The carrier for ASAP carpentry, Continental Indemnity Company alleged in its answer that the petitioner had not been in its employ on the date alleged in the petition and that the accident had not arisen out of and in the course of employment for ASAP carpentry. In its answer to the motion for temporary and medical benefits, Continental Indemnity Company alleged again that petitioner was not in its employ and that petitioner was an independent contractor.

The two issues before the court are first did the petitioner elect proprietor’s coverage at the inception of the policy with American Zürich Insurance company and therefore be entitled to coverage and benefits and secondly if there is to be no coverage afforded by American Zürich for the petitioner, is the petitioner eligible to be covered as an employee of an uninsured subcontractor by the general contractor on the worksite and therefore entitled to medical and temporary benefits.

The parties agreed to try the issue of coverage before addressing the petitioner’s need for treatment or temporary disability benefits. The petitioner testified through a Russian interpreter. The petitioner testified that he was owner of Tsybulskyy Construction LLC and that he had been in business in New Jersey for several years. He testified that his son Viktor assisted him with the incorporation documents. He also testified that he was not involved in any conversations or meetings with any insurance brokers or insurance companies. It was his testimony that when the bills came he would pay them. His son Viktor was not an employee of Tsybulskyy construction.  He did not receive any financial remuneration for his assistance with the paperwork. Mr. Tsybulskyy had another son Yuri who was an employee of the company. Yuri Tsybulskyy was at the worksite on the day that Mr. Petro Tsybulskyy was injured. 

Petra Tsybulskyy and Yuri Tsybulskyy worked as siders at various residential construction sites. In Mr. Tsybulskyy estimation, he had worked on four or five houses for ASAP Carpentry Inc.  It was his testimony that when needed, ASAP Carpentry would call Mr. Tsybulskyy and request that he go to particular job site. It was his testimony that because his English was nonexistent, the information from ASAP was given to his son Yuri. There was no contract or any written understanding between Tsybulskyy Construction Company and ASAP Carpentry. The accident happened at a worksite in Metuchen, New Jersey. Before commencing work, someone at ASAP carpentry asked Mr. Tsybulskyy for proof of insurance. He obtained a certificate of insurance and provided it to ASAP Carpentry.   Mr. Tsybulskyy testified that without furnishing proof of insurance he would not get the job.

Mr. Tsybulskyy testified that he was not familiar with and did not know the broker Joseph Schipsi.  It was his testimony that he had never spoken with Mr. Schipsi. The only person who negotiated insurance in behalf of Mr. Petro Tsybulskyy was his son Viktor Tsybulskyy.

On cross-examination, Mr. Tsybulskyy again reiterated that he spoke no English other than thank you, goodbye or hello.  He testified that he was trained in doing siding, windows and doors. He also admitted that he did work for other companies other than ASAP carpentry. Mr. Tsybulskyy testified that the only workers at Tsybulskyy construction were his son and himself. He received payment from ASAP by way of a check in his name. Then he would issue paychecks to himself and to his son Yuri.

Respondent’s counsel produced as R-1 the New Jersey workers compensation insurance plan application for the designation of an insurance company. The petitioner testified that he did not remember whether he had ever seen it before. He stated that his memory was very poor after the accident. He did acknowledge that he did not fill it out; that his son Viktor had filled it out and then Viktor had explained to him that it was an application for insurance. He acknowledged that he signed the check superimposed on last page of R-1. He denied that he signed the application. He testified that the best of his knowledge the signature on the application was not his son Viktor’s signature.

As R-2, the respondent produced a certificate of insurance produced by Joseph Schipsi for Petro Tsybulskyy which indicated that the proprietor/partner/executive officers were excluded. Mr. Tsybulskyy testified that he thought he had seen R-2 before but that he did not know what it was and could not read it. He again admitted that he did not deal with the insurance broker. He was of the opinion that the workers compensation insurance was to cover him and that he had always asked to be covered as he was the one who did most of the work for the company.

The respondent produced a policy issued by Liberty Mutual marked into evidence as R – 3. The petitioner acknowledged that he did in fact sign the application for this policy. This application had a notice of election for proprietors and partners. This election form specifically stated that this coverage was rejected.   The Petitioner testified that the signature on the notice of election was in fact his signature.

The petitioner could not supply any information as to how insurance broker was chosen. He did not know the insurance broker, he never spoke with any insurance broker and he never called any insurance broker. All the information he received about workers’ compensation coverage was given to him through his son Viktor. He relied

on his son Viktor as Viktor spoke English and was computer literate.

