for defendants, a construction firm doing business as a licensed general contractor. Before 2009, defendant company had several workers’ compensation insurance policies cancel as a result of non-payment of the required premium. As a result, the company had to secure workers’ compensation insurance through the North Carolina Rate Bureau, which assigned American Zurich Insurance Company to provide workers’ compensation insurance to the firm.

Defendants paid a premium deposit of $850 that was valid until August 2010. In May of that year, insurer sent company an letter indicated the policy would expire Aug. 4, 2010 unless the firm chose to renew. The letter indicated that in order to avoid a lapse in coverage, the insurer would need to receive payment of $1,000 no later than that date. Company president would later concede he did not make that payment.

Two weeks after the coverage lapsed, worker suffered an injury resulting from an accident arising out of and in the course of his employment. Worker soon thereafter filed notice with the industrial commission, as well as with his employer and the insurer.

Defendant insurer denied a policy was in effect at the time of the incident.

A single commissioner ruled there was no insurance in place, and therefore defendant company would be solely liable to pay temporary total disability benefits to worker. Both employer and employee appealed to full commission. Defendant’s appeal was dismissed, but plaintiff’s proceeded.

Commission found that while employer did request retroactive coverage from insurer, there was a window of time – from 8/4/10 – 8/24/10 – that he was uninsured. Unfortunately, that’s when this accident occurred. Therefore, there was no coverage at the date of accident, leaving defendant company solely responsible to cover injuries.

Upon further review by the North Carolina Court of Appeals, that decision was affirmed.

Worker will still be compensated, but the cost for those expenses will be paid directly by employer, rather than insurer.

If you have been injured at work, contact the Lee Law Offices at 800-887-1965.

Additional Resources:
Estrada v. Timber Structures and American Zurich Insurance Co., Nov. 18, 2014, North Carolina Court of peal

More Blog Entries
NC Industrial Commission Targets Scofflaw Firms With No Worker Injury Coverage, Nov. 13, 2014, Greensboro Workers’ Compensation Lawyer Blog

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