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FEDERAL INSURANCE COMPANY v. WORKMEN'S COMPENSATION APPEAL BOARD (GENERAL AIR FREIGHT (09/13/85)

decided: September 13, 1985.

FEDERAL INSURANCE COMPANY, PETITIONER
v.
WORKMEN'S COMPENSATION APPEAL BOARD (GENERAL AIR FREIGHT, DIVISION OF DCI INTERNATIONAL, INC. AND TRANSPORT INDEMNITY COMPANY AND BERNACKI), RESPONDENTS



Appeal from the Order of the Workmen's Compensation Appeal Board in case of William Bernacki v. General Air Freight (DCI, Inc.) and General Air Freight, a division of DCI International, Inc., No. A-79578.

COUNSEL

Richard D. Harburg, Swartz, Campbell & Detweiler, for petitioner.

William J. McKee, with him, Walter J. Timby, Jr., and Thomas R. Bond, LaBrum and Doak, for respondents.

Judges Rogers, MacPhail and Palladino, sitting as a panel of three. Opinion by Judge Palladino. Judge Barry did not participate in the decision in this case.

Author: Palladino

[ 91 Pa. Commw. Page 631]

The question presented in this appeal is which of two workmen's compensation insurance carriers is responsible for making workmen's compensation payments to Claimant, William Bernacki.

Claimant worked for General Air Freight (GAF), a company which became a division of DCI International, Inc. (DCI) in October of 1974. This consolidation was effectuated by an agreement of sale in which DCI agreed to purchase all of the assets of GAF, including its insurance policies. At the time of the sale, each company had a workmen's compensation carrier; GAF was insured by Petitioner, Federal Insurance Company (Federal), and DCI was insured by Transport Indemnity Company (Transport). On November 1, 1974, Federal endorsed its policy with GAF to include DCI under its coverage, and Transport likewise endorsed its policy with DCI to include GAF. The dual endorsements were made pending clarification of the relationship between DCI and GAF. The period of coverage of the policy between GAF and Federal was from July 1, 1974 to July 1, 1975.

In March of 1975, Federal received a request from GAF/DCI that it cancel the workmen's compensation policy, with an effective date retroactive to October 16, 1974, the date GAF became a division of DCI. No formal cancellation notice was sent to DCI because the

[ 91 Pa. Commw. Page 632]

    policy expired on July 1, 1975. Federal did return to GAF/DCI the excess premium due on the policy.

Claimant sustained a work-related injury on January 10, 1975, and as a result is now totally disabled. Federal, believing that it might be liable to Claimant for workmen's compensation benefits, paid Claimant benefits from January 11, 1975 to July 13, 1978 at the rate of $114.00 per week, and also paid medical expenses totaling $551.32. Neither Federal nor GAF/DCI filed a notice of compensation payable. This case was initiated by Federal, when it filed a document entitled Claim Petition, requesting a determination as to whether Transport should be responsible for Claimant's compensation. At this point Claimant also filed a claim petition requesting compensation. The referee dismissed Federal's claim petition and acted upon Claimant's petition. The referee found that Claimant had sustained a work-related injury on January 10, 1975 while employed by GAF/DCI. The referee held that on the date of the injury GAF/DCI was insured by Transport Indemnity Company, and ordered Transport to pay Claimant workmen's compensation, with back payments from January 11, 1975, plus medical expenses. The referee further ordered Claimant to reimburse Federal for the monies mistakenly paid to him, an amount in excess of $21,000.00.

The Board, on appeal, held that the cancellation of Federal's workmen's compensation policy with GAF/DCI was ineffective because it occurred after Claimant's injury. The Board concluded that GAF/DCI had dual coverage as of January 10, 1975, and ordered the two insurers to assume an equal share of the compensation payments and any medical expenses. Transport was also ordered to reimburse Federal in the amount of $10,706.66, half ...


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