Reimbursement of Medical Expense or Disability Benefit Providers in Personal Injury Cases; Subrogation Prohibited; Notice

1. Law
2. Georgia Code
3. Insurance
4. Insurance Generally
5. General Provisions
6. Reimbursement of Medical Expense or Disability Benefit Providers in Personal Injury Cases; Subrogation Prohibited; Notice

1. As used in this Code section, the term:
   1. "Benefit provider" means any insurer, health maintenance organization, health benefit plan, preferred provider organization, employee benefit plan, or other entity which provides for payment or reimbursement of health care expenses, health care services, disability payments, lost wage payments, or any other benefits under a policy of insurance or contract with an individual or group.
   2. "Injured party" means a person who alleges that he or she has been injured by the acts or omissions of a third party and who has received benefits from a benefit provider. This term also includes the personal representative of the estate of such person.
2. In the event of recovery for personal injury from a third party by or on behalf of a person for whom any benefit provider has paid medical expenses or disability benefits, the benefit provider for the person injured may require reimbursement from the injured party of benefits it has paid on account of the injury, up to the amount allocated to those categories of damages in the settlement documents or judgment, if:
   1. The amount of the recovery exceeds the sum of all economic and noneconomic losses incurred as a result of the injury, exclusive of losses for which reimbursement may be sought under this Code section; and
   2. The amount of the reimbursement claim is reduced by the pro rata amount of the attorney's fees and expenses of litigation incurred by the injured party in bringing the claim.
3. 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.
4. In the trial of any case for personal injury submitted to a court or jury, the trier of fact may allocate the amounts paid among the categories of damages actually sought by the plaintiff at trial, and it shall be conclusively presumed that such allocation by the trier of fact is reasonable.
5. 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.
6. No benefit provider shall be entitled to reduce the amount for which it is liable under an insured party's coverage for liability, uninsured motorist, disability, medical payments, or other benefits as a setoff against any claim for reimbursement under subsection (b) of this Code section, nor shall any benefit provider be entitled to withhold or set off insurance benefits as a means of enforcing a claim for reimbursement. Nothing in this subsection shall be deemed to prohibit the coordination of benefits between or among benefit providers.
7. When a recovery for personal injury is sought from a third party by or on behalf of a person for whom any benefit provider has paid medical expenses or disability benefits, the person asserting the claim for recovery against the third party shall provide notice of the existence of the claim, by certified mail or statutory overnight delivery unless some other form of notice is agreed to by the designated recipient of the notice, to any benefit provider which the person asserting the claim has reason to believe has paid benefits relating to the injury for which the injured party seeks a recovery. This notice shall be provided no later than ten days prior to the consummation of any settlement or commencement of any trial unless a shorter notice period is agreed to by the designated recipient of the notice and shall include a request for information regarding the existence of any claim by a benefit provider and an itemization of payments for which the benefit provider seeks reimbursement including the names of payees, the dates of service or payment or both, and the amounts thereof.
8. If the notice required in subsection (g) of this Code section is provided, a claim for reimbursement under subsection (b) of this Code section is enforceable against an injured party only to the extent that such person has actual notice prior to the consummation of a settlement or commencement of trial, by certified mail or statutory overnight delivery or other form of notice if agreed to by the designated recipient of the notice, of the claim of the benefit provider for reimbursement including a specific itemization of payments for which the benefit provider seeks reimbursement, including the names of payees, the dates of service or payment or both, and the amounts thereof. Nothing contained in this subsection shall prohibit the supplementation of a claim prior to the consummation of a settlement or judgment, except that any supplemental claims shall be subject to the notice requirements contained in this subsection.
9. If the notice required in subsection (g) of this Code section is not provided, then subsection (h) of this Code section shall not apply, and a claim for reimbursement under subsection (b) of this Code section is enforceable subject to the other provisions of this Code section.
10. No benefit provider contracts or policies containing or incorporating provisions in conflict with this Code section may be issued in this state, and no policy or contract provisions for subrogation or reimbursement in conflict with this Code section may be enforced by a benefit provider with regard to claims or injuries.
11. Any settlement which is subject to this Code section that contains a confidentiality provision as to any terms of the settlement which are necessary to a proceeding under this Code section shall be unenforceable as to the disclosure of such required information.
12. This Code section shall not apply to the rights of the Department of Community Health to recover under Article 7 of Chapter 4 of Title 49, nor shall it affect the subrogation rights and obligations provided in Code Section 34-9-11.1.

(Code 1981, §33-24-56.1, enacted by Ga. L. 1997, p. 668, § 1; Ga. L. 1999, p. 296, § 24; Ga. L. 2000, p. 1589, § 3.)

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 1997, "consummation" was substituted for "consumation" in the second sentence in subsection (g) and in the first sentence in subsection (h).

Editor's notes.

- Ga. L. 2000, p. 1589, § 16, not codified by the General Assembly, provides that the amendments to subsections (g) and (h) are applicable with respect to notices delivered on or after July 1, 2000.

Law reviews.

- For discussion of insurance reimbursement law in annual survey article on trial practice and procedure, see 49 Mercer L. Rev. 313 (1997). For article commenting on the enactment of this Code section, see 14 Ga. St. U.L. Rev. 172 (1997). For annual survey article discussing trial practice and procedure, see 51 Mercer L. Rev. 487 (1999). For article, "Insurance," see 53 Mercer L. Rev. 281 (2001). For survey article on trial practice and procedure, see 59 Mercer L. Rev. 423 (2007). For annual survey on trial practice and procedure, see 64 Mercer L. Rev. 305 (2012). For article, "Uninsured Motorist Benefits in Light of Thurman v. State Farm," see 23 Ga. Bar. J. 19 (Oct. 2017). For note, "ERISA Subrogation and the Controversy Over Sereboff: Silencing the Critics, the Divided Bench is a Legitimate Standard," see 45 Ga. L. Rev. 579 (2011).

JUDICIAL DECISIONS

Construction.

- Legislature intended, when the legislature enacted O.C.G.A. § 33-24-56.1, to state the preexisting law, that the rule of complete compensation is the public policy of this state. Davis v. Kaiser Found. Health Plan of Ga., Inc., 271 Ga. 508, 521 S.E.2d 815 (1999).

Applicability.

- O.C.G.A. § 33-24-56.1 did not apply when an insurer did not seek reimbursement or subrogation, but instead relied on a coverage exclusion. State Farm Auto. Ins. Co. v. Walker, 234 Ga. App. 101, 505 S.E.2d 828 (1998).

Full compensation rule codified in O.C.G.A. § 33-24-56.1 did not apply when an insurer settled with an alleged tortfeasor and the insureds claimed the insureds were owed monies in excess of the insureds' policy limits as the insurer did not seek reimbursement from the insured, or seek to recover medical or disability payments, and the alleged tortfeasor did not have limited assets such that either the insurer or the insureds had to some extent go unpaid; the fact that the insurer had taken the lead in the litigation with the alleged tortfeasor did not bring the case within the purview of Georgia's public policy concerns related to subrogation. Ga. Cas. & Sur. Co. v. Woodcraft by MacDonald, Inc., 315 Ga. App. 331, 726 S.E.2d 793 (2012).

Federal preemption.

- Trial court erroneously granted summary judgment to an UM insurer, when the injured claimant, who was also a federal employee, fell under the purview of federal compensation law; thus, under these federal provisions, the medical benefits insurer and the workers' compensation insurer had subrogation liens and were able to enforce the liens upon the injured party's receipt of a settlement from the liable third party, regardless of Georgia's requirement that such action be preceded by a determination that the injured person had been fully compensated. Thurman v. State Farm Mut. Auto. Ins. Co., 278 Ga. 162, 598 S.E.2d 448 (2004).

Georgia's anti-subrogation statute, O.C.G.A. § 33-24-56.1, did not apply to prevent a welfare benefit plan from enforcing its reimbursement claim against an employee because the plan was exempt from the statute by virtue of the deemer clause in 29 U.S.C. § 1144(b)(2)(B). Summerlin v. Georgia-Pacific Corp. Life, Health and Accident Plan, 366 F. Supp. 2d 1203 (M.D. Ga. 2005).

Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., did not preempt O.C.G.A. § 33-24-56.1 because the state statute was directed toward the insurance industry, and affects the risk pooling arrangement between the insurer and the insured. Smith v. Life Ins. Co. of N. Am., 466 F. Supp. 2d 1275 (N.D. Ga. 2006).

ERISA plan administrator off-set.

- Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., plan administrator was prevented from off-setting a participant's monthly disability under Georgia's anti-subrogation statute, O.C.G.A. § 33-24-56.1. Smith v. Life Ins. Co. of N. Am., 466 F. Supp. 2d 1275 (N.D. Ga. 2006).

Complete compensation rule inapplicable due to federal statute.

- Since there was no conflict between state law and federal interests, an action by a state service benefit plan for reimbursement from a plan beneficiary after a settlement with a third party under the Federal Employees Health Benefits Act of 1959 (FEHBA) lacked subject matter jurisdiction under 28 U.S.C. § 1331 and had to be dismissed. There was no conflict because Georgia courts determined that when the FEHBA applied, the complete compensation rule under O.C.G.A. § 33-24-56.1(b) did not apply. Blue Cross Blue Shield Health Care Plan of Ga., Inc. v. Gunter, 541 F.3d 1320 (11th Cir. 2008).

Insurer not entitled to setoff following Medicare payment.

- Trial court erred by dismissing an insured's uninsured motorist (UM) benefits suit against the insured's UM carrier as the insured's settlement with the tortfeasor was reduced by the amount of a Medicare lien; therefore, the insured's UM recovery should not have been reduced (nor rejected) under the complete compensation doctrine. Toomer v. Allstate Ins. Co., 292 Ga. App. 60, 663 S.E.2d 763 (2008).

Policy provision subject to public policy.

- Insurance policy provision that required reimbursement without regard to whether the insured was completely compensated was unenforceable as violative of public policy of this state regarding complete compensation. Davis v. Kaiser Found. Health Plan of Ga., Inc., 271 Ga. 508, 521 S.E.2d 815 (1999), reversing Davis v. Kaiser Found. Health Plan of Ga., Inc., 235 Ga. App. 13, 508 S.E.2d 431 (1998).

Vested subrogation rights not abrogated.

- Subrogation rights, if any, that a medical insurer had against an insured were vested at the time O.C.G.A. § 33-24-56.1 became effective and could not be abrogated by the statute. Jefferson-Pilot Life Ins. Co. v. Fraker, 234 Ga. App. 430, 507 S.E.2d 188 (1998).

Subrogation rights of underinsured motorist inusurer.

- Because the insured's release of an underinsured tortfeasor reserved the rights of an insurer against the tortfeasor, the insurer was entitled to judgment on the insurer's cross-claim against the tortfeasor for the amount the insurer paid to the insured and the "full compensation" rule of paragraph (b)(1) of O.C.G.A. § 33-24-56.1 did not prohibit the insurer's subrogation claim. Landrum v. State Farm Mut. Auto. Ins. Co., 241 Ga. App. 787, 527 S.E.2d 637 (2000).

Insurer entitled to set-off.

- In a personal injury action to recover damages incurred in an automobile collision, an insurer that was served as the plaintiffs' uninsured motorist carrier was entitled to set-off the amount the insurer had already paid the plaintiffs from the amount of the judgment. Yates v. Dean, 244 Ga. App. 333, 535 S.E.2d 335 (2000).

Cited in Davis v. Kaiser Found. Health Plan of Ga., Inc., 235 Ga. App. 13, 508 S.E.2d 431 (1998); Lamb v. Salvation Army, 301 Ga. App. 325, 687 S.E.2d 615 (2009); Woodcraft by MacDonald, Inc. v. Ga. Cas. & Sur. Co., 293 Ga. 9, 743 S.E.2d 373 (2013).

RESEARCH REFERENCES

Litigation of Recovery from Insurers for Medical Provider Liens, 152 Am. Jur. Trials 265.

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