Hanover Insurance Sues Compunnel and Subsidiaries in Workers’ Compensation Dispute

In an unusual case, the Hanover Insurance Company has filed a lawsuit against New Jersey-based Compunnel Software Group, Inc. and its subsidiaries, Infopro Learning Inc., NurseDeck Inc., and Wall Street Services, Inc., in the United States District Court for the District of New Jersey. ​ The case centers on alleged breaches of the defendants' obligations under workers’ compensation insurance policies issued by Hanover.

Hanover asserts that Compunnel and its subsidiaries failed to comply with the record-keeping and audit obligations under the policies. ​ These obligations are standard in the industry for determining the final premiums, which are calculated based on actual payroll exposure and worker classifications after the policy period ends. ​ Hanover alleges that the defendants:

• Failed to provide complete and accurate payroll records necessary for premium audits. ​
• Refused to allow full audits of their financial records, including ledgers, contracts, tax reports, and payroll data. ​
• Omitted substantial payroll exposure data, with discrepancies amounting to approximately $89 million in unaccounted payroll for 2023. ​

The lawsuit also asserts that the defendants failed to honor their assurances that non-IT and medical staffing operations would be separately insured. ​

According to the Complaint, Hanover audited the incomplete records provided by the defendants, resulting in additional premiums of $1,235,576, which Communal paid. Hanover contends that this figure does not fully account for the actual premiums owed. ​

This case is unusual because staffing firms usually bend over backwards to accommodate their workers compensation insurers.  The Complaint suggests that Comptunnel did just the opposite. Failure to maintain accurate records and cooperate with audits can have adverse legal consequences such as these. More importantly, one wonders how the insurance market will treat the company in the future.   

You can read the Complaint here: