eNotes: Workers’ Compensation – June 2022 – New Jersey

SIGNIFICANT CASE SUMMARIES

NJ CASE SUMMARY

Applied Underwriters Captive Risk Assur. Co. v. N.J. Dep’t of Banking & Ins.
New Jersey Superior Court
2022 N.J. Super. LEXIS 53 (N.J. Super. Ct. App. Div. Apr. 27, 2022).

Decided: April 27, 2022

Section 20 of the Non-Admitted Insurers Act provides discretion to the Commissioner of the Department of Banking and Insurance as to the litigation forum, including administrative actions within the Department.

Background

The question decided by the Superior Court of New Jersey in this case is whether the Commissioner of the Department of Banking and Insurance may pursue administrative action against a foreign insurance carrier for alleged improper insurance-related practices in the State of New Jersey, or whether this falls solely within the discretion of the New Jersey Attorney General. In this case, four insurance carriers were accused of violating New Jersey insurance law when they operated as a foreign insurance carrier, without licensure in New Jersey. The carriers were prosecuted for various violations by the Commissioner, and in defense of their actions, the carriers argued that Section 20 of the Non-Admitted Insurers Act, N.J.S.A. 17:32-16, provides an exclusive jurisdictional provision that disallows the Commissioner to bring a cause of action, and instead allocates that any action be brought by the Attorney General.

Notably, the relevant statute regulates the activities of insurance companies not “authorized to engage in insurance transactions in the State.” Although the defendants in this case did not have authority to transact insurance business in New Jersey, they nonetheless came within the scope of the statute because workers’ compensation did “not fall within the definition of any of these types of excluded insurance [health insurance, life insurance, or blanket insurance].” The matter was transferred to the Superior Court of New Jersey for an initial determination of this specific jurisdictional issue.

Holding

The New Jersey Superior Court declared that the Legislature did not “confine the Commissioner to a ‘lawsuit-only’ jurisdictional straitjacket.” The court discussed the legislative history of the relevant statute, aiming to address unmet legislation over “what authority, if any, the Commissioner had over non-admitted foreign insurance companies transacting insurance business” in New Jersey. Further, the court reviewed statements submitted in support of its passage, including that “[t]his bill will bring within the purview of the Department of Banking and Insurance certain previously non-admitted insurance companies.”

The court emphasized the declarative intent behind this statute as “remedial legislation.” Tied with the public policy analysis, the court considered whether the “proposed reading of the words of a statute is ‘at odds with either public policy or the overarching statutory scheme of which it is a part.’” In this regard, applicable insurance laws “confer upon the Commissioner expansive powers to take various administrative measures.”

Takeaway

Relying on the doctrine of “primary jurisdiction,” allowing courts to defer to “the appropriate body,” the court acknowledged the Department’s “special expertise in insurance regulation” towards concluding that “the Act was specifically passed to ‘provide the Department with jurisdiction over activities over unauthorized insurers.’”

Questions about this case can be directed to Caroline Gentilcore, Esquire at (908) 528-2600 or cgentilcore@tthlaw.com.