The respondent produced Mr. Joseph J. Schipsi. Mr. Schipsi was subpoenaed by the respondent. Mr. Schipsi is the president of Joseph J. Schipsi Inc. He has been licensed as an insurance agent in the state of New Jersey since 1983.  He testified that he was primarily a commercial property casualty insurance agency. In that capacity he testified that he would write workers compensation insurance and that he would submit applications to NJCRIB.   It was his testimony that he would obtain information from the insured and complete a form which would then be sent to the insured for signature. Once the application was sent back to the agent the information would be transformed electronically from the application and forwarded electronically to CRIB. It was his testimony that when the hard copy of the application was returned to Mr. Schipsi by the insured, it would be filed in the insured’s file at the agency. He did not have a signed form from Mr. Tsybulskyy in his possession.   In addition to general identification information, Mr. Schipsi testified that he would ask the potential insured whether or not the insured wanted to be included or excluded from coverage. He acknowledged that inclusion of the proprietor on the policy would result in a substantial increase in premium. Mr. Schipsi testified that all information sent to NJCRIB was sent directly into the NJCRIB website. The only item that would be sent by fax to NCR IB would be the insured’s check, the agency check or the proof of deposit. Mr. Schipsi also testified that it was his policy to have the checks payable to NJCRIB. Thereafter NJCRIB would examine the application, determine whether or not the insured had coverage elsewhere and if appropriate underwrite the policy and assign it to an insurance company.

Mr. Schipsi testified that he did have the application that he had faxed to the petitioner and then received back from Mr. Tsybulskyy. This form was marked as R-5. Mr. Schipsi testified that it was returned to him with Mr. Tsybulskyy’s signature along with his driver’s license information. Mr. Schipsi testified that Mr. Tsybulskyy’s initial policy application was rejected as he had a balance due Liberty Mutual, his prior insurance company.  Once the balance was paid Mr. Schipsi reapplied on behalf of Mr. Tsybulskyy and the workers’ compensation policy was issued. Mr. Schipsi acknowledged that he initialed next to what he believed to be the signature of Peter Tsybulskyy on the application dated January 18, 2008 although he admitted that he did not see Mr. Tsybulskyy signed the document. He also indicated Mr. Tsybulskyy’s status as owner and dated the application. Mr. Schipsi did sign the application as producer. It was his testimony that his initials were only meant to confirm that the application was signed. He concluded his direct testimony by stating that he never met Mr. Tsybulskyy, that he only talked to Mr. Tsybulskyy over the phone and that he did not speak Russian. It was his testimony that he forwarded the workers’ compensation policy to Mr. Tsybulskyy and requested that the insured check the policy for accuracy. He also advised in a letter to Mr. Tsybulskyy that if Mr. Tsybulskyy had any questions he could call Mr. Schipsi. Thereafter the only contact he had with Mr. Tsybulskyy was a request for a certificate of insurance. He testified that upon receiving a request for a certificate he would forward the request to American Zurich and that American Zürich would then issue the certificate. Mr. Schipsi testified that he was not an agent of American Zurich.

Mr. Schipsi testified that a renewal quote was sent to Mr. Tsybulskyy. It was his testimony that he did not have any contact with Mr. Tsybulskyy in regard to the renewal.  He did not receive a request from Mr. Tsybulskyy asking that the coverage in the renewal policy be modified in any way. Mr. Schipsi had no knowledge whether or not a renewal policy was ever issued. The policy year ran from January to January. Mr. Schipsi testified that the renewal notice which came directly from Zürich did include a paragraph on the first page that indicated that if a sole proprietor/limited liability partner/limited liability company member wished to have coverage for themselves that they would have to execute the notice of election form. 

On cross-examination by petitioner’s attorney, Mr. Schipsi testified that he spoke with Mr. Tsybulskyy in October of 2007. It was Mr. Schipsi’s testimony that he spoke to Mr. Petro Tsybulskyy and that the conversation was conducted in English. Mr. Schipsi testified that he did not speak with either of Mr. Tsybulskyy’s sons.  Mr. Schipsi testified that he received a signed application from Mr. Tsybulskyy. He testified that Mr. Tsybulskyy rejected coverage for himself the sole proprietor. He did acknowledge that he did not have a hardcopy handwritten signature from Mr. Tsybulskyy on the election form. He acknowledged that there was in fact a separate page for the election of coverage and that he had the application which contained an electronic signature. Mr. Schipsi offered his opinion that the signature on the last page of the application form covered everything that was typed into the form. It was his opinion that this was the effective understanding between the insured and NJ CRI B. It was Mr. Schipsi’s testimony that the petitioner, Mr. Petro Tsybulskyy did not elect coverage.

