ATLANTIC SPECIALTY INSURANCE COMPANY v. << (2023)

ORDER

This matter is before the court on cross-claim plaintiff Atlantic Specialty Insurance Company's (“Atlantic Specialty”) motion for summary judgment [Doc. No. 118]. Succinctly, Atlantic Specialty's motion concerns the proceeds of a settlement that the plaintiff, Jerdo Robert Newson, entered into with remaining defendants John Lance Garber and Kehe Enterprises, LLC (“Kehe”). Atlantic Specialty claims that Newson is obligated to reimburse it from the settlement funds for benefits paid pursuant to Atlantic Specialty's Occupational Accident Policy (“the Policy”). Atlantic Specialty claims that there is no issue of fact or law as to its entitlement to the funds; hence, it has moved for summary judgment on its claim that Newson is contractually obligated to reimburse it for all benefits paid on his behalf out of the settlement recovery.

I. Summary Judgment Standard

Federal Rule of Civil Procedure 56(a) provides that “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A factual dispute is genuine if the evidence would allow a reasonable jury to find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” if it is “a legal element of the claim under the applicable substantive law which might affect the outcome of the case.” Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997).

The moving party bears the initial burden of showing, by reference to materials in the record, that there is no genuine dispute as to any material fact that should be decided at trial. Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The moving party's burden can be discharged either by showing an absence of evidence to support an essential element of the nonmoving party's case or by showing that the nonmoving party will be unable to prove the case at trial. Celotex, 477 U.S. at 325; Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). In determining whether the moving party has met this burden, the court must consider the facts in the light most favorable to the nonmoving party. See Robinson v. Arrugueta, 415 F.3d 1252, 1257 (11th Cir. 2005).

Once the moving party has adequately supported its motion, the non-movant then has the burden of showing that summary judgment is improper by coming forward with specific facts showing a genuine dispute. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). There is no “genuine [dispute] for trial” when the record as a whole could not lead a rational trier of fact to find for the nonmoving party. Id. All reasonable doubts, however, are resolved in favor of the nonmoving party. Fitzpatrick, 2 F.3d at 1115. In addition, the court must “avoid weighing conflicting evidence or making credibility determinations.” Stewart v. Booker T. Washington Ins., 232 F.3d 844, 848 (11th Cir. 2000).

II. Facts for Purposes of Summary Judgment

A. Preliminary Considerations

In this case, Newson did not submit a statement of additional material facts. Moreover, he failed to properly dispute or deny any of Atlantic Specialty's asserted facts as required by LR 56.1B(2), (3) NDGa.¹ Accordingly, the court has deemed Atlantic Specialty's statement of material facts admitted. Id. The court has cited Atlantic Specialty's statement of material facts by referencing paragraph numbers preceded by “SMF.” Consistent with the Local Rules, the court has disregarded any facts the parties set forth in only in briefs. LR 56.1(B)(1)(d).

B. Summary Judgment Facts

This case concerns an “Occupational Accident Policy,” an insurance policy for medical and indemnity benefits issued to policyholder Trucking Group Insurance Industry Trust at 1445 New York Avenue, NW, Washington, DC 20005-2134. SMF ¶ 1 [Doc. No. 118-3]. It is an accident-only policy whereby contract drivers or owner-operator drivers can enlist as beneficiaries for medical and indemnity payments. Id. ¶¶ 2 – 3. It is not a Workers’ Compensation Policy. Id. ¶ 2. The Policy was never issued or delivered in the State of Georgia and was never submitted for approval, approved, or requested for approval by Georgia's insurance commissioner. Id. ¶¶ 4 – 5. It has been in effect since November 1, 2018 up through April 13, 2020, the date of Newson's loss addressed in this action. Id. ¶ 7.

On December 2, 2018, Newson enlisted as a beneficiary of the Policy. Id. ¶ 8. Following the April 13, 2020 incident that served as the basis for this case, Newson filed a claim for medical and indemnity benefits. Id. ¶ 9. Atlantic Specialty paid $219,255.76 to or on behalf of Newson pursuant to the Policy's terms. Id.

The Policy states that if the “Insured Person makes a recovery from a third party for a loss paid under this Policy, the Insured Person will Reimburse Us up to the amount of the benefits made by Us.” Id. ¶ 6. On March 23, 2023, defendants Garber and Kehe made a $500,000 settlement offer to Newson, which was conditioned upon Newson's “satisfaction of all valid liens against claims set forth in the Complaint or against the recovery made by the Plaintiff under the Offer of Judgment.” Id. ¶¶ 10 – 11. Newson thereafter accepted the offer of settlement. Id. ¶ 12. To date, Newson has not made any reimbursement pursuant to the Policy. Id. ¶ 13.

