Travelers can sue aircraft painter for unpaid comp premiums

The 8th U.S. Circuit Court of Appeals on Tuesday ruled Travelers Property Casualty Insurance Co. can seek to recover unpaid insurance premiums from a commercial aircraft painting company that the insurer found to have underreported the scope of its work.

The decision reverses a lower court ruling that said Travelers must exhaust “administrative remedies” available under Missouri law before suing Kansas City, Missouri-based Jet Midwest Technik Inc. for breach of contract to recover the unpaid premiums, according to documents in Travelers Property Casualty Insurance Co. of America v. Jet Midwest Technik Inc.

 

The higher premiums were calculated after Travelers disputed some of the code classifications in Jet Midwest’s policy application, according to documents, citing the new calculations were “based on an audit that allegedly revealed that Jet Midwest, which paints commercial-sized aircraft, had failed to accurately report some of its work. In particular, Travelers believed that Jet Midwest underreported the time its employees spent painting metal structures over two stories in height, which is in a higher risk category than the code classification assigned to the work by Jet Midwest,” according to documents filed in U.S. District  Court in St. Louis.

 

Jet Midwest refused to pay the higher premium, prompting Travelers to cancel the policy, records state. The insurer then issued a final bill, which Jet Midwest has paid only in part and then “vigorously disputed its responsibility for the remainder and filed an application with (Missouri’s Workers’ Compensation Determinations Review Board) to resolve the parties’ code-classification dispute.”

The board agreed that Jet Midwest had misclassified some of the tasks it had workers perform, but not to the extent that Travelers had thought, records state. The board advised the parties that they could appeal the decision, but neither did so. Travelers instead filed this lawsuit against Jet Midwest, according to documents.

At issue in Tuesday’s unanimous ruling by a three-judge panel of the 8th Circuit was Missouri’s exhaustion requirement for seeking the payment, which the higher court classified the procedures as “too informal,” concluding that Travelers “had no obligation to exhaust its administrative remedies before filing its lawsuit,” thus permitting the insurer to proceed with its suit.

 

Officials with Jet Midwest could not immediately be reached for comment.