Robert A. Villwock, etc v. Insurance Co. of NA, etc ( 1996 )

COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Moon, Judges Coleman and Fitzpatrick
Argued at Salem, Virginia
ROBERT A. VILLWOCK, T/A
PIONEER CONSTRUCTION CO., INC.
OPINION BY
v. Record No. 0434-95-3 CHIEF JUDGE NORMAN K. MOON
MARCH 19, 1996
INSURANCE COMPANY OF NORTH AMERICA/CIGNA,
CHRISTOPHER R. ROUTH, ROBERT C.
HUFFMAN AND UNINSURED EMPLOYERS' FUND
FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION
R. Louis Harrison, Jr. (R. Louis Harrison,
Jr., P.C., on briefs), for appellant.
John M. Poma (Midkiff & Hiner, P.C., on
brief), for appellee Insurance Company of
North America/CIGNA.
No brief or argument for appellees
Christopher R. Routh, Robert C. Huffman and
Uninsured Employers' Fund.
Robert A. Villwock appeals the ruling of the Workers'
Compensation Commission that CIGNA, the putative insurer,
complied with Code § 65.2-804(B) in cancelling his workers'
compensation insurance policy. We affirm because credible
evidence supported the commission's finding that the employer
received notice of cancellation.
Robert A. Villwock owns and operates the Pioneer
Construction Company. He had workers' compensation insurance
through CIGNA. The most recent policy was to be effective from
April 7, 1993 through April 7, 1994. As a condition of that
policy, Villwock was required to comply with certain audit
requirements, including provision of payroll records.
On March 30, 1993, CIGNA requested payroll information for
an audit. The request was accompanied by a notice that the
information had to be provided within fifteen days in order to
avoid an interruption in coverage. CIGNA received no response
from Mr. Villwock, and sent a second request for information on
May 8th. Villwock's insurance agent, Virginia Fowler, received a
copy of this notice, and contacted Villwock by telephone.
Villwock assured Fowler on two occasions that he would provide
the requested information immediately, but did not do so.
CIGNA then requested permission from NCCI, which administers
workers' compensation insurance for the Commonwealth of Virginia,
to cancel Villwock's policy. A copy of this request was sent to
Villwock and his agent. On August 13, 1993, NCCI responded
directly to Villwock, with a copy to CIGNA, informing Villwock
that if he did not provide the requested information within
fifteen days his policy would be cancelled. While both Fowler
and CIGNA received their copies of the aforementioned notices,
Villwock denied receiving any of them.
CIGNA then proceeded with cancellation of the policy
pursuant to Code § 65.2-804(B). On August 27, 1993, it sent a
notice to Villwock, with a copy to the agent, informing him that
his insurance would be cancelled effective September 30, 1993.
The statute requires a thirty-day notice to the employer and the
commission, and CIGNA routinely adds five to seven days to
account for mailing. Under standard office practice, the notices
to Villwock and the agent would be mailed the day the notice was
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typed, and the commission's would be mailed two to five days
later in a bulk mailing.
The commission did not receive its notice until September
22, 1993. NCCI, to which CIGNA also sent a copy of the notice,
received its notice on September 16. Because it received its
notice less than thirty days from the cancellation date, the
commission changed the effective date of the cancellation to
October 21, 1993, thirty days from its receipt of the notice from
CIGNA. The commission's standard practice was to send a notice
to the employer notifying it of the cancellation and the
effective date. A commission witness testified that this form
was sent, although he was unable to produce a copy of it because
the hard copies of the record had been destroyed. Villwock
denied receiving notice from either CIGNA or the commission. His
agent received her copy of the notice from CIGNA.
On November 15, 1993, two employees of Pioneer Construction
fell from a scaffold and were injured, one severely. On the day
of the accident, Villwock contacted his insurance agent, who
informed him that his policy had been cancelled. Villwock
testified that CIGNA did not inform him that the policy was
cancelled until he contacted the company himself in February
1994.
At his deposition, Villwock testified that in June 1993 he
moved from Route 1, Box 148B in Huddleston, Virginia to 112
Autumn Avenue in Huddleston. Villwock did not inform either
CIGNA or his insurance agent of his change of address. He did,
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however, provide a forwarding order to the post office, and he
received forwarded mail. He was still receiving forwarded mail
as of the deposition date of August 24, 1994. Yet, he testified
that he never received a single item of correspondence from
CIGNA, NCCI, or the commission concerning either the audit or the
cancellation of his insurance. He testified that he was unaware
of any other mail he failed to receive after changing his
address. 1 He acknowledged receiving and cashing a refund check
from CIGNA that was mailed to his former address in March 1994.
