Franklin Mortgage Corp. v. Walker

Koontz, C.J., with whom Baker, J. joins,

concurring in part and dissenting in part.

*116I concur with the majority opinion holding that the claimant suffered an injury that arose out of and in the course of her employment. I respectfully disagree with the majority opinion holding Federal solely liable to pay the award to the claimant.

It is undisputed that on May 28, 1985, the day of the industrial accident, the employer was insured under both the Federal and the Aetna policies. Whether Federal or Aetna failed to comply with the notice of cancellation provisions of Code § 65.1-105 is a non-issue in this case. Federal failed to notify the commission of its coverage and properly concedes that its policy automatically became in full force and effect prior to the date of the industrial accident. Likewise, Aetna’s failure to give notice of cancellation after the date of the industrial accident did nothing to alter the fact that its policy also was in full force and effect on the date of the industrial accident.

Similarly, our Supreme Court’s decision in Hartford Co. v. Fidelity and Guaranty, Inc., 223 Va. 641, 292 S.E.2d 327 (1982), relied upon by the commission and in part by the majority, is not dispositive in the present case. Hartford construes Code § 65.1-105 to prevent a lapse in insurance coverage so that the worker is protected. Lapse in coverage is not the issue here; rather the issue is dual coverage. I simply find no language in Hartford prohibiting dual coverage or suggesting that the commission has any authority to relieve one insurance company from liability and thereby prefer one company over another on the facts of the present case. In short, in my view a finding of adequate coverage by one company to protect the injured worker is not synonymous with a finding that dual coverage does not exist.

Consequently, the real issue in this case is whether there is any authority for the commission to permit Aetna to effectively terminate its policy after the date of the industrial accident and thereby to terminate its dual coverage with Federal. The majority reasons that since nothing in the record suggests that a back-dated cancellation is not standard practice in the insurance industry and because Aetna has returned its premium, that loss should follow the premium and Federal should assume full responsibility. Having learned of the industrial accident prior to returning the premium, it should surprise no one in the insurance industry that Aetna would forego these premiums in exchange for a back-dated cancellation of its policy. More importantly, for the majority to base *117its holding that Aetna should not be held jointly liable for the award because Aetna has received no premiums simply ignores the fact that Aetna did receive premiums prior to the date of the accident. I agree with the majority that “the old adage that ‘loss follows the premium’ is applicable in this instance” and in this case that loss should follow the premium both to Federal and Aetna.

Finally, the majority properly concludes that Mrs. Walker’s rights were fully protected by Federal’s coverage. Again, however, the fact that she “had no right to, nor would she receive any benefit from, double coverage” does not provide a foundation on which to conclude that dual coverage in fact did not exist. Both policies were in full force and effect on the date of Mrs. Walker’s industrial accident; that fact is simply not altered because she was fully protected by one of them or that she will receive no benefit from dual coverage.

If on the facts, as here, dual coverage existed and both companies share the loss, there must be some authority for the commission to place the entire loss on only one company. Finding no such authority, I would hold Federal and Aetna jointly liable for the loss under their policies which were in full force and effect on the date of Mrs. Walker’s industrial accident.