GEORGIA COURT OF APPEALS FAVORS INSURANCE COMPANIES OVER INJURED

Recently, the Georgia Court of Appeals issued an opinion in the case of Southern General Ins. Co. v. Wellstar, ____ Ga. App. ____ (2012 No. A11A2065). The opinion seriously chips away at the rights of injured claimants in dealing with an at-fault party’s insurance company.

Georgia law has provided since the 1970’s that when an at-fault party’s insurance company knows that the injured party has medical bills and/or lost wages that exceed the limits of the coverage available to the at fault party, the insurance company has a duty to tender its limits if given the opportunity by the injured claimant’s attorney to settle the claim within those limits. If the insurance company does tender its limits, it can be held in bad faith by its insured (the at-fault party) because it is needlessly exposing its insured (and his/her assets) to a judgment potentially in excess of those limits via a lawsuit.

Georgia law also provides that a hospital that provides medical care to an injured claimant has a claim for payment on the settlement with the at-fault insurance company when certain procedural conditions are met under the hospital lien statute.

The Wellstar Court was faced with a situation where a plaintiff had $22,000.00 in bills and the at-fault party had only $25,000.00 in coverage. A hospital was claiming a lien on the case for the $22,000.00. The insurance company for the at fault party tendered its limits of $25,000.00 to the injured claimant but did not pay the hospital. The hospital then sued the insurance company for its claimed lien.

In the Wellstar case, a panel of three judges of the Court of Appeals created new law by providing a “safe harbor” from a bad faith claim by allowing insurance companies to pay settlement funds to the hospital directly rather than pay the injured claimant.

The Wellstar decision’s approval of an insurance carrier for an at-fault party potentially paying a hospital provider directly rather than the injured claimant is flawed for many reasons but two important ones are that: (a) Georgia law already provides a mechanism for the insurance company in the situation the Wellstar court was faced with; and (b) the decision completely ignores that the attorney and not the hospital created the settlement funds via a demand letter or lawsuit.

Georgia law has long provided for an action called an interpleader that allows for someone who has competing claims made against it to put the funds into the court registry and let the court sort the mess out. An insurance company faced with a situation like in Wellstar could easily interplead the funds and get a court order distributing the funds. Such an action would avoid any claim of bad faith against the insurance company.

Further, the Wellstar decision overlooks the fact that the attorney and not the hospital is the one who prosecuted the claim and, therefore, created the fund of money that the insurance company is paying. An attorney’s lien for his work is superior to any lien of the hospital. Moreover, the decision overlooks the common-fund doctrine, which Georgia adheres to. The common fund doctrine provides that where an attorney creates a fund of money from which a passive entity can share in the funds, that passive recipient must share in the attorney’s fee. The court completely ignores this equitable principle.

Hopefully, this will decision will not remain on the books for long in Georgia. It is bad for Georgians.

HOW DOES HEALTH INSURANCE PLAY INTO MY INJURY CASE IN ALABAMA?

Recently, the Alabama Court of Civil Appeals issued a disappointing decision that permits insurance companies and their defense attorneys to introduce evidence that the Plaintiff’s medical bills were paid by the Plaintiff’s health insurance company.

The case is Crocker v. Grammer. So, if a Plaintiff, injured through no fault of her own, is hit by a DUI driver, the Courts in Alabama say that the DUI driver can minimize the amount he owes the Plaintiff by suggesting that the actual bill incurred by the Plaintiff was much less due to the presence of the Plaintiff’s own health insurance. Since most health insurance companies have contractual adjustments with health care providers for less than the provider’s sticker price, this, in essence, reduces the Defendant’s liability to Plaintiff.

The problem with the Court decision is that it disregards well-settled rules of evidence and long-standing principles of common law. The Alabama Rules of Evidence state that only relevant evidence is admissible. The fact that a Plaintiff has health insurance is really not relevant to anything as to what the Defendant is responsible for due to a wreck. It is about as relevant as the Plaintiff having a rich grandmother. Thus, the Court disregarded this principle of evidence. Furthermore, the decision does away with the collateral source rule. This is a principle of common law that suggests that the tortfeasor does not get credit for outside sources that might pay the Plaintiff’s medical bills. After all, the Defendant is the one who caused the harm to begin with. The common law held that, if anyone should receive a benefit in this situation, it should be the Plaintiff, not the defendant who caused the harm in the first place.

Make no mistake. What the Alabama court has done is shifted some of the cost of the Defendant’s harm to the Plaintiff. Keep in mind that the Plaintiff who has health insurance pays good money in the form of premiums. What the court has done is punished Plaintiffs with health insurance for being reasonable. They are the ones who went out and bought health insurance to begin with. Instead, the Plaintiffs who do not have insurance may claim the full sticker price of the bill. For Plaintiffs who have governmental insurance through Medicare, Medicaid, or Tricare the Court has shifted some of the cost for the Defendant’s negligence to the taxpayer.

You can see the problems this creates when you have two individuals in the same wreck—one with health insurance, the other without. In essence you have two different, unequal measures of damages. This violates the equal protection clauses of the federal and state constitutions.

However, the attorneys at the Law Offices of Gary O. Bruce, know techniques to minimize the effects of this decision for clients who have health insurance and are injured in Alabama. We are always willing to discuss your potential claim/case through a free consultation.