Zalma on Insurance
Education • Business
Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
Interested? Want to learn more about the community?
July 11, 2024
Common Law Right Eliminated by Statute

No Right to Rescind Workers’ Compensation in Mississippi

Post 4831

Read the full article at https://lnkd.in/g3sf4v5f; see the full video at https://lnkd.in/giTV6SEa and at https://lnkd.in/g3fFfbbv and https://zalma.com/blog plus more than 4800 posts.

The Supreme Court of Mississippi answered in the negative the inquiry from the United States Court of Appeals for the Fifth Circuit that certified the following question to this Court: “Does the Mississippi Workers’ Compensation Act (MWCA) allow an insurer to void ab initio a workers’ compensation policy based on a material misrepresentation?”

The decision came in American Compensation Insurance Company v. Hector Ruiz et al, No. 2023-FC-01160-SCT, Supreme Court of Mississippi (June 27, 2024) the Supreme Court answered the question in the negative.

THE WORKERS’ COMPENSATION STATUTE

The MWCA is silent with regard to the equitable remedy of rescission as are most statutes that have no reason for a statute to deal with equitable remedies.

The statutory contractor (who will be on the hook if the subcontractor’s insurer is permitted to void the policy) argued that, because the MWCA does not provide for rescission-only cancellation and nonrenewal – then rescission is not an available remedy. The insurer (who will be on the hook for millions of dollars if not permitted to void the policy) argued that, because the legislature opted not to address rescission in the MWCA, reasonably argued that the common law remedy of voiding the policy ab initio is available.

The Mississippi Supreme Court noted that a workers’ compensation policy is different. Not only is it governed exclusively by statute, but also it exists to pay benefits to the injured worker.

Because the MWCA makes no provision for an insurer to void a workers’ compensation policy based on a material misrepresentation and because the MWCA exists to ensure injured workers are compensated, the Supreme Court concluded that the MWCA does not allow insurers to void ab initio a workers’ compensation policy based on an employer’s material misrepresentation.

BACKGROUND FACTS

The employer is Hector Ruiz, doing business as Los Primoz Construction. Ruiz was performing work as a subcontractor for contractor Jesco, Incorporated, when his employee Raul Aparacio fell more than fifteen feet and severely injured himself.

Ruiz had a workers’ compensation insurance policy with the American Compensation Insurance Company (ACIC). ACIC initiated a declaratory action in federal court seeking to retroactively void the policy. ACIC alleged that Ruiz materially misrepresented in his application that his company did not perform work more than fifteen feet above ground. ACIC asserted that, had Ruiz been truthful, ACIC would not have issued the policy. It argued that since the statute did not change the common law right to rescind a contract it was entitled to rescind.

The Mississippi Workers’ Compensation Act (MWCA) Controls

The Mississippi Workers’ Compensation Act (MWCA) represents a wide departure from common law by providing compensation to employees accidentally injured during the course and scope of their employment, regardless of fault. This right to recovery comes at the exchange or abrogation of the common law right to recovery from a potentially negligent employer.

RESCISSION IS INCONSISTENT WITH THE STATUTE

Rescission is a retroactive remedy and renders a contract unenforceable from the outset. In the workers’ compensation context, however, the Supreme Court found that allowing rescission is tantamount to allowing an insurer to retroactively cancel a policy rather than the common understanding that a rescinded policy never existed.

The Supreme Court concluded that in Mississippi, voiding the policy ab initio is inconsistent with the “purpose” of Section 71-3-77(1)-which is to provide assurance to the commission that eligible employees are protected under the act.

Finding the MWCA precludes a common law rescission action, the Supreme Court does not hold that an insurer like ACIC has no remedy against an employer who allegedly makes a material misrepresentation. The sole question is whether the MWCA permits the remedy of voiding a policy ab initio based on an employer’s material misrepresentation. And to this question, the Supreme Court answered “no,” it does not.

COLEMAN, JUSTICE, DISSENTING:

Justice Coleman noted that Mississippi has recognized and followed a robust common-law of contracts since well before the State adopted its Workers Compensation Law in 1948 and there is nothing in the Workers’ Compensation Law generally, and nothing in Section 71-3-77 specifically, that abrogates the common law of contracts principle that a contract based on a material misrepresentation is void ab initio. Justice Coleman disagreed with the majority’s holding and answer to the Fifth Circuit’s question because, according to well-settled law, a clear statement of intent, not silence, is required to abrogate the common law.