Villwock's method of dealing with his business mail was
haphazard. Both he and his wife, who helped with the business,
collected the mail. Mail was opened each day "at random" by
either Villwock or his wife. The business and personal mail were
both delivered to the same mailbox. The Villwocks did not open
all of the business mail at once, but instead "at various times."
They did not datestamp the mail.
We construe the evidence in the light most favorable to the
party prevailing below. States Roofing Corp. v. Bush
Construction Corp., 15 Va. App. 613, 616, 426 S.E.2d 124, 126
(1993). The commission's factual findings will not be disturbed
on appeal if supported by credible evidence. Id. This Court is
not bound by the commission's determination of legal questions.
1
At the hearing, Villwock testified that he had changed his
address in 1987. The commission cited this date in its decision.
The testimony at the deposition concerning the change of address
was more clear and detailed, and is also more consistent with
other facts in the record. We therefore accept the deposition
testimony for purposes of this appeal.
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Cibula v. Allied Fibers & Plastics, 14 Va. App. 319, 324, 416
S.E.2d 708, 711 (1992), aff'd, 245 Va. 337, 428 S.E.2d 905
(1993).
Resolution of this case requires interpretation of Code
§ 65.2-804(B). The statute provides, in pertinent part:
No policy of insurance hereafter issued
under the provisions of this title . . .
shall be cancelled or nonrenewed by the
insurer issuing such policy . . . except on
thirty days' notice to the employer and the
Workers' Compensation Commission . . .
The threshold question is whether the insurance company must
show that the notice was received, or merely that it was mailed.
The commission's opinion is ambiguous on this issue. For the
reasons set forth below, we hold that CIGNA must show that the
employer received the notice. 2
In American Mutual Fire Insurance Co. v. Barlow, 4 Va. App.
352, 355-56, 358 S.E.2d 184, 186-87 (1987), we held that the
notice must actually be received by the commission in order for
cancellation to be effective. In Barlow, the employer received
the notice but the commission did not. We thus had no need to
decide whether the employer must actually receive the notice.
In deciding whether actual receipt is necessary to effect
cancellation, the language of the statute controls. Where the
2
The commission did not rule explicitly on whether Villwock
had received the notice. However, it noted that Villwock had
received and cashed the policy refund check--in effect finding
that Villwock had received the notice as well. As discussed
further below, this finding is amply supported by credible
evidence.
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statute provides that the policy may be cancelled by giving a
certain number of days' notice to the insured, and does not
specify mailing as the method of providing notice, actual receipt
is required for the notice to be effective. 3 This rule is well
established in both cases and commentary. See Scanlon v. Empire
Fire and Marine Insurance Co., 117 Idaho 691, 693-94, 791 P.2d
737, 739 (1990); Larocque v. Rhode Island Joint Reinsurance
Assoc., 536 A.2d 529, 530-31 (R.I. 1988); Nunley v. Florida Farm
Bureau Mutual Insurance Co., 494 So. 2d 306, 307 (Fla. Dist. Ct.
App. 1986); Osborne v. Unigard Indemnity Co., 719 S.W.2d 737,
740-41 (Ky. Ct. App. 1986); Smith v. Municipal Mutual Insurance
Co., 169 W.Va. 296, 298-99, 289 S.E.2d 669, 670-71 (1982); Rocque
v. Co-operative Fire Insurance Association of Vermont, 140 Vt.
321, 325, 438 A.2d 383, 385-86 (1981); Martin J. McMahon,
Annotation, Actual Receipt of Cancellation Notice Mailed By
Insurer as Prerequisite to Cancellation of Insurance, 40 A.L.R.
867, 873, 883-88 (4th ed. 1985); 43 Am. Jur. 2d Insurance § 391
(4th ed. 1982).
3
The same rule applies to provisions in an insurance policy
that set forth requirements for notice of cancellation. Where,
as here, the policy provisions conflict with the applicable
statute, the statute controls. See Ampy v. The Metropolitan
Casualty Insurance Company of New York, 200 Va. 396, 400, 105
S.E.2d 839, 844 (1958) (Code provision regarding cancellation of
motor vehicle insurance became part of insurance policy and
insurer had to comply with it); see also Boman v. State Farm
Mutual Automobile Insurance Co., 505 So. 2d 445, 450 (Fla. Dist.
Ct. App. 1987); Smith v. Municipal Mutual Insurance Co., 169
W.Va. 296, 301, 289 S.E.2d 669, 671-72 (1982); Martin J. McMahon,
Annotation, Actual Receipt of Cancellation Notice Mailed By
Insurer as Prerequisite to Cancellation of Insurance, 40 A.L.R.