III. Atlantic Specialty's Motion for Summary Judgment

A. Overview of the Parties’ Arguments

Atlantic Specialty argues that by accepting and receiving benefits, Newson is bound to the recovery and subrogation provisions of the policy. Summ. J. Br. at 7 [Doc. No. 118-4]. It argues that the Policy requires Newson to reimburse Atlantic Specialty from the settlement proceeds for the $291,255.76 in benefits it paid on his behalf. Id. at 8. It further argues that he is contractually obligated to reimburse Atlantic Specialty pursuant to the terms of the Offer of Settlement as an intended beneficiary. Id.

Newson opposes Atlantic Specialty's motion, arguing that he is not required to reimburse the insurer because he has not been made whole. Newson's Resp. Br. at 2 [Doc. No. 120]. Citing Georgia workers’ compensation and insurance code statute, he argues that an insured must be completely compensated before an insurer can exercise its right of reimbursement. Id. at 5 (citing O.C.G.A. §§ 33-24-56.1 and 34-9-11.1(b)).

B. Analysis

In Georgia, “insurance is a matter of contract, and the parties to an insurance policy are bound by its plain and unambiguous terms.” Georgia Gas. and Sur. Co. v. Woodcraft by MacDonald, Inc., 726 S.E.2d 793, 797 (Ga. Ct. App. 2012) (citing SawHorse, Inc. v. Southern Guaranty Ins. Co., 604 S.E.2d 541 (Ga. Ct. App. 2004)). “It is general contract law in Georgia that parties are free to contract about any subject matter, on any terms, unless prohibited by statute or public policy, and injury to the public interest clearly appears.” Id. (citing Jones v. Jones, 632 S.E.2d 121 (Ga. 2006)). Under Georgia law, a third-party beneficiary to a contract like Newson is “bound by any valid and enforceable provisions of the contract ․”. Coleman v. United Health Servs. of Ga., 812 S.E.2d 24, 27 (Ga. Ct. App. 2018).

In this case, Newson does not contest the language of, formation of, authenticity of, assent to, or interpretation of the reimbursement provision in the Policy. Instead, he argues that Atlantic Specialty's recovery is prohibited pursuant to a Georgia Workers’ Compensation statute and a Georgia Insurance Code statute because the settlement did not make him whole.

The court will examine Newson's arguments in turn.

1. Georgia Workers’ Compensation Law Does Not Apply

Newson argues that O.C.G.A. § 34-9-11.1(b) prohibits Atlantic Specialty's reimbursement from the settlement funds because the settlement did not make Newson whole.

Title 34 of the Georgia Code addresses Labor and Industrial Relations, and Chapter 9 of Title 34 pertains to Workers’ Compensation. O.C.G.A. § 34-9-11.1(b) states that when an employer's Workers’ Compensation liability has been fully or partially paid, the employer or the employer's insurer has a subrogation lien against an employee's recovery from a third party causing the employee's injury or death. It further states that the employer's or insurer's recovery shall be limited to the amount of benefits and expenses paid under the Workers’ Compensation chapter and “shall only be recoverable if the injured employee has been fully and completely compensated, taking into consideration both the benefits received under [Chapter 9] and the amount of the recovery in the third-party claim, for all economic and noneconomic losses incurred as a result of the injury.” O.C.G.A. § 34-9-11.1(b).

Based on the facts before the court, the court finds that O.C.G.A. § 34-9-11.1(b) and the cases Newson cited interpreting it and other workers’ compensation issues, see e.g., Liberty Mut. Ins. Co. v. Roark, 677 S.E.2d 786 (Ga. Ct. App. 2009); Performance Food Group, Inc. v. Williams, 686 S.E.2d 437 (Ga. Ct. App. 2009); North Bros. Co. v. Thomas, 513 S.E.2d 251 (Ga. Ct. App. 1999); and Georgia Electric Membership Corp. v. Hi-Ranger, Inc., 563 S.E.2d 841 (Ga. 2002), are inapplicable in this matter. As set forth in the statement of material facts and clearly stated on the cover of the Policy [Doc. No. 118-1 at 6], the Policy at issue is not a workers compensation policy. Newson's arguments—which he does not support with law or fact—that the court should construe the Policy as a worker's compensation policy (or reserve that question for the trier of fact) is insufficient to survive summary judgment. The plaintiff has presented unrebutted evidence that the Policy is not a worker's compensation policy; therefore, the court will not further analyze it pursuant to law governing such policies.

