Summary judgment should not have been granted to an insurer that claimed an employer knowingly and intentionally deceived it into retroactively reinstating a canceled policy so as to cover a claimed workers’ compensation injury, the Workers’ Compensation Court Appellate Division in Rhode Island has ruled.
The division found that genuine issues of material fact and credibility determinations remained with regard to the reinstatement of Paint & Color’s policy as well as the workers’ compensation claim filed by employee Carlos Saavedra for an injury that occurred during the “gap period” in coverage.
“There is a genuine issue as to whether Saavedra was injured at work, as evidenced by his statements within the unsworn interview transcript that his injury did happen at work, which conflicts with his failure to indicate on two (2) or three (3) of his first post-injury medical visits that he was hurt at work,” Judge Steven A. Minicucci wrote for the panel. “[S]uch credibility dispute must, for purposes of the motion, be resolved in favor of Paint & Color, which means for the motion it should be assumed that Saavedra did not state at the emergency room that he was injured at work for Paint & Color.”
Neither Gregory J. Acciardo of East Greenwich, who represented the employer, nor Providence attorney Jeffrey E. Estey Jr., on behalf of Beacon Mutual Insurance Co., responded to requests for comment.
The 16-page decision is The Beacon Mutual Insurance Company v. Paint & Color, LLC.
A hand injury
Just before noon on Feb. 17, 2016, Saavedra walked into the Carney Hospital Steward Satellite Emergency Facility in Quincy, Massachusetts, with a hand wound in need of stiches. While in the emergency room, he reported that he lacerated his hand while using a box cutter.
According to the medical record from that first visit — as well as the record for Saavedra’s follow-up visit to remove the stiches at the same facility on Feb. 26 — he did not indicate that the injury occurred at work.
Within days of Feb. 17, Paint & Color contacted Beacon Mutual, its workers’ compensation insurer, to inquire about reinstating its lapsed workers’ comp insurance policy retroactively to Jan. 25. The policy had been canceled by the insurer on Jan. 25 for nonpayment of premiums.
As a condition precedent to retroactive reinstatement, Paint & Color owner and manager Mauricio Cardona certified that the employer “did not have any kind of [covered] loss” during the time gap when coverage was lapsed. Beacon Mutual then retroactively reinstated the policy by letter on March 4.
At an occupational therapy appointment at Rhode Island Hospital on March 8, Saavedra reported that he cut his hand while putting up wallpaper on the job. In May, Saavedra filed for workers’ comp benefits, alleging that the Feb. 17 injury was work-related. In his petition, he listed his supervisor, Juan Cardona, as a witness.
Beacon Mutual responded with a petition in Workers’ Compensation Court, seeking a declaration that the reinstated policy was null and void due to fraudulent misrepresentations by Paint & Color.
The insurer then settled Saavedra’s claim with a lump sum payment and filed a motion for summary judgment against Paint & Color. Just before the motion hearing, counsel for Beacon Mutual filed with the court a large packet of documents.
Included in the documents was an undated, unsigned statement purporting to be a transcription of a recorded interview of Saavedra. The statement was not in affidavit or deposition form.
In the statement, Saavedra stated that Juan Cardona drove him to the hospital on Feb. 17 after he was injured on the job but directed him not to report at the ER that the injury occurred at work because there was an insurance issue. He said the supervisor promised to pay his medical bills, and he only sought workers’ comp when the employer did not pay him.
Relying on the statement, the trial court granted summary judgment in favor of the insurer and ordered Paint & Color to reimburse Beacon Mutual for all payments made under the policy, plus the costs associated with the handling and defense of Saavedra’s workers’ comp claim, including attorneys’ fees.
The employer appealed. It argued that the trial judge committed reversible error by relying on the statements within the interview transcript, which violated the requirements under Rule 56(c) to provide sufficient notice of materials relied on by the moving party at least 10 days prior to hearing. In addition, multiple issues of material fact remained, Paint & Color told the court.
Procedure and substance
The unanimous panel found both procedural and substantive problems with the trial court’s decision.
“Procedurally, this panel finds the trial judge erred by ruling without affording the counsel for Paint & Color an opportunity to develop a rebuttal to the interview transcript opposing counsel shared mere moments before the motion hearing began,” Minicucci wrote. “This is a clear violation of subsection (c) of Rule 56 and alone would be a sufficient basis for reversal.”
Substantively, whether Beacon Mutual was knowingly and intentionally deceived by Paint & Color turned on whether the company was aware of any injuries during the “gap period” of coverage, the panel said, but multiple issues of material fact remained.
In addition to the genuine issue of whether Saavedra was injured at work (as evidenced by statements made at his initial medical visits, contrasted with the later statements in the transcript), questions existed about whether the owner had knowledge that Saavedra claimed to be injured at work during the time he wrote his letters to the insurer, as well as what, if any, interest the supervisor had in the company and whether any knowledge he may have had about the injury could be imputed to the employer.
“All the credibility determinations on these points for purposes of the motion for summary judgment must at this time be resolved in favor of the nonmoving party,” Minicucci wrote. “As the petition at issue sounds in allegations of intentional and knowing fraud by Paint & Color, this appellate panel finds that issues remain requiring sworn testimony and a full opportunity for cross-examination so that credibility and what knowledge Mauricio Cardona had when executing his two (2) letters to Beacon Mutual may be property assessed.”
The panel reversed summary judgment in favor of the insurer and remanded the case to the trial court for further proceedings.
In a separate concurrence, Judge Alfredo T. Conte said the panel should have dismissed the case.
“[F]rom a judicial efficacy standpoint, this matter could be dismissed because there is no statutory or legal precedent upon which this court can grant the relief requested by the insurer in this matter, and thus there is no justiciable issue before this court,” Conte wrote.