Georgia has long been the bane of a subrogation professional’s existence. The State features both an anti-subrogation law and a complete compensation (“made-whole”) statute. The combination of these two laws have led many insurers to simply write off the hope of any recoveries on their subrogation claims. If you’ve given up all hope of recovering in Georgia, we’ve got good news for you!
MWL has been working for a decade on developing arguments around these anti-subrogation laws for our clients. We are happy to report that this work has finally paid off. On May 11, 2023 the federal district court for the Northern District of Georgia ruled that our client, Atlantic Specialty Insurance Company’s was entitled to full reimbursement of $219,255.76 out of the plaintiff’s $500,000 settlement without regard to whether the plaintiff was made-whole. You read that right – full reimbursement! But how?
To understand the decision will take a little unpacking. The plaintiff Jerdo Newson was an owner-operator, independent contractor who was driving under the authority of Dedicated Logistics, LLC at the time of his accident. As an independent contractor he was not covered by workers’ compensation insurance. Rather, he was required to obtain “occupational accident” insurance coverage in order to operate. Occupational accident insurance provides coverage for work-related injuries and death to independent contractors not covered by workers’ compensation. In today’s gig economy, occupational accident insurance is also widely utilized by on-demand contractors. In this case, Atlantic Specialty issued a group occupational accident policy in the District of Columbia to the Trucking Industry Group Insurance Trust. The policy was a group policy, issued in the District of Columbia to the Trucking Industry Group Insurance Trust, and which Dedicated was a participating organization. The policy featured a first-priority subrogation provision.
For purposes of our arguments, it is important to note two key facts. First, the policy is an “accident-only” policy. Second, the policy was neither delivered in Georgia nor approved by its Insurance Commissioner. These facts will be important when we examine the applicable statutes.
Georgia’s anti-subrogation statute, O.C.G.A. 33-24-56.1(e), provides:
Subrogation for medical expenses and disability payments by a benefit provider against a person at fault for injury is prohibited and no defendant or liability insurance carrier shall include any insurer seeking reimbursement under subsection (b) of this Code section as a copayee on any check or draft in payment of a settlement or judgment.
In addition, Georgia’s complete compensation statute, O.C.G.A. 33-24-56.1(c), states:
In the settlement of any claim for personal injury, under circumstances where it is claimed that the amount of the recovery does not exceed the sum of all economic and noneconomic losses incurred as a result of the injury, a benefit provider which has paid benefits to or on behalf of the injured person may seek a declaratory judgment pursuant to Code Section 9-4-2 as to what extent it may equitably share in said settlement. If the court determines said settlement does not fully and completely compensate the injured party, the benefit provider has no right of reimbursement.
Often overlooked when it comes to this pair of anti-subrogation statutes, are certain exceptions passed by the Georgia legislature. The legislature chose to limit the scope of Chapter 24 of the Georgia Insurance Code not to include “(2) Policies or contracts not issued for delivery in this state or delivered in this state, except as provided in subsection (e) of Code Section 33-24-9”. O.C.G.A. § 33-24-2(2). Therefore, because the undisputed evidence showed that Atlantic Specialty’s policy was delivered in D.C. and never approved by the Georgia Insurance Commissioner, the district court ruled that neither anti-subrogation provision of the code applied:
Because O.C.G.A. § 33-24-2 “imperatively demands” that this court not construe the Policy as one within the scope of O.C.G.A. § 33-24-56.1, this court will not find—as Newson urges—that Georgia’s public policy overrides the freedom of contract.
Order at n.3.
Finally, because the district court ruled for Atlantic Specialty on its first argument, the court never reached the question of whether the policy was also excluded because it was an “accident only” policy. This is a separate and additional argument that may be useful in future cases. That is that O.C.G.A. 33-1-2(1.1) defines “health benefit plans” and “health benefit policies” to exclude “accident only” policies. You can keep this argument in your back pocket.
Overall, this is a tremendous result for our industry, and we thank all our local counsel who have worked with and supported us these past ten years as we honed our arguments. As a bit of further good news, the decision will not be appealed so you will be able to cite it as persuasive authority going forward.
The full case decision can currently be found at: Atl. Specialty Ins. Co. v. Hernandez, No. 1:21-CV-2133-CAP, 2023 WL 3674349, at *3 (N.D. Ga. May 11, 2023). Feel free to contact Ryan Woody at firstname.lastname@example.org or James Busenlener at email@example.com if you would like a copy of the decision or if you would like to learn more about how MWL can maximize your occupational accident recoveries in Georgia and throughout the United States.
Ryan L. Woody is a shareholder with Matthiesen, Wickert & Lehrer, S.C. and concentrates his practice on complex defense and subrogation litigation. He is nationally recognized for subrogation, reimbursement, lien resolution issues, and healthcare defense, especially ERISA and Medicare Advantage. Ryan represents clients in numerous federal courts and arbitrations around the country. He is a frequent speaker and has contributed to numerous articles and national treatises on insurance coverage, workers’ compensation subrogation, and ERISA and federal health insurance, including FEHBA and Medicare Advantage. In 2008, he was named a Rising Star by SuperLawyers Magazine, an award given only to the top 2.5% of young lawyers in the State, and in 2012, he was named a Leading Lawyer by Milwaukee Magazine.
James T. Busenlener is an insurance trial lawyer and managing partner of Matthiesen, Wickert & Lehrer, S.C.’s New Orleans branch office. Jim is licensed to practice law in Louisiana, Texas, and Pennsylvania, as well as numerous federal district and appellate courts. Jim received his Bachelor of Arts degree from Washington & Lee University in Lexington, Virginia in 1990, his Juris Doctor degree from Tulane University School of Law in New Orleans, Louisiana in 1993. For many years, Jim served as MWL’s local subrogation counsel in Louisiana. Jim has nearly three decades of experience representing insurers in coverage, professional liability, subrogation and defense litigation, and also practices in the areas of maritime and commercial litigation. He has extensive experience representing domestic and foreign insurers, including the London Market, in complex, multi-party insurance coverage, indemnity and casualty defense issues arising out of pipeline ruptures, maritime allisions, well blowouts and industrial accidents. He also has a great deal of experience litigating large loss property and casualty subrogation cases. He has represented excess insurers and re-insurers in disputes with large corporate insureds and primary insurers. Jim handles MWL’s large case load of workers’ compensation, health, Longshore (LHWCA), maritime, auto, and oilfield subrogation in Louisiana and Texas.