867, 871 (4th ed. 1985).
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This rule is consistent with the policy that underlies Code
§ 65.2-804(B). As the Court noted in Barlow, one purpose of the
notice requirement is to allow employers to secure insurance with
another carrier. See also Hartford Accident & Indemnity Co. v.
Fidelity & Guaranty Insurance Underwriters, Inc., 223 Va. 641,
643-44, 292 S.E.2d 327, 328 (1982). If the employer does not
receive the notice, the employer does not have the opportunity to
secure other insurance, and thus the statutory purpose is not
fulfilled. See Larocque, 536 A.2d at 531; Smith, 169 W.Va. at
299, 289 S.E.2d at 671.
CIGNA met its burden of showing, based on credible evidence,
that the employer received the notice. 4 First, CIGNA presented
evidence concerning its regular procedure for mailing notices of
cancellation. This evidence supports a finding that the notice
4
Insurance companies typically meet this burden through
application of the presumption that correspondence properly
mailed is received by the addressee. See Larocque, 536 A.2d at
532; Osborne, 719 S.W.2d at 741. In Virginia, the mailing of
correspondence, properly addressed and stamped, raises a
presumption of receipt of the correspondence by the addressee.
Washington v. Anderson, 236 Va. 316, 322, 373 S.E.2d 712, 715
(1988). Denial of receipt by the addressee raises an issue for
the fact finder. Manassas Park Development Co. v. Offutt, 203
Va. 382, 385, 124 S.E.2d 29, 31 (1962).
Here, the notice was not "properly addressed" because, due
to Villwock's failure to inform CIGNA of his change of address,
it was mailed to his former address and therefore had to be
forwarded. We need not decide whether the mailing presumption
applies in the circumstances of this case. Even without benefit
of the presumption, which disappears upon denial of receipt by
the addressee, credible evidence supports the finding that
Villwock received the notice.
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was mailed from CIGNA in the regular manner. Villwock disputes
this, arguing that the commission's late receipt of the notice
negates any inference that the mailing was handled in a regular
manner. However, a postal delay in processing the commission's
copy of the notice, or a delay by the commission handling the
notice once it arrived, is irrelevant to the procedures used by
CIGNA in handling Villwock's notice. Also, the notices to the
commission and Villwock were mailed using different procedures,
with notice to the employer going out the day it was typed, and
notice to the commission going out two to five days later through
bulk mail. While CIGNA's procedures for mailing commission
notices may have contributed to the delay, this does not suggest
that Villwock's notice was handled other than in the regular
manner.
Second, none of the correspondence from CIGNA to Villwock
concerning either the audit or the cancellation was returned as
undeliverable. Indeed, CIGNA showed and Villwock acknowledged
that he had received the refund check from CIGNA that was mailed
to his former address. He also testified that he had received
forwarded mail and was unaware of failing to receive any
forwarded mail other than the notices concerning his insurance.
The commission was justified in concluding that Villwock's
haphazard procedures for handling business mail, as well as his
history of failing to respond to verbal notice provided by his
insurance agent, supported the inference that he received the
cancellation notice but failed to respond, either deliberately or
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through negligence. We hold that Villwock's insurance was
effectively cancelled.
According to Villwock's testimony, mail to his former
address in Huddleston was forwarded to his new address. While
CIGNA added five days to the notice period to account for
mailing, the necessity of forwarding may have delayed the notice
so that the notice period was less than thirty days. However,
even if it was received late, the notice was still effective.
Villwock had more than thirty days' notice of the need to
procure substitute insurance. The commission, because it
received its notice less than thirty days before the notice
period set by CIGNA was due to expire, established a new
cancellation date of October 21, 1993. The commission sent a
notice to Villwock that informed him of the new cancellation
date. The commission's action negated any failure to comply with
the thirty-day notice period set by the statute. Moreover, under
the rule generally applicable to cancellation of insurance,
failure to give the notice of the requisite length does not void
the notice; instead, cancellation becomes effective after the
required period has lapsed. See Wright v. Grain Dealers National
Mutual Fire Insurance Co., 186 F.2d 956, 960-61 (4th Cir. 1950)
(applying Virginia law); 43 Am. Jur. 2d Insurance § 389 (1982).
In addition, both CIGNA and NCCI informed Villwock in August,
more than two months before the cancellation date, that his
insurance would be cancelled for failure to provide information
necessary for the audit. Villwock's insurance was effectively
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cancelled under Code § 65.2-804(B).
Therefore, the judgment of the commission is affirmed.
Affirmed.
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