Avant v. Willowglen Academy , 367 S.C. 315 ( 2006 )

Justice PLEICONES:

This is a workers’ compensation case. Respondent Travelers Property Casualty Co. (Travelers) moved the Workers’ Compensation Commission to identify Petitioner United Heartland (United) as the insurer responsible for the claim of Willowglen Academy (Willowglen). The single commissioner held United responsible. The appellate panel of the commission affirmed in part and reversed in part, holding Travelers and United equally responsible. The circuit court affirmed in part and reversed in part, holding Travelers solely responsible. The Court of Appeals reversed, holding United solely responsible. Avant v. Willowglen Academy, 356 S.C. 181, 588 S.E.2d 125 (Ct.App.2003). We granted a writ of certiorari to review the Court of Appeals’ opinion and now affirm.

FACTS

Travelers insured Marty Avant’s employer, Willowglen Academy, through an assigned-risk workers’ compensation policy administered by the National Council on Compensation Insurance (NCCI). The policy was effective from August 24, 1996 through August 24,1997.

Although covered by the assigned-risk policy with Travelers, Willowglen procured voluntary insurance from United, effective July 1, 1997. An employer able to procure voluntary insurance is ineligible for assigned-risk insurance,¹ but Willow-glen neither notified Travelers or the NCCI of the voluntary coverage nor attempted to cancel the assigned-risk policy. More important, Willowglen actually renewed the assigned-risk policy with Travelers for the period August 24,' 1997 through August 24,1998 (the renewal policy).

On September 6, 1997, a date within both Travelers’ and United’s respective stated coverage periods, Marty Avant was injured. Willowglen submitted the claim to Travelers, which remained unaware of the voluntary policy with United. Travelers accepted the claim and began providing benefits.

Travelers eventually became aware of the voluntary policy, in January 1998. Travelers issued a notice of cancelation retroactive to July 1, 1997, the date on which Willowglen acquired voluntary insurance from United.² Travelers refunded all premiums paid by Willowglen for assigned-risk coverage after that date.

Subsequently, Travelers filed a motion with the Workers’ Compensation Commission to identify United as the sole responsible carrier. The single commissioner relied on the South Carolina Workers’ Compensation Assigned Risk Plan (the Assigned Risk Plan or the Plan), which was filed with the Department of Insurance by the NCCI and approved by the Director of the Department of Insurance. The commissioner then held that under the Assigned Risk Plan, Travelers’ assigned-risk coverage terminated as a matter of law on July 1, 1997, the date on which United began providing voluntary coverage. The commissioner therefore ruled that United was solely responsible for Willowglen’s claim.

On appeal, the commission’s appellate panel affirmed in part and reversed in part. Preliminarily, the panel held that the Assigned Risk Plan does not “supersede” the workers’ compensation regulations. The panel then found that both Travelers and United “intended to have coverage on September 6, 1997” and that “[e]quity, in the light of the circumstances of this case, require[d]” that United and Travelers equally share responsibility.

On further appeal, the circuit court affirmed in part and reversed in part. The court found the Plan inapplicable and held Travelers alone responsible under the workers’ compensation regulations. According to the court, Travelers’ attempt to retroactively cancel its coverage was ineffective because the regulations do not permit retroactive cancelation. Also under the regulations, Travelers was presumed responsible because the effective date of its renewal policy (August 24, 1997) was later than that of United’s voluntary policy (July 1,1997). See 25A S.C.Code Ann. Regs. 67-409(A) (1990) (addressing dual coverage); infra, note 5.

■ On further review, the Court of Appeals reversed. The court held that the Assigned Risk Plan has the force of law and determined that the Plan “should be read in conjunction with the Act and its regulations and be accorded effect under the facts of this case given [the Plan] addresses matters where the Act is silent.” Avant, 356 S.C. at 187-89, 588 S.E.2d at 128-29. The Court of Appeals then held that Travelers’ coverage terminated as a matter of law as soon as United issued its voluntary policy. Id. Consequently, the court ruled that United was solely responsible.

