The North Dakota Supreme Court recently made an important ruling regarding personal liability for unpaid workers’ compensation premiums. In a decision issued on July 11, the court clarified the extent to which corporate officers can be held responsible when their companies fail to pay these required premiums.
The case, known as State of North Dakota by and through Workforce Safety and Insurance v. Boechler, PC and Jeanette Boechler, involved the state’s Workforce Safety and Insurance agency (WSI). They appealed a lower court’s ruling that limited Jeanette Boechler’s personal liability for over $17,000 owed by her law firm, including unpaid premiums, penalties, and interest dating back to 2020.
Initially, the district court found that while the law firm owed the full amount, Boechler, as the firm’s president, was only personally liable for $5,802. The court decided she would not be held responsible for penalties related to failing to file payroll reports, limiting her liability to amounts due as of a 2021 WSI decision.
However, the Supreme Court agreed with the lower court’s finding that Boechler should not face penalties for payroll report issues. They ruled that those penalties did not fall under the personal liability provisions of North Dakota law, which specifically relate to unpaid premiums.
In a significant shift, the Supreme Court overturned the lower court’s conclusion about the timeline of Boechler’s liability. The justices stated that her responsibility for the unpaid amounts continued as long as she was associated with the firm and as long as the debts accrued. Additionally, they ruled that a previous judgment of $11,661.99 against the firm could not be deducted from Boechler’s personal liability because she had been dismissed from that earlier case without prejudice.
The case has now been sent back to the district court to adjust the judgment according to the Supreme Court’s decision. This ruling is particularly relevant for insurance professionals, especially those involved in compliance or collections. It clearly defines that personal liability can extend to unpaid employer obligations directly linked to premiums, while also distinguishing between payment issues and administrative failures.
While the ruling does not directly address private insurance policies, it may influence how insurers and regulators hold corporate officers accountable for ongoing unpaid obligations. The decision underscores the importance of timely administrative actions and clear communication regarding accruing liabilities.
This case sets a precedent for how state agencies and insurers may handle delinquent accounts while respecting the limits of personal liability.