The carrier, American Zürich also subpoenaed the testimony of Mr. Yuri Tsybulskyy and Viktor Tsybulskyy. Yuri Tsybulskyy testified that he worked with his father doing siding and installing windows and doors. It was his testimony he had absolutely nothing to do with any paperwork for the business. He was not involved with any of the arrangements for insurance. Viktor Tsybulskyy testified that he was the one who had contacted Mr. Schipsi. He testified that his father had received an advertisement for insurance through the mail. Mr. Viktor Tsybulskyy testified that he identified himself to Mr. Schipsi as the son of Petro Tsybulskyy. Mr. Viktor Tsybulskyy was given R-5 for review. He testified that he recognized the signature on the document as the signature of his father. He also acknowledged that the signature page had been faxed from his fax machine. This fax machine was located in his residence.

In regard to the insurance, Mr. Viktor Tsybulskyy testified that his father told him that he wanted the same type of insurance that he had with Liberty Mutual. It was his testimony that his father was seeking another carrier because Liberty Mutual’s premiums were very high.

Mr. Viktor Tsybulskyy reviewed the application the January 18, 2008 and marked as R. – one and could not identify the applicant’s signature as his father’s.  Mr. Viktor Tsybulskyy testified that he was not involved in the payment of the premiums. It was Mr. Petro Tsybulskyy who paid all the bills. Mr. Viktor Tsybulskyy did not have any clear recollection of reviewing the application with his father. Mr. Viktor Tsybulskyy testified to a conversation he had with Mr. Schipsi indicating that his father wanted to be covered as a sole proprietor. According to Mr. Viktor Tsybulskyy’s recollection, he was told by Mr. Schipsi that Mr. Petro Tsybulskyy would be covered. This conversation concerning coverage occurred some time before the application was filled out.

Mr. Viktor Tsybulskyy testified that he did not see “owner rejecting to be included” on the application for designation of insurance Company dated January 18, 2008 and marked as R-1 in evidence.

The carrier American Zürich also produced the testimony of John Skidmore and Ron Brazda.  These individuals were from NJCR I B. They testified to the process involved in underwriting workers compensation policies.

Finally, counsel for the carrier American Zürich recalled the petitioner Mr. Petro Tsybulskyy to the stand.  Mr. Tsybulskyy admitted that his signature was on the check for the premium but not on the application marked R-4 in evidence and dated October 12, 2007.

The ability of a sole proprietor/partner/limited liability company member to obtain workers compensation coverage for themselves is a relatively recent addition to our law. The statute, N. J. S. A. 34:15 – 36 states that a self-employed person, a partner of the limited liability partnership or a member of the limited liability company who actively performs services on behalf of the self-employed person’s business shall be deemed an “employee” of the business for the purpose of receiving workers compensation benefits if the sole proprietor of the business, the limited liability partnership or a limited liability company elects, when the workers compensation policy for the business is purchased or renewed, to obtain coverage for said individual. This election for coverage for the self-employed person, the limited liability partner or the limited liability company member may only be made at the purchase or renewal and may not be withdrawn during the policy term.

The statute continues that “every application for workers compensation made on or after the effective date of this amendatory act shall include notice, as approved by the Commissioner of Banking and Insurance, concerning the availability of workers compensation coverage for self-employed persons limited liability partners and limited liability company members or partners. That application shall also contain a notice of election of coverage and shall clearly state that the coverage for self-employed persons, limited liability partners, limited liability company members or partners  shall not be provided under the policy unless the application containing the notice of election is executed and filed with the insurer or the insurance producer”.

The statute also provides that “no insurer or insurance producer shall be liable in an action for damages on the account of the failure of the business, limited liability partnership, limited liability company to elect to obtain workers’ compensation coverage unless the insurer or the insurance producer causes damage by a willful, wanton or grossly negligent act of commission or omission”. 

In the case before me, the petitioner argues that it was his intent as a member of a limited liability company to be covered by the workers’ compensation policy obtained from American Zurich insurance company. He maintains this argument despite the fact that his prior workers’ compensation policy with Liberty Mutual did not provide insurance for himself as a limited liability company member, that the notice of election dated January 18, 2008 and part of R-1 in evidence clearly states coverage is rejected, that the certificate of insurance issued by American Zürich marked R-2 in evidence and dated August 28, 2008 indicates that the proprietor/partner/executive officers are excluded and finally that the notice of election attached to R-4 and dated October 12, 2007 also indicates that coverage is rejected.