ISSUES

I. Whether the Assigned Risk Plan has the force of law.

II. Whether Travelers or United is the responsible carrier.

ANALYSIS

We adhere to our holding in Rodriguez v. Romero 363 S.C. 80, 88, 610 S.E.2d 488, 492 (2005), that the Plan has the force of law. In addition, we hold that United is responsible for Willowglen’s claim. We therefore affirm.

I. Force of Law

Under the Administrative Procedures Act, “ ‘[pjolicy or guidance issued by an agency other than in a regulation does not have the force of law.’ ” S.C.Code Ann. § 1-23-10(4) (Supp.2002). None of the provisions of the Assigned Risk Plan has been promulgated as a regulation. United argues that the lack of promulgation requires a finding that the Plan lacks the force of law, meaning only the workers’ compensation regulations are controlling. See also Rodriguez, 363 S.C. at 88-89, 610 S.E.2d at 492-93 (Toal, C.J., dissenting); Avant, 356 S.C. at 193-97, 588 S.E.2d at 131-33 (Anderson, J., dissenting). We disagree.

The General Assembly has delegated certain authority over assigned-risk insurance to the Director of the Department of Insurance.³ South Carolina Code section 38-73-540(A)(l)⁴ states that “any mechanism designed to implement” the assigned-risk agreement executed by the state’s insurers “must be submitted in writing to the director or his designee for approval prior to use, together with such additional information as the director or his designee may reasonably require.” The Code does not require that the implementation mechanism be promulgated as a regulation. Rather, the mechanism attains the force of law when it is approved by the Director of the Department of Insurance.

Moreover, the provisions of the Plan prevail over the workers’ compensation regulations. Code section 38-73-540 specifically addresses assigned-risk insurance and the mechanism for implementing assigned-risk agreements, whereas the regulations address workers’ compensation generally. The principle that more specific rules prevail over general ones applies, and the Plan is the product of a more specific statute. See Mims v. Alston, 312 S.C. 311, 313, 440 S.E.2d 357, 358-59 (1994) (applying the principle). The Plan controls with respect to issues it addresses.

In comparison, the Court of Appeals held that the Plan “should be read in conjunction with [the Workers’ Compensation Act] and its regulations and be accorded effect under the facts of this case given [the Plan] addresses matters where the Act is silent.” Avant, 356 S.C. at 189, 588 S.E.2d at 129 (quoted with approval in Rodriguez, 363 S.C. at 88, 610 S.E.2d at 492). Because this passage could be interpreted to mean that the Plan fills gaps in the workers’ compensation regulations, we clarify that the regulations fill gaps in the Plan. As discussed below, the Plan resolves the issues in this case, so there is no need to resort to the workers’ compensation regulations.

II. Responsible Carrier

As stated above, Marty Avant was injured on September 6, 1997, a date within the stated coverage periods of both Travelers’ renewal policy and United’s voluntary policy. After becoming aware of Willowglen’s voluntary policy with United, Travelers canceled its assigned-risk policy retroactive to July 1, 1997, the effective date of United’s voluntary policy, and refunded all premiums paid by Willowglen for assigned-risk coverage after that date.

The first issue is whether Travelers’ renewal policy in fact became effective on its stated effective date, August 24, 1997. If it did, then there was dual coverage on September 6, 1997, and because the Plan does not address dual coverage, a workers’ compensation regulation applies ... in favor of United.⁵ For the reasons stated below, we find that Travelers’ renewal policy never became effective, so the dual-coverage issue does not arise.

In Rodriguez, we held that the assigned-risk policy at issue never became effective because the insured, like Willowglen here, procured voluntary coverage prior to the assigned-risk policy’s effective date. Rodriguez involved a more recent edition of the Assigned Risk Plan, however, and that edition contained language different from this edition. That edition stated:

[A]ny insurer that wishes to insure an employer as voluntary business may do so at any time. If such insurer is not the contract carrier, the contract carrier shall cancel its policy pro rata and the coverage shall automatically terminate as of the effective date of the voluntary insurer’s policy.

