Appeals court reverses in comp premium case

The Georgia Court of Appeals on Thursday ordered a lower court to reconsider all documentation in a case in which a workers compensation insurer alleged that a renovations contractor owed $153,363 plus interest for unpaid premiums.

According to Preston Building and Renovations, LLC. v. Ace American Insurance Company, the contractor bought a workers compensation policy initially priced at $1,500 “based on payroll data” in June 2019. Months later, Ace issued an endorsement, with an updated premium of $193,745, based on what it said were company records, modifiers, work classifactions and other documentation. By October 2019, the policy was canceled for nonpayment.

“In line with industry custom,” Ace conducted a final audit to calculate the final premium due, generating a final bill of $154,863 “based upon the total payroll” for the audited period. After crediting the $1,500 Preston had paid, Ace American calculated the final amount due as $153,363.

After being sued, Preston’s owner contested the calculation of the unpaid premium as “inflated” and asserted that the insurer “failed to properly classify certain subcontractors or to credit the premium due for those subcontractors covered by a valid certificate of insurance.”

A trial court ruled in favor of Ace and ordered Preston to pay the unpaid premium, plus prejudgment interest of $44,283.04. In reversing, the appeals court said the lower court failed to consider evidence filed by Preston’s owner explaining the subcontractors and the certificates of insurance covering their workers. On remanding the case, the court wrote that “the trial court erred in disregarding Preston’s affidavit in determining whether genuine issues of material fact remain regarding the classification of certain subcontractors and the final premium due under the policy.”