Workers' Comp Carriers Catch a Break from the VA Supremes

In a case representing a major change in Virginia, the Supreme Court issued a decision on Friday, September 12, 2008 in Travelers Property Casualty Co. v. Ely, holding that, when a workers' compensation insurance policy lapses at the end of its policy term because the employer does not pay the renewal premium, the policy is not considered "nonrenewed by the insurer" within the meaning of Virginia Code § 65.2-804(B). 

Section 65.2-804(B) of the Virginia Workers' Compensation Act requires workers' compensation carriers to provide notice to the Virginia Workers' Compensation Commission within 30 days of the date the carrier cancels or "nonrenews" a policy, and if it fails to do so, the Workers" Compensation Commission policy remains in force.  This means that an accident occurring after the policy is cancelled or "nonrenewed" is covered under the policy unless the employer replaced the cancelled or "nonrenewed" policy with other coverage.

The decision by the Supreme Court is important in the handling of claims in this situation because, under the new Ely case, insurers are no longer required, in this situation, to provide notice to the Virginia Workers' Compensation Commission before their policies are effectively terminated. Therefore, an injury by accident happening (or a diagnosis is made of an occupational disease) after the policy lapsed for non-payment of premium on renewal, will not be covered, whether or not the workers' compensation carrier gave notice to the Commission that the policy had lapsed.

As always, we are happy to answer any questions you have concerning this development.

For more information contact Vernon Priddy at (804) 783-7238 or VPriddy@SandsAnderson.com