United States: Dual Coverage For Workers' Compensation Insurance Under A Voluntary Policy And Assigned Risk Plan In Georgia

Last Updated: June 17 2019
Article by Nirav Patel

Georgia employers are required by law to retain workers’ compensation insurance if they employ three or more full time, part time, or seasonal employees.  This is an arduous endeavor, however, as several employers are unable to obtain workers’ compensation coverage in the standard insurance market.  Fortunately, every state provides employers an opportunity to acquire workers’ compensation insurance through a Workers' Compensation Assigned Risk Plan, Pool, or Residual Market. 

Employers may be denied workers compensation coverage for several reasons.  These reasons may involve their lack of effective loss control measures or the inherent occupational hazards associated with their business model.  Alternatively, new or small businesses may be denied coverage due to an insurer’s inability to reference previous loss history and/or assess the risk associated with the business and its operations.  Whatever the reason may be, under O.C.G.A. § 34-9-133, employers with four rejections or declinations from duly authorized insurers may avail themselves of coverage through an assigned risk plan, administered by the National Council on Compensation Insurance (“NCCI”).  The application must be submitted by the employer to NCCI directly and must include proof of rejections within seventy-five (75) days of the application date.

Further, entities are deemed ineligible for the assigned insurance if applying in bad faith.  This includes employers that are aware of their impending bankruptcy; employers that knowingly refuse to meet reasonable health, safety, or loss control requirements; employers with outstanding premium obligations; and employers that have issued misrepresentations to obtain coverage.

Upon receipt of the application, NCCI assigns the employer to an assigned insurance carrier and group classification based on the risk associated with the employer’s business.  All employers to which this plan applies shall be directed utilizing the classification forms and rating plans filed by NCCI.  Employers are generally placed within one of three groups, comprising of 1) Employers which have insufficient prior workers' compensation experience to be rated; 2) Employers which are not Group 1 or 3 rates; and 3) Employers that have an experience rating modification greater than 1.0.  The mutual rates for the groups shall be determined by applying a deviation factor for each group to the plan rates. The assigned insurance carriers, however, are mandated to provide the same type of services to assigned employers that they would to their voluntary policyholders. 

Although any insurer to whom a particular risk is assigned must accept the assignment and provide coverage, it is allowed to collect higher premiums, proportionate with the particular risk.  These premiums are determined by a rating system, which accounts for the nature, number, and severity of violations and incidents associated with the relevant employer.  Therefore, unlike voluntary policyholders, employers within an assigned risk plan are unable to negotiate the terms of their coverage contracts.  Rondale Bus Svc. v. American Cas. Co., 189 Ga.App. 869, 870-871(1), 377 S.E.2d 726 (1989). 

The essential unilateral nature of this contract is evident within its terms, comprising of high premiums, limited coverage, and the employer’s lack of choice in insurers and of payment plans.  Consequently, while assigned risk coverage assists employers in complying with Georgia law, it often comes at a greater disadvantage, latent within the expenses associated in maintaining coverage.  Employers attempt to mitigate this issue by continually seeking voluntary coverage, and, often obtaining dual coverage by failing to first disassociate with or discontinue their assigned risk plan.  This period of dual coverage may result in a conflict between the voluntary and assigned risk insurers when employees wish to avail themselves of workers’ compensation by filing a claim within this period.

Although there is no case law directly on point within Georgia, the issue of dual coverage with a voluntary insurer and an assigned risk insurer has been litigated within the neighboring state of South Carolina.  In Avant v. Willowglen Academy, 367 S.C. 315, 319, 626 S.E.2d 797, 799 (2006), the South Carolina Supreme Court held that the assigned risk coverage is automatically terminated when workers' compensation coverage commenced under a voluntary insurance policy.  In Avant, Travelers insured the employer, Willowglen Academy, through an assigned risk workers' compensation policy administered by NCCI.  The Policy was effective from August 24, 1996 through August 24, 1997.  Although covered under this policy, the employer procured voluntary insurance from United Heartland, effective from July 1, 1997. The court found that an employer able to procure voluntary insurance is ineligible for assigned risk coverage. However, Willowglen failed to notify Travelers or NCCI of the voluntary coverage and did not attempt to cancel the assigned-risk policy. More important, Willowglen renewed the assigned-risk policy with Travelers for the period August 24, 1997 through August 24, 1998. 

On September 6, 1997, while both policies were in effect, Marty Avant, an employee of Willowglen, was injured and filed a workers compensation claim.  The claim was submitted to Travelers, which remained unaware of the voluntary policy with United.  Travelers accepted the claim and began providing benefits.  However, Travelers subsequently received notice of the coverage allotted by United in January 1998. In response, it immediately issued a notice of cancelation retroactive to July 1, 1997, the date on which Willowglen acquired voluntary insurance from United.  Travelers also refunded all premiums paid by Willowglen for the assigned risk coverage. Finally, Travelers filed a motion with the Workers' Compensation Commission of South Carolina to identify United as the sole responsible carrier.  NCCI was also notified of Willowglen's dual coverage and held in accordance with the court’s findings that "Travelers' assigned risk coverage terminated as a matter of law on July 1, 1997, the date on which United began providing voluntary coverage. 

The Supreme Court of South Carolina, prior to its ruling in Avant, affirmed the appellate court’s findings in Rodriguez v. Romero, 363 S.C. 80, 88, 610 S.E.2d 488, 492 (2005), holding that an assigned risk policy does not become effective if the employer’s voluntary policy was in force during the issuance of the assigned coverage.  The court also recognized that in duplicate or dual coverage scenarios, existing when two insurers issue two policies to the same employer and secure the same liability, the policy with the later date nullifies the earlier policy.  In either scenario, the court established persuasive precedent for Georgia Courts and the Georgia Board of Workers’ Compensation in holding that assigned risk coverage cannot co-exist with voluntary insurance coverage.  In fact, the existence of a voluntary workers compensation policy, will nullify the assigned risk policy altogether.

Moreover, Georgia has reinforced this notion in its cases regarding rescission of insurance policies.  Generally, in order for an insurer to rescind its policy, it must first determine that it has an application misrepresentation defense and promptly declare the policy void within a reasonable time of its acquiring such information.  It must then submit notice to the employer of its decision to rescind.  However, in Georgia, the insurer does not have to return the premium payments for fraudulent misrepresentation.  Accordingly, despite the unfavorable terms provided through the assigned risk plans, employers should remain wary of attempting to obtain voluntary coverage while retaining coverage through an assigned risk policy. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions