         FIRST DISTRICT COURT OF APPEAL
                STATE OF FLORIDA
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                         No. 1D17-5259
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NORMANDY INSURANCE
COMPANY,

    Appellant,

    v.

JOSE SORTO, JIMERICO
CONSTRUCTION, INC., and
AMERISURE INSURANCE
COMPANY,

    Appellees.
                 _____________________________


On appeal from an Order of the Judge of Compensation Claims.
Iliana Forte, Judge.

Date of Accident: May 2, 2016.

                        October 31, 2018


OSTERHAUS, J.

     After a heavy Bobcat machine ran over Jose Sorto’s foot at his
job site one morning, his employer J.A.M. Construction called its
insurance broker about the expected workers’ compensation claim.
Upon hearing of the injury, the broker promptly submitted the
paperwork to obtain workers’ compensation coverage with
Normandy Insurance Company. J.A.M.’s broker did not disclose
that morning’s accident. Normandy proceeded to write the policy
effective as of that same day forward, but when it discovered Mr.
Sorto’s undisclosed injury, it refused to cover the claim. And it filed
a case seeking repayment from the general contractor’s workers’
compensation insurer.

     Ultimately, a Judge of Compensation Claims granted the
motion for summary order against Normandy on the basis of a
default rule that the insurance agreement between J.A.M. and
Normandy was effective as of 12:01 a.m. of its effective date (there
was no time-of-day term specified in the agreement). Normandy’s
policy was thus determined to cover Mr. Sorto’s morning injury.
We reverse, however, because Mr. Sorto’s claim involves an
undisclosed, known loss that Normandy’s policy could not cover.
Florida’s insurance laws apply known loss principles and preclude
coverage for losses that have already taken place. Uninsured
persons cannot experience a loss, then scramble to get insurance
and fail to disclose their loss, and then have the cost of their loss
borne by the new insurer.

                                  I.

     An ambulance carted Jose Sorto to the hospital one morning
in May 2016, after a Bobcat S300 ran over his foot at the jobsite.
His injury was bad. So his employer, subcontractor J.A.M.
Construction, promptly called its insurance agent about the
expected workers’ compensation claim. J.A.M. didn’t know it, but
it didn’t have workers’ compensation coverage. J.A.M.’s insurance
agent had inquired about getting workers’ compensation coverage
a month before, but hadn’t finalized anything. Once the agent
heard about the new accident, he promptly submitted all the
paperwork and got coverage for J.A.M. with Normandy Insurance
Company made effective that same day. The agent did not tell
Normandy about Mr. Sorto’s injury that morning, but made it clear
that J.A.M.’s coverage should be made effective for that day.

     Mr. Sorto’s injury was later reported to Normandy in the form
of a claim. And for a while, Normandy duly accepted the claim and
provided medical care and indemnity benefits. But once it
discovered that Mr. Sorto’s injury pre-existed J.A.M.’s application
for coverage and wasn’t disclosed, Normandy objected to covering
it. Normandy instead sought contribution from the general
contractor at the work site, Jimerico, Inc., who otherwise would be
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considered Mr. Sorto’s statutory employer and responsible for
providing workers’ compensation coverage for the injury. See
§ 440.10(1)(b), Fla. Stat. (2016). Jimerico’s insurer, Amerisure
Insurance Company, filed a Response and Counter Motion for
Final Summary Order. Amerisure argued that according to
Normandy’s policy with J.A.M., Normandy’s coverage began at
12:01 a.m. on the day of the accident, prior to Mr. Sorto’s accident,
and thus Normandy was responsible for covering the injury. The
JCC agreed with Amerisure that Normandy was responsible for
covering the loss and granted Amerisure’s motion. See Fla. Admin.
Code R. 60Q-6.120(1) (authorizing JCCs to grant summary final
order on the issue of whether there is coverage). Normandy then
appealed.

                                 II.

     An appellate court considers de novo whether disposition by
summary final order was appropriate. See Moya v. Trucks & Parts
of Tampa, Inc., 130 So. 3d 719, 721 (Fla. 1st DCA 2013). This court
reviews de novo a JCC’s interpretation of the insurance policy
contract and the determination of whether the law requires the
insurer to provide coverage. See Bend v. Shamrock Servs., 59 So.
3d 153, 156 (Fla. 1st DCA 2011); State Farm Mut. Auto. Ins. Co. v.
Mashburn, 15 So. 3d 701, 704 (Fla. 1st DCA 2009).

     The key question in this appeal is whether a workers’
compensation insurer must cover claims that were known to the
insured before procuring coverage, but that weren’t disclosed to
the insurer. Nothing in the Workers’ Compensation Law, chapter
440 of the Florida Statutes, requires new insurers to cover an
insured’s prior known losses. Nor do we think that the parties’
contract in this case compels Normandy to cover J.A.M.’s known
loss. Rather, our cases explicitly forbid insureds from saddling
insurers with known losses, as opposed to covering for the risk of
loss. Insurance is meant to cover uncertainties, not certain losses.
And we have recognized that extending insurer liability to cover
known losses would undermine the concept of insurance and the
stability of the insurance system.

    This court most recently addressed the issue in Interstate Fire
& Casualty v. Abernathy, 93 So. 3d 352 (Fla. 1st DCA 2012). In
Abernathy, a sponsor of a fundraising event lacked liability
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coverage when a child was seriously injured playing on an
“inflatable bungee run” at the event. Id. at 354. After a claim was
filed for the child’s injury, the sponsor contacted the supplier of the
party’s recreational gear and requested that it secure a certificate
of insurance naming the event sponsor as an additional insured.
Id. at 355. It was four days after the event when the insurer issued
the certificate of insurance. Id. Under these circumstances, this
court reversed a judgment against the insurer on the basis that
known losses cannot be insured against. Id. at 359. Our opinion
explained that Florida’s insurance laws embody fortuity and
known loss principles that preclude coverage for losses that have
already taken place. Id. at 358. “An agreement to assume a known
loss is not insurance.” Id. at 359. Indeed the very definition of
“insurance” in Florida law is “a contract whereby one undertakes
to indemnify another or pay or allow a specified amount or a
determinable benefit upon determinable contingencies.” § 624.02,
Fla. Stat. (emphasis added). We went on to explain that insurers
could not cover known losses without undermining the entire
system:

    The rule forbidding “insuring against” known losses is
    part and parcel of the public policy to protect other policy
    holders against insolvent insurers. . . . “The concept of
    insurance is that the parties, in effect, wager against the
    occurrence or non-occurrence of a specified event; the
    carrier insures against a risk, not a certainty.”
    Bartholomew v. Appalachian Ins. Co., 655 F.2d 27, 29 (1st
    Cir. 1981). . . . “Even the most loosely stated conceptions
    of insurance and indemnity require these element[s].
    Hazard is essential. . . . If there is no risk, . . . there can
    be [no] insurance.” Jordan v. Group Health Ass’n, 107
    F.2d 239, 245 (D.C. Cir. 1939). “The principle of public
    policy that insurance should only cover fortuitous losses
    is universally recognized.” Scott C. Turner, Insurance
    Coverage of Construction Disputes § 3:18 (2011).

Id. at 359. So strong was our policy view in Abernathy that it didn’t
matter there, unlike here, that the injury had been disclosed to the
insurer before the certificate was issued. Id.

    Our conclusion in Abernathy wasn’t an aberration. The Fifth

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District wrestled with a similar issue two years earlier in a title
insurance case. See Nourachi v. First Am. Title Ins. Co., 44 So. 3d
602 (Fla. 5th DCA 2010). In Nourachi, it held that a known and
undisclosed title defect rendered the title insurance policy
unenforceable because the insured knew and failed to disclose the
defect at the time he sought the insurance. Id.; see also Nat’l Life
Ins. Co. v. Harriott, 268 So. 2d 397 (Fla. 2d DCA 1972) (involving
a life insurance policy). Then-Judge Lawson’s concurring opinion
in Nourachi added that very serious consequences would flow from
expanding the concept of insurance to cover known losses: “because
society as a whole relies on insurance, public policy will not permit
a transaction that is anathema to the very concept of insurance
which, if allowed in the aggregate, could put insurance at risk for
all.” Id. at 610 (Lawson, J., concurring) (citation omitted).

