Rodriguez v. Romero, No. 25948.

• Court: United States State Supreme Court of South Carolina
• Citation: 363 S.C. 80,610 S.E.2d 488
• Decision Date: 28 February 2005
• Docket Number: No. 25948.
• Parties: Celestino RODRIGUEZ, Employee, Claimant, v. Hector ROMERO, Employer, and The Insurance Corporation of New York (INSCORP) and Capital City Insurance Company, Carriers, Defendants, of whom The Insurance Corporation of New York (INSCORP) is the, Appellant, and Capital City Insurance Company is the, Respondent.

363 S.C. 80
610 S.E.2d 488

Celestino RODRIGUEZ, Employee, Claimant,
v.
Hector ROMERO, Employer, and The Insurance Corporation of New York (INSCORP) and Capital City Insurance Company, Carriers, Defendants,
of whom The Insurance Corporation of New York (INSCORP) is the, Appellant, and
Capital City Insurance Company is the, Respondent

No. 25948.

Supreme Court of South Carolina.

Heard September 21, 2004.

Decided February 28, 2005.

Rehearing Denied April 7, 2005.

363 S.C. 81

Stephen L. Brown and Amy E. Mathisen, both of Young Clement Rivers & Tisdale, of Charleston, for Appellant

Stanford E. Lacy and Christian Stegmaier, both of Collins & Lacy, of Columbia, for Respondent.

Justice WALLER:

This is a workers compensation matter. At issue is which of two insurance carriers, The Insurance Corporation of New

363 S.C. 82

York (INSCORP) or Capital City Insurance Company (Capital), is responsible for coverage for injuries sustained by Celestino Rodriguez in a work-related accident on June 27, 2000. The single commissioner held Capital was the responsible insurance carrier; the full commission affirmed. The circuit court reversed and held INSCORP is the responsible carrier. We affirm the circuit court's ruling

FACTS

Rodriguez was employed performing construction-type labor for Hector Romero, a subcontractor. On June 27, 2000, while installing a new roof on a large commercial building, Rodriguez slipped and fell through a skylight opening, suffering numerous injuries. It is undisputed that Rodriguez is entitled to workers' compensation coverage. The only question is which carrier is responsible.

Romero initially purchased workers' compensation insurance from INSCORP in January 1999. The policy was cancelled in June 1999 for non-payment. In May 2000, Romero called INSCORP'S managing agent, Risk Control, to ask if his policy could be reinstated. Risk Control referred him to one of its carriers, Tad Roberts. On May 19, 2000, Romero faxed his application to Roberts, who forwarded it to Risk Control. Romero sent a partial premium of $704.00 in June 2000.

Sometime thereafter, Roberts became suspicious Romero was "leasing" his employees.¹ Risk Control investigated and determined it was likely Romero was leasing employees. On or about June 16, 2000, Risk Control advised Roberts that Romero's policy should be cancelled. Roberts relayed this information to Romero and told him to seek coverage through an "assigned risk" plan.² However, Romero's policy was not cancelled and, instead, INSCORP issued policy # SC0001204200RCS on June 22, 2000, with an effective date of May 19, 2000. On June 23, 2000, Risk Control sent Romero an invoice for the July premium payment.

363 S.C. 83

Meanwhile, having been advised by Roberts to seek assigned risk coverage, Romero went on June 23, 2000 to Capstone Insurance Services in Greenville and applied for workers' compensation coverage. In accordance with assigned risk rules and procedures, Romero's application was sent to Capital, a designated assigned risk carrier. Romero's application for assigned risk coverage made a number of misstatements and misrepresentations, including the averment that he was a new business and had no prior workers' compensation coverage.³ Not knowing of Romero's coverage with INSCORP, Capital issued policy # 05-WC-0004280/000, effective June 24, 2000. Three days later, on June 27, 2000, Rodriguez slipped through the roof and was injured

Capital, still unaware of the INSCORP policy, accepted the claim and began providing benefits. It learned of the INSCORP policy on or about August 15, 2000. On August 16, 2000 Capital tendered Rodriguez' claim to INSCORP; Capital simultaneously filed a cancellation form with the National Council on Compensation Insurance (NCCI) asking its policy be voided on the ground that Romero was ineligible for assigned risk coverage because a) he had voluntary coverage, and b) he had made material misrepresentations in his application for coverage. On August 17, 2000, INSCORP sent a "flat cancellation" notice to Romero.

On September 6, 2000, Capital filed a motion to determine coverage. A hearing was held before the single commissioner, who ruled that because Romero had lied in his representations to obtain the policy, Capital's policy should be rescinded and declared void ab initio. Since INSCORP voluntarily issued its policy, the commissioner found it should be deemed the responsible carrier. However, notwithstanding these findings, the single commissioner ruled that because Capital's assigned

363 S.C. 84

risk policy had the most recent effective date, it was the responsible carrier pursuant to the applicable regulation, 25A S.C.Code Ann. Reg. 67-409. The full commission affirmed, with one commissioner dissenting. The circuit court reversed and found INSCORP to be the responsible carrier; it ruled that because Romero had coverage in the voluntary market, he was not eligible for assigned risk coverage such that Capital's coverage was void. The circuit court also ruled the policy was void ab initio due to material misrepresentations made by Romero in his application. Accordingly, the circuit court found no dual coverage such that Reg. 67-409 was inapplicable.

ISSUE

Did the circuit court properly rule that INSCORP was the responsible carrier?

SCOPE OF REVIEW

Review of a decision of the workers' compensation commission is governed by the Administrative Procedures Act. Lark v. Bi-Lo, Inc., 276 S.C. 130, 135, 276 S.E.2d 304, 306 (1981). Although this Court may not substitute its judgment for that of the full commission as to the weight of the evidence on questions of fact, it may reverse where the decision is affected by an error of law. Shealy v. Aiken County, 341 S.C. 448, 535 S.E.2d 438 (2000); S.C.Code Ann. § 1-23-380(A)(6) (Supp.2002). Review is limited to deciding whether the commission's decision is unsupported by substantial evidence or is controlled by some error of law. Hendricks v. Pickens County, 335 S.C. 405, 411, 517 S.E.2d 698, 701 (Ct.App.1999).

DISCUSSION

Central to resolution of this dispute is the interplay between the South Carolina Assigned Risk Plan Operating Rules and Procedures (Procedures) and the applicable regulation, 25A S.C.Code Ann. Reg. 67-409.

Pursuant to S.C.Code Ann. § 38-73-540 (1976), "[a]ssigned risk agreements may be made among insurers with respect to the equitable apportionment among them of insurance which

363 S.C. 85

may be afforded applicants who are in good faith entitled to, but who are unable to procure, insurance through ordinary methods." (emphasis supplied). In April 2000,⁴ the National Council on Compensation Insurance (NCCI) filed the South Carolina Workers Compensation Assigned Risk Plan (Plan) with the Department of Insurance. Although the Plan has not been enacted by the General Assembly,...