Lack of notice of hearing gives insurer second chance to prove experience rating

In hearings to determine the experience rating for a company, both the insured and insurer are entitled to formal notice of the time, place, and purpose of the hearing.

Case name: Travelers Indemnity Co. v. Gridiron Management Group, No. S-10-068 (Neb. 02/11/11).

Ruling: The Nebraska Supreme Court held that an insurer did not receive proper notice of a hearing determining the experience rating for a company, so it sent the case back for a new hearing.

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What it means: In hearings to determine the experience rating for a company, both the insured and insurer are entitled to formal notice of the time, place, and purpose of the hearing.

Summary: A company acquired the assets of another business. It applied for workers' compensation insurance. The company had not previously obtained workers' compensation insurance, so it had not been assigned an experience rating. The company was assigned the rating previously held by the business rather than a lower rating given to a new company. The higher rating meant the company had to pay a bigger premium. The company disputed the experience rating assignment. At a prehearing conference, the date for the hearing was set. The insurer did not attend the prehearing conference and did not receive statutory notice of the hearing. After the hearing, which resulted in an outcome favorable to the company, the insurer appealed the decision. The Nebraska Supreme Court held that the insurer was entitled to formal notice of the hearing. The court sent the case back for a new hearing providing the insurer with notice and an opportunity to present evidence and be heard.

The insurer acknowledged that it learned informally that a hearing would take place, but it did not receive statutory notice. The company argued the informal notice was adequate. Construing the statute, the court concluded that both the insured and insurer are interested parties entitled to formal notice of the time, place, and purpose of the hearing.

Read more at the WorkersComp Forum homepage.

March 28, 2011

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