2. The Georgia Insurance Code Does Not Apply

Newson also argues that O.C.G.A. § 33-24-56.1 prohibits Atlantic Specialty's reimbursement from the settlement funds because the settlement did not make Newson whole.

Title 33 of the Georgia Code is known as the “Georgia Insurance Code,” see O.C.G.A. § 33-1-1, and Chapter 24 of the Georgia Insurance Code is titled “Insurance Generally.” Chapter 24 “applies to all insurance polices and to annuities and pure endowment contracts as defined in Codes Section 33-28-1 except ․ [in pertinent part,] (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.”² O.C.G.A. § 33-24-2. Section 56.1(c) of Chapter 24 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.

O.C.G.A. § 33-24-56.1(c).

When read in isolation, O.C.G.A. § 33-24-56.1 appears to prohibit Atlantic Specialty's recovery if Newson has not been fully and completely compensated for his injuries. However, Atlantic Specialty has presented unrebutted evidence that the Policy under which it now seeks reimbursement was never issued or delivered in the State of Georgia and was never submitted for approval, approved, or requested for approval by Georgia's insurance commissioner. Therefore, it argues that O.C.G.A. § 33-24-56.1 does not govern the Policy at issue here.

The court agrees with Atlantic Specialty. Because Newson (1) has presented no evidence rebutting Atlantic Specialty's statement of fact that the Policy was never issued or delivered in the State of Georgia and was never submitted for approval, approved, or requested for approval by Georgia's insurance commissioner; and (2) has pointed to no applicable authority showing that O.C.G.A. § 33-24-56.1(c) applies to an exempt policy like the one at issue in this case,³ the court finds that O.C.G.A. § 33-24-56.1 does not prohibit Atlantic Specialty's reimbursement.

IV. Conclusion

As set forth above, neither of the statutes asserted by Newson apply to the Policy at issue in this action. Since Newson does not otherwise contest the reimbursement provision in the Policy, the court GRANTS summary judgment to Atlantic Specialty and finds that it is entitled to all benefits paid ($219,255.76) on Newson's behalf.

SO ORDERED, this 11th day of May, 2023.

FOOTNOTES

1.   With the exception of one fact which he admitted, Newson responded to all of Atlantic Specialty's Statements of Material Facts by stating “Denied” or “Denied as cast.” See generally Newson's Resp. to Atlantic Specialty's Statement of Material Facts [Doc. No. 120-1]. As set forth in the local rules, these responses are insufficient to create an issue of material fact for summary judgment. LR 56.1(B)(2), (3) NDGa.

2.   O.C.G.A. § 33-24-9(e) states that “[t]his Codes section shall apply also to any form used by domestic insurers for delivery in a jurisdiction outside this state, if the insurance supervisory official of that jurisdiction informs the Commissioner that the form is not subject to approval or disapproval by the official and upon the Commissioner's order requiring the form to be submitted to him for approval or disapproval.” This code section is not applicable to the facts currently before the court.

3.   Newson points the court to Duncan v. Integon Gen. Ins. Corp., 482 S.E.2d 325 (Ga. 1997), in which the Georgia Supreme Court stated that “Georgia public policy strongly supports the rule that an insurer may not obtain reimbursement unless and until its insured has been completely compensated for his losses.” A few days after the Georgia Supreme Court decided Duncan, the Georgia General Assembly enacted O.C.G.A. § 33-24-56.1. Davis v. Kaiser Foundation Health Plan of Georgia, Inc., 521 S.E.2d 815, 817 (Ga. 1999). The Georgia Supreme Court thereafter concluded that “the General Assembly was alerted by the decision in Duncan to the absence of a clear statement of existing law on the question, and enacted O.C.G.A. § 33-24-56.1 to make unmistakable that complete compensation is the public policy of [Georgia].” Id. at 817 – 18.While the Georgia Supreme Court held that the enactment of O.C.G.A. § 33-24-56.1 clarified:that the public policy of [Georgia] will not permit insurers to require an insured to agree to a provision that permits the insurer, at the expense of the insured, to avoid the risk for which the insurer has been paid by requiring the insured to reimburse the insurer whether or not the insured was completely compensated for the covered loss,id. at 818, the Georgia General Assembly explicitly excepted policies like the one at issue here from its scope. O.C.G.A. § 33-24-2. 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.

CHARLES A. PANNELL, JR., United States District Judge