State Compensation Insurance Fund (State Fund) had insured Dynamic Nutraceutical, Inc. for many years. The policy at issue ran from January 1, 2012 to January 1, 2013, with a total estimated annual premium of $640 and a required deposit premium of the same amount. On January 20, 2012, State Fund sent Dynamic a notice revising the required deposit. It told Dynamic to pay $71.20. The decision does not explain the difference between the two figures.
On February 21, 2012, State Fund sent a notice cancelling the policy effective March 8, 2012 for failure to pay premium when due, citing the $71.20 balance. Dynamic’s principal testified that he did not recall receiving the notice until much later, because at the time he was caring for his mother, who had cancer and was frequently hospitalized. He found the letter in June and then sent State Fund a check for $71.20.
The policy listed nonpayment of premium as a ground for cancellation. State Fund had attached letters telling policyholders that, starting January 1, 2012, it would no longer send cancellation warning letters and would move to a new billing system built around a premium deposit. Nicolas Garcia’s workers’ compensation claim against Dynamic turned on whether the policy was still in force. The decision does not state his date of injury. The Uninsured Employers Benefits Trust Fund was among the parties served.
In a February 2, 2026 Findings and Order, the arbitrator found that part of Dynamic’s deposit premium remained unpaid as of February 21, 2012. However, the arbitrator also found that State Fund had not shown any unpaid earned premium, meaning premium for coverage already provided. The arbitrator concluded that neither the policy nor Insurance Code § 676.8 allows cancellation on 10 days’ notice for an unpaid deposit premium. He declared the cancellation void and returned the case to the trial level to address injury and benefits. His later report recommended that State Fund’s petition for reconsideration be denied, and Dynamic filed no answer.
In the panel decision of Nicolas Garcia v. Dynamic Nutraceutical, Inc.; State Compensation Insurance Fund, ADJ9109258, (September 2026), the Board panel (Commissioners Paul F. Kelly, Katherine Williams Dodd, and Joseph V. Capurro) granted reconsideration and rescinded the arbitrator’s decision. It substituted a finding that State Fund properly canceled the policy on March 8, 2012 because Dynamic failed to make a required premium payment when due.
The panel first confirmed that its decision was timely. Under the version of Labor Code § 5909 in effect from July 2, 2024 through June 30, 2026, the Board had 60 days from the case’s transmission on July 15, 2026 to act. That period ended on a Sunday, so the deadline moved to Monday, September 14, 2026 under Cal. Code Regs., tit. 8, § 10600(b). The arbitrator’s report had been served months before the transmission, so serving it did not give the parties notice that the 60-day clock had started. However, the district office’s July 15 minutes of hearing did give that notice.
On the merits, the panel held that the statute and the policy were both unambiguous. Section 676.8(b)(1) allows cancellation for the policyholder’s failure to make any premium payment when due. The panel reasoned that the statute makes no distinction between earned and unearned premium and does not exempt a premium deposit. It read the word “any” as removing doubt that every kind of premium payment is covered. The policy likewise allowed cancellation for nonpayment of premium without distinguishing between types of premium. Neither the statute nor the policy sets a minimum amount, so it did not matter that the shortfall was only $71.20.
The panel said the arbitrator’s distinction between deposit and earned premium went well beyond the plain meaning and obvious purpose of requiring timely payment. It cited the Third District’s recent published decision in Employers Preferred Ins. Co. v. Workers’ Comp. Appeals Bd. (2026) 122 Cal.App.5th 467 for the rule that courts will not adopt strained readings to create ambiguity. That case also upheld a carrier’s cancellation of a policy. The panel also found the notice procedurally sound: § 676.8(c) requires at least 10 days’ written notice for nonpayment, and State Fund gave 15.
Finally, the panel admonished State Fund’s counsel for citing an unpublished Court of Appeal opinion to explain what a deposit premium is. Under California Rules of Court, rule 8.1115, unpublished opinions generally may not be cited or relied on in other cases. The panel found that none of the rule’s exceptions applied.