ZALMA OPINION

Mississippi, like almost every state, applies the common law and its equitable remedies. One of those remedies is called rescission that finds it is unfair to require a person to fulfill the terms of a contract that is obtained as a result of a misrepresentation or concealment of facts material to the acceptance of the contract and treats such contracts as if they never existed. That common law right can only, in my opinion, be eliminated by a direct and specific action of the Legislature. By allowing rescission, the employer instead of the insurer must pay for the workers’ compensation benefits owed to the injured employee, and allowing rescission might deprive that employee of the benefits does not support forcing the insurer to pay millions of dollars of benefits it would not have owed had the insured been truthful. I understand why the court did what it did but believe Justice Coleman was more in line with the law since the Legislature could have included in the statute the elimination of the right to rescission. It did not.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.

Subscribe to my substack at https://barryzalma.substack.com/subscribe or Subscribe to my substack at https://lnkd.in/gmmzUVBy

Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg.

Go to X @bzalma; Go to the Insurance Claims Library – https://lnkd.in/gwEYk

00:10:39
Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
9 hours ago
No Coverage for Intentional Acts

When Harm is Inherent in the Nature of the Act it is Intentional

Post 5237

See the video at and at and at https://zalma.com/blog plus more than 5200 posts.

No Coverage for Intentional Acts

Hitting a Person in the Face is an Intentional Act

In Unitrin Auto and Home Insurance Company v. Brian C. Sullivan, et al., George A. Ciminello, No. 2022-01607, Index No. 21632/14, Supreme Court of New York, Second Department (November 19, 2025) George A. Ciminello was injured when struck in the face by a cup filled with liquid, thrown from a moving vehicle operated by Brian C. Sullivan, with Robert Harford as the passenger who threw the cup. The vehicle approached Ciminello at about 30 mph, from 2 to 10 feet away, and Harford extended his arm to make contact. The cup splintered upon impact.

Sullivan and Harford later conceded liability on the intentional tort claim before a damages trial.

Insurance Policy:

Unitrin Auto and Home...

00:06:53
placeholder
December 04, 2025
Unmitigated Gall to Abuse an Elderly Bishop and His Church

Obtaining Title to Church by Fraud Defeated

Post 5238

Read the full article at https://www.linkedin.com/pulse/unmitigated-gall-abuse-elderly-bishop-his-church-zalma-esq-cfe-xcasc, see the video at and at and at https://zalma.com/blog plus more than 5200 posts.

It is Villainous to Steal Church Property from Sick and Elderly Bishop

In Testimonial Cathedral Local Church of God in Christ v. EquityKey Real Estate Option, LLC et al. (Cal. Ct. App., 2d Dist., Div. 8, No. B331522 (Nov. 18, 2025) EquityKey (through broker Steven Sharpe and Frank Wheaton, a trusted advisor/friend of elderly Bishop Jimmy Hackworth) presented a deal supposedly for a $4 million life-insurance policy on Hackworth’s life with EquityKey as beneficiary. In exchange, EquityKey paid Hackworth $400,000 upfront.
Factual Background

To qualify Hackworth for the large policy, church real property on South Western Ave., Los Angeles was temporarily ...

00:10:28
placeholder
December 03, 2025
Soldier Sentenced for Nigerian Romance Fraud

Guilty of Money Laundering Scheme
Post 5238

See the video at https://lnkd.in/gqh7V46x and at https://lnkd.in/gmE-zrDC and at https://zalma.com/blog plus more than 5200 posts.

Prison Sentence for Fraud Must be Limited to the Fraud in Which the Defendant Participated

In United States v. Stephen O. Anagor, No. 2:24-CR-00019-DCLC-CRW (E.D. Tenn., Nov. 26, 2025) by Judge Clifton L. Corker the government sought to increase the defendant’s sentence because his co-conspirators added a fraudulent FBI scam that resulted in the victim’s suicide. Anagor sought a lower sentence because he was only involved in part of the fraud.

Charges & Plea

Defendant, a U.S. Army soldier pled guilty on June 11, 2025 to Conspiracy to Commit Mail and Wire Fraud, Aiding and Abetting Aggravated Stalking Resulting in Death and Aiding and Abetting Aggravated Identity Theft that was part of a larger 38-count superseding indictment against Anagor and co-defendants Chinagorom Onwumere and Salma Abdalkareem for an international Nigerian-based ...

00:10:51
October 31, 2025
The Zalma Philosophy of Claims Handling – Part 9

The Professional Claims Handler
Post 5219

Posted on October 31, 2025 by Barry Zalma

An Insurance claims professionals should be a person who:

Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.

How to Create Claims Professionals

To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...

post photo preview
October 20, 2025
The Zalma Philosophy of Claims Handling – Part I

The History Behind the Creation of a Claims Handling Expert

The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210

This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster

When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.

I was initially sat at a desk reading a text-book on insurance ...

post photo preview
October 20, 2025
The Zalma Philosophy of Claims Handling – Part I

The History Behind the Creation of a Claims Handling Expert

The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail

Post 5210

This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.

My Training to be an Insurance Claims Adjuster

When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.

I was initially sat at a desk reading a text-book on insurance ...

post photo preview
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals