NC Legislature Adjourns: IIANC Successful with Passing Workers’ Comp Initiatives

The Legislature has wrapped up its 2013 long session.  Despite the pyrotechnics, the sun will come up tomorrow and the world continues to spin on its axis.  The legislative battlefield is strewn with the dead and the wounded.  IIANC has some wounds to heal but we also have some victories to celebrate.  There are several noteworthy accomplishments in this session.  Two of these accomplishments were initiated by IIANC with contribution and support from some allies.  One of the accomplishments was an insurer initiative that IIANC supported and worked to pass.

The two IIANC initiatives involve Workers’ Compensation.  A Court of Appeals decision in the spring of 2012 created a serious problem with insurers’ ability to cancel a workers’ compensation policy.  The law required the insurer to send notice of cancellation by registered mail return receipt request and “completed.”  This was interpreted to mean that if the insurer could not produce physical proof of delivery, such as the “green card,” then delivery was not completed and cancellation was not effective.  This interpretation created serious logistical issues for an insurer to make sure that the policy was in fact cancelled.  The new statutory wording retains the “and completed” wording but makes notice by registered mail an option.  The other option is notification by any means permissible under Rule 4 of the North Carolina Rules of Civil Procedure.  This rule is a commonly used method of notice for other types of legal documents and now can be used by insurers to make required notice of cancellation for workers’ compensation policies.

The second accomplishment and the one most important to insurance agents, deals with a second interpretation in the case referenced above.  This second interpretation would require a general contractor to get a new certificate of insurance each time a job was sublet to the same subcontractor.  This would create an administrative nightmare to insurance agents who would have to issue an increased number of certificates.  It would also create an administrative challenge to the general contractor to make sure that the certificates and jobs matched up or risk adverse audits based on the inability to produce job specific certificates.  General Statute 97-19 of the Workers’ Compensation Act has now been amended to permit the general contractor to obtain a certificate at any time before the subletting.   Additionally, the law has been augmented to provide protection for the general contractor from responsibility in a situation where the subcontractor has workers’ compensation insurance and the general contractor failed to obtain a certificate in a timely manner.  Also, the augmented wording protects general contractors who obtain a certificate in a timely manner but the subcontractor’s workers’ compensation insurance is cancelled prior to the injury and the general contractor is unaware of the cancellation.

The accomplishment initiated by the insurers and supported by IIANC involves electronic insurance communications and records.  This is a new provision that allows the insurers to meet the requirements for notification under insurance statutes (except for workers’ compensation) by complying with Article 40 of Chapter 66 which is the Uniform Electronic Transactions Act.  So, legally required insurance notifications can now be made with the same electronic methods permissible in other business transactions.  Additionally, an oral communication between an insurer and another party that is “reliably stored and reproduced” constitutes an electronic communication or record.  Such recording of an oral communication will satisfy the legal requirements for written notification and an oral recording of an agreement between parties will satisfy any requirement for a signature.

A lot of hard work by the IIANC Technical & Legislative Committees, the Board of Directors and IIANC lobbyists was required to bring these accomplishments to a successful conclusion.  These accomplishments prove the value of belonging to an association such as IIANC and also the value of grass roots involvement through PAC contributions and daily staff presence in the Legislature.