A Georgia appeals court has reversed a $153,363 judgment against a construction firm, putting a spotlight on how insurers handle workers’ compensation audits and subcontractor classifications.
Preston Building and Renovations, a single-member construction and remodeling business owned and operated by Dylan Preston, challenged a trial court’s decision that favored Ace American Insurance Company over disputed workers’ compensation premiums. The dispute began when Preston Building applied for coverage through the assigned risk pool in June 2019, working with Best Insurance Group as its agent. Ace American issued a policy with an initial estimated premium of $1,500, based on payroll figures provided by the business.
That estimate didn’t last long. On September 10, 2019, Ace American issued an endorsement, raising the estimated premium to $193,745. On October 14, 2019, the insurer sent a notice of cancellation for non-payment, effective November 3, 2019. After the policy ended, Ace American conducted a final audit—a routine step in the industry to determine the actual premium, which depends on the company’s real payroll numbers. The audit concluded that Preston Building owed $154,863. After accounting for deposit premiums already paid, Ace American calculated the remaining balance at $153,363 and filed a lawsuit to recover the money plus interest.
Preston Building disputed the claim, arguing that Ace American had misclassified certain subcontractors and failed to credit premiums for subcontractors who had their own valid insurance. Dylan Preston said he provided the insurer’s auditor with extensive documentation, including bank statements, a listing of all payments to employees or subcontractors, 1099s, tax returns, contracts, W-9s, and certificates of insurance. He maintained that the audit overstated the premium by not properly accounting for the subcontractors’ work and coverage.
Ace American moved for summary judgment, submitting an affidavit from a records custodian authenticating business records, including the final audit worksheets, premium adjustment notice, and a statement of account. Preston Building opposed, arguing that genuine issues of material fact remained regarding subcontractor classification and the premium calculation. The trial court held a hearing in November 2024 and, in an order dated November 21, 2024, granted summary judgment to Ace American, ordering Preston Building to pay $153,363 plus $44,283.04 in prejudgment interest. The court concluded that Preston Building had failed to support its argument with business records and that such evidence without business records was hearsay and did not create an issue of fact to rebut Ace American’s evidence.
But on July 31, 2025, the Court of Appeals of Georgia reversed that decision. The appellate court found that Preston’s affidavit, based on his personal knowledge as owner and sole member of the company, and the attached invoices and certificates of insurance, was enough to create a factual dispute for a jury. The court pointed to the insurance policy clause stating that the final premium would be determined after the policy ended, using actual payroll and proper classifications, not just estimates.
The case now heads back to the trial court. For insurance professionals, this outcome is a reminder of how important it is to keep thorough records and communicate clearly about policy terms—especially when it comes to classifying subcontractors and calculating premiums. The decision underscores that in workers’ compensation disputes, the details matter, and both sides need to be ready to back up their numbers.