     These cases and Florida’s policy against insuring known
losses apply here directly. J.A.M.’s insurance broker only stirred
into action—finalizing the paperwork and gaining workers’
compensation coverage for his client from the insurer—after being
notified of Mr. Sorto’s serious injury. Then, in seeking the
coverage, J.A.M.’s agent didn’t disclose his serious injury to the
insurer. Under these circumstances, Florida law doesn’t permit the
insurer Normandy to be left holding the bag for Mr. Sorto’s known
loss, but locates coverage for his claim in the policy of the general
contractor. See 440.10(1)(b), Fla. Stat.; Mena v. J.I.L. Constr. Grp.
Corp., 79 So. 3d 219, 224 (Fla. 4th DCA 2012) (recognizing that
“where a subcontractor . . . fails to secure compensation, the
contractor is liable for the same”).

     In reaching this conclusion, we note Appellees’ reliance on La
Quay v. Union Fidelity Life Insurance Co., 403 So. 2d 1359 (Fla.
4th DCA 1981). In La Quay, the parties contested the time of day
that a life insurance policy became effective, where, unbeknownst
to the parties, the insured had passed away in the early morning
of the same day that the policy issued in the afternoon. Id. at 1360.
The Fourth District discussed multiple cases from multiple
jurisdictions in reaching the conclusion that when a policy does not
set an effective date that includes a specific time of day, its
coverage begins as of 12:01 a.m. on the effective date. Id. at 1360-
62. The policy was construed in favor of the insured in La Quay.
But this case differs in a very important way. La Quay was decided

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in the absence of evidence of any concealment. La Quay specifically
limited its holding to cases where the loss isn’t already known and
there has been no concealment. Id. at 1362-63. The insurance
application in La Quay had been submitted a couple weeks prior
to the loss, and the loss wasn’t known by the agent or insurer when
the policy issued. In other words, “it could not be argued that
[anyone] did anything to promote indemnity with knowledge of the
insured’s death.” Id. at 1362. J.A.M.’s circumstances are different
here, because its agent knew and concealed the information about
Mr. Sorto’s loss from the insurer Normandy.

     Finally, we reject Appellees’ argument that the JCC could not
rule for Normandy without erroneously reforming the coverage
terms, or voiding J.A.M.’s workers’ compensation coverage
altogether. This result applies specifically to Mr. Sorto’s known
and undisclosed claim without more broadly affecting or canceling
J.A.M. workers’ compensation coverage for other losses. Normandy
bears the risk of other contingencies and losses according to the
terms of the coverage. The issue in this case was only whether the
subcontractor’s policy, or the contractor’s policy, supplied the
coverage for Mr. Sorto’s loss. And it was within the JCC’s
jurisdiction to determine whether and whose coverage applied to
this loss by ruling on the insurers’ competing motions for summary
final order. See Fla. Admin. Code R. 60Q-6.120.

                               III.

     Accordingly, we reverse the summary final order granted in
Amerisure’s favor order and remand for the entry of a summary
final order in favor of Normandy.

    REVERSED and REMANDED.

ROBERTS and WETHERELL, JJ., concur.

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    Not final until disposition of any timely and
    authorized motion under Fla. R. App. P. 9.330 or
    9.331.
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Richard M. Stoudemire and William T. Stone, Jr. of Saalfield Shad,
P.A., Jacksonville, for Appellant.

Alan D. Kalinoski and Eric J. Netcher of Dean, Ringers, Morgan &
Lawton, P.A., Orlando, for Appellees Jimerico Construction, Inc.,
and Amerisure Insurance.

No appearance for Appellee Jose Sorto.




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