(all but “pro rata” quoted in Rodriguez, 363 S.C. at 85-86, 610 S.E.2d at 491 (emphasis in opinion altered)).

The edition involved in this case states:

[A]ny insurer that wishes to insure an employer as voluntary business may do so at any time. If such insurer is not the assigned carrier, the assigned carrier shall cancel its policy pro rata and the assignment shall automatically terminate as of the effective date of the voluntary insurer’s policy.

United argues that the difference is critical. United emphasizes that the assignment flows from the insurer’s contractual relationship with the other insurers participating in the Assigned Risk Plan, whereas coverage flows from the insurance policy, which represents the relationship between the insurer and the insured. According to United, the edition of the Plan involved here plainly addresses the automatic termination of only the assignment. Based on the principle inclusio unius est exclusio alterius, United asserts that under this edition of the Plan, assigned-risk coverage does not automatically terminate upon the commencement of voluntary coverage. See, e.g., German Evangelical Lutheran Church of Charleston v. City of Charleston, 352 S.C. 600, 606-07, 576 S.E.2d 150, 153 (2003) (applying the principle); Hodges v. Rainey, 341 S.C. 79, 86-87, 533 S.E.2d 578, 582 (2000) (same). Accordingly, United claims, Travelers’ assigned-risk coverage with Willowglen continued to exist until Travelers affirmatively canceled the renewal policy, after September 6,1997.⁶

At first glance, United’s argument is appealing. This edition of the Plan does say “assignment,” not “coverage.” Nevertheless, the effect of the automatic termination of the assignment is the automatic termination of coverage. Without the assignment there never would have been any policy or coverage. We therefore hold that Travelers’ assigned-risk coverage automatically terminated when United’s voluntary coverage commenced. Consequently, coverage under the renewal policy never became effective. Cf. Rodriguez, 363 S.C. at 82-83, 88, 610 S.E.2d at 489-90, 492 (involving an insured who procured assigned-risk insurance after procuring voluntary coverage, and holding that the assigned-risk policy never became effective). There was no dual coverage on September 6, 1997. United was the only carrier.

We see no significance in the issues raised by United related to the timing and retroactivity of Travelers’ cancellation of the policy. See Avant, 356 S.C. at 191, 588 S.E.2d at 130 (addressing the issues and holding that the Plan “allows for this retroactive cancellation”). As we have stated, coverage under Travelers’ renewal policy never went into effect. United was the only carrier providing workers’ compensation coverage on September 6,1997, so United is solely responsible for the claim.

CONCLUSION

United was the only carrier covering Willowglen when Marty Avant was injured. United is therefore solely responsible for the claim. The decision of the Court of Appeals is

AFFIRMED.

MOORE, WALLER and BURNETT, J.J., concur. TOAL, C.J., dissenting in a separate opinion.

1 . S.C.Code Ann. § 38-73-540(A) (2002).

2 . Travelers initially issued a notice of cancellation effective March 19, 1998, which is not germane to the issues before us.

3 . Whether the delegation is lawful is not an issue before us.

4 . S.C.Code Ann. § 38-73-540(A)(l) (2002).

5 . Regulation 67-409(A) states:

When duplicate or dual coverage exists by reason of two different insurance carriers issuing two policies to the same employer securing the same liability, the Commission shall presume the policy with the later effective date is in force and the earlier policy terminated on the effective date of the later policy.

25A S.C.Code Ann. Regs. 67-409(A) (1990).

Because its policy’s stated effective date is later than that of United's policy, Travelers would be presumed responsible if Regulation 67-409(A) were controlling. ,

6 . As mentioned above, in 1998 Travelers canceled its policy retroactive to July 1, 1997. As discussed below, United argues that this retroactive cancelation was invalid.