Georgia Supreme Court Upholds Insurers in 2 Uninsured Motorist Cases

The Supreme Court of Georgia has ruled in favor of insurance companies in two cases involving how much people injured in car wrecks should get under uninsured motorists coverage.

At issue was whether the two injured persons were entitled to receive more money under their uninsured motorist coverage to help cover their unpaid medical expenses, or if their insurance companies were entitled to reduce the amount of coverage by the payments made under the insurance policies of the drivers responsible for the wrecks.

In their 5-2 ruling in the similar cases, the state’s high court reversed the Georgia Court of Appeals.

The first appeal — State Farm Insurance Co. v. Adams –involved an accident in which Randolph Adams was treated at Grady Hospital for a fractured skull, brain injury, dental damage and back, neck and leg injuries, according to briefs filed in the case. Adams filed a claim for personal injuries and economic damages, including the cost of his treatment at Grady.

The person who hit Adams carried $25,000 in insurance with Nationwide, which paid $15,782.34 to Adams and his attorney and $9,217.66 directly to Grady to satisfy the hospital lien for Adams’ unpaid medical bills.

Adams, who claimed his medical bills totaled more than $40,000, then sought compensation under his own policy with State Farm, with which he had a maximum of $100,000 in “uninsured motorist” coverage. Such coverage is designed to protect someone who is injured in a car wreck when the other party has no insurance or is “underinsured.”

A dispute arose, however, when State Farm reduced Adams’ reimbursement by the entire $25,000 paid by Nationwide, including not only the near $16,000 Nationwide had paid Adams, but also the $9,000 plus it had paid Grady. Adams then sued State Farm, arguing that State Farm was not entitled to a credit for Nationwide’s payment of Grady’s lien.

The trial court ruled in the insurance company’s favor, finding that the payment by Nationwide to Grady did not qualify as a reduction of the liability coverage that would trigger additional uninsured motorist coverage by State Farm. On appeal, the Georgia Court of Appeals initially upheld the lower court’s decision. But on reconsideration, it reversed the lower court’s decision and ruled in favor of Adams.

In the Georgia Supreme Courts decision, written by Justice Harold Melton, the majority has reversed the Court of Appeals, finding that the “clear language” of Georgia law “mandates that payment of a hospital lien should not be subtracted from a tortfeasor’s [person who caused the wreck] total liability coverage to determine the underinsured coverage of an insured who has been injured in an accident.”

State law “recognizes that a hospital is entitled to directly bill the patient for its services and to rely solely on the patient to pay for medical services rendered,” the majority opinion says.

“To ensure payment to the hospital, the statute grants the hospital a lien against a patient’s cause of action. This cause of action refers to the patient’s recourse against a tortfeasor for causing the patient’s injuries.”

In a dissent, Justice Robert Benham wrote that he believes State Farm is not entitled to a credit for the amount Nationwide paid Grady Hospital for its treatment of the injuries Adams sustained due to the negligent acts of the tortfeasor. Georgia’s uninsured motorist statute should be construed to “protect innocent victims from the negligence of irresponsible drivers,” the dissent says. Here, the majority opinion “effectively penalizes Adams” by “limiting his potential recovery.”

“In this case, such a result is not in keeping with the legislative purpose of the [uninsured motorist] statute to protect innocent drivers from irresponsible motorists and, as such, I cannot join the majority’s opinion,” says the dissent, which was joined by Chief Justice Carol Hunstein.

Second Case

In the second case – American International South Insurance Co. v Floyd–, the Supreme Court ruled similarly as the issues were the same.

In 2005, Donna Floyd was in a car crash in which she lost consciousness and suffered a concussion and other injuries. The person who hit her had $25,000 in liability coverage through United Automobile Insurance Co. Floyd had $25,000 in uninsured motorist coverage under a policy she had purchased from American International South Insurance Co.

Floyd settled with the other driver for the maximum $25,000 in liability coverage. She then sought coverage from her own UM carrier in the amount of $23,189.60 – the difference between the underinsured driver’s maximum coverage and the amount she still owed Atlanta Medical Center where she was treated.

Her insurance company denied the claim because her UM policy limit of $25,000 did not exceed the other driver’s policy limit of $25,000.

As in Adams’ case, Floyd sued, and the trial court ruled in the insurance company’s favor. Floyd appealed, and the Georgia Court of Appeals reversed the decision, ruling in her favor by finding that the policy limits under the other party’s liability insurance had to be reduced by the amount of the unpaid hospital lien, thereby increasing American International’s exposure.

But, the “Court of Appeals erred,” Justice Melton wrote in the Supreme Court’s majority opinion. For all the reasons set forth in the Adams decision, the majority found that Floyd’s unpaid hospital lien does not reduce United Automobile’s coverage or concomitantly increase American International’s uninsured motorist coverage.

Justice Benham again dissented, joined by Chief Justice Hunstein.

The rulings were published on Nov. 30.

Source: Supreme Court of Georgia

Topics Carriers Legislation Georgia