Untitled Document

Home / Public / Amicus Section / Briefs

IN THE SUPREME COURT OF THE
STATE OF GEORGIA
MARY LOU RIPPSTINE DAVIS,
Appellant,
v.
KAISER FOUNDATION HEALTH PLAN OF GEORGIA, INC.,
Appellee.
CASE NO.
S99C0306

------------------------------------------------------------------------

BRIEF OF THE AMICUS CURIAE COMMITTEE
GEORGIA TRIAL LAWYERS ASSOCIATION
Billy Ned Jones
President, Georgia Trial Lawyers AssociationThis Brief Prepared By:Charles M. Cork, III
Ga. Bar No. 187915
Chair, Amicus Curiae Committee
Georgia Trial Lawyers Association
Reynolds & McArthur
P. O. Box 6897
Macon, Georgia 31208-6897
(912) 741-6000

------------------------------------------------------------------------

IN THE SUPREME COURT OF THE
STATE OF GEORGIA
MARY LOU RIPPSTINE DAVIS,
Appellant,
v.
KAISER FOUNDATION HEALTH PLAN OF GEORGIA, INC.,
Appellee.
CASE NO.
S99C0306

------------------------------------------------------------------------

BRIEF OF THE AMICUS CURIAE COMMITTEE
GEORGIA TRIAL LAWYERS ASSOCIATION

Disclosure of Amicus Interest. The Georgia Trial Lawyers Association is an association comprising members of the State Bar of Georgia and it is committed to the preservation of the jury system and the notion of full compensation for those injured by the wrongdoing of others. Because of the enormous number of cases still pending to which the decision below could apply, GTLA submits the following brief in support of the petitioner's contention that she should be fully compensated before the insurer is reimbursed for its payments.

Introduction

This brief will re-state arguments that GTLA made in its brief in support of the petition for certiorari, and in addition, this brief will show that other states have adopted the complete compensation principle by judicial decision even where a contract provision conflicts with that rule. See pp. 17-23.

The Effect of the Policy Provisions, if Valid

The decision of the Court of Appeals upholding the medical payments insurer's (MPI) policy provisions conflicts with numerous provisions and policies of Georgia law.

* The ruling below ignores the "Georgia public policy [that] strongly supports the rule that an insurer may not obtain reimbursement unless and until its insured has been completely compensated for his losses." Duncan v. Integon Gen. Ins. Corp., 267 Ga. 646, 647 (1997) (emphasis added). That this policy applies in all fields of Georgia law where the issue has arisen is shown below at pp. 5-11. That it is a part of the very fabric of Georgia law, and is part of the very definition of "insurance," is shown below at pp. 11-15.

* The Court of Appeals' ruling is contrary to the principle which prohibits subrogation or assignment of personal injury claims by upholding for the first time a loan receipt arrangement for personal injury claims and by imposing obligations on the plaintiff that are even more onerous than if the insurer had merely subrogated to the plaintiff's position. This is shown below at pp. 23-25.

* The ruling below authorizes policy provisions that are barratrous, in violation of OCGA § 16-10-95(a)(3), in that the provisions require an injured victim to file a suit even against her wishes and own best interests. See below at pp. 25-26.

* The ruling below conflicts with rulings from this court that the plaintiff in a tort claim should never be compelled to surrender a cause of action unless he has done so intentionally or received full compensation. See below at pp. 26-27.

The ruling below also has enormous practical consequences for a person who has been severely injured by the tortious conduct of another. For instance, suppose that an insured/victim received $50,000 in "benefits" from the MPI but the tortfeasor had only $15,000 in insurance coverage and assets. If this provision were valid, the insured/victim would have no right to recover a penny from the tortfeasor, but she would be forced to file a suit anyway under this policy, and to incur the expenses of litigation, in order to avoid being sued under this policy by her own insurer for reimbursement, that is, in order to avoid being victimized again. Since she would not recover from the tortfeasor, there would be no fund for the payment of contingent attorney's fees. Thus, she would either have to pay for an attorney out of her own pocket, or she would have to learn how to practice law on the fly for the benefit of the MPI. Whether she made a "reasonable effort" to prosecute her claim would be a jury question in a suit by the MPI against her. It would be difficult for her to compromise her claim, since a compromise could be evidence that she failed to make a "reasonable effort" to collect the debt due. Likewise, failure to seek the personal assets of an underinsured tortfeasor or to garnish wages could be deemed a failure to make a reasonable effort to collect.

CITATION OF AUTHORITY

THE REIMBURSEMENT PROVISIONS IN ISSUE VIOLATE GEORGIA'S PUBLIC POLICIES AND CANNOT BE ENFORCED.

There is no statute or common law principle that could justify the reimbursement provision here except freedom of contract. Freedom of contract is concededly an important and valuable right for all of the reasons cited by the courts in numerous decisions. "The main purpose of contract law is the realization of reasonable expectations induced by promises." Pepsi Cola