A fair reading of the statute clearly places the burden for the election of coverage squarely on the shoulders of the sole proprietor/limited liability partnership or limited liability company. It is an affirmative requirement on the part of the individual to execute the notice if the coverage is sought. In the case before me, the petitioner testified that he never spoke to the insurance broker. He relied on his son Viktor to speak to the broker. Viktor testified that he may have explained the application to his father. He did not have a complete recollection at the time of his testimony.  The petitioner’s failure to carefully investigate and learn about the possible options and consequences constituted negligence on his part.    Whether there was a miscommunication, a failure in translation, or a lack of sophistication on the part of the petitioner, this failure to properly execute the notice does not relieve the petitioner from the consequences of his negligence. 

I am satisfied that the petitioner sought out a new insurance carrier to reduce his workers’ compensation insurance policy premiums. The Liberty Mutual policy did not provide coverage for Mr. Tsybulskyy. Any policy that would have extended coverage to Mr. Tsybulskyy would have had a premium much higher than the one assessed by Liberty Mutual.

I find that the petitioner has failed to meet the burden of proof in establishing that he intended an election for coverage for himself. I find that the documentary evidence before me establishes clearly that the election was rejected. Whether a mistake occurred in the application process either through the fault of Mr. Tsybulskyy or the fault of Mr. Schipsi is irrelevant.  The carrier assigned the policy by NJCRIB can only rely on the application submitted to NJCRIB by the insurance producer.

I did not find the testimony of Mr. Petro Tsybulskyy or Mr. Viktor Tsybulskyy to be credible. In the aftermath of a serious accident, I believe the parties testified about what they wished would be true rather than what was actually true. The petitioner, Mr. Petro Tsybulskyy did not speak English. This inability imposes a greater burden on an individual who wishes to do business in an English-speaking world. Mr. Petro Tsybulskyy had the obligation to make sure that he understood the coverage that was to be afforded to him. He failed in this obligation. The trust he placed in his son was understandable but mistaken.  The fact that Mr. Tsybulskyy denied that the signatures on the application were his does not assist him in proving his case. Any errors on the application cannot be attributed to American Zürich insurance company.  Certainly Mr. Tsybulskyy admitted that he applied for workers’ compensation insurance. He also admitted that he did sign the application and faxed it back to his broker. Any responsibility for his error or the possible error of his broker should be litigated in a forum outside the workers’ compensation court’s jurisdiction.

The carrier American Zürich is not free to decline to issue a policy assigned to it by NJCRIB.  The law requires that when the application has been accepted by N JCRIB for an assigned risk policy the insurance company must insure.  If the application includes an election for coverage of a sole proprietor/limited liability partner/limited liability company member, the insurance carrier must extend coverage pursuant to statute. Naturally, the premium for such coverage is higher than it would be without coverage for this individual. The insurance carrier is paid for the risk it underwrites. The carrier is indifferent to whether the election is made or not as the higher premium covers the additional responsibility.

In the instant case if the election had been executed properly, the carrier would have issued a policy and subsequent certificates of insurance that reflected coverage of the sole proprietor/limited liability partners / limited liability company member and collected the appropriate premium. 

The petitioner also argues that in the event that this court decides that he did not elect coverage for himself that he should be afforded coverage through NJSA 34:15 – 79. This statute permits penalties to be assessed against any employer who fails to provide the protection required by New Jersey law. It also provides “any contractor placing work with a subcontractor shall, in the event of the subcontractors’ failing to carrier workers’ compensation insurance as required by the article, becomes liable for any compensation which may be due an employee or the dependents of the deceased employee of a subcontractor. The contractor shall then have a right of action against the subcontractor for reimbursement.”

Mr. Tsybulskyy argues that he should be considered an employee of a subcontractor and as such, entitled to workers’ compensation. Having failed to obtain insurance for himself he now seeks to set aside his negligence and obtain benefits. The general contractor ASAP Carpentry did meet its obligations under the statute and did require that Mr. Tsybulskyy provide a certificate of insurance before beginning work. ASAP carpentry could not require that Mr. Tsybulskyy provide coverage for himself as the law does allow a sole proprietor/limited liability partners / limited liability company member to decline personal coverage.   It would be inequitable to require that the general contractor now provide benefits to Mr. Tsybulskyy, especially in light of the fact that the statute permits the contractor the right of reimbursement against the subcontractor who has the ability to insure but fails to do so.  He should not be able to benefit through either his deliberate omission or his inexcusable neglect. 

Therefore having found that the petitioner has failed to establish an entitlement to benefits in either petition, I dismiss both petitions with prejudice.  I assess a stenographic fee of $1500.00 payable by the carrier American Zurich Insurance Company. The attorneys for the carriers will prepare Orders of Dismissal. 

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                                                                           Virginia M. Dietrich A.S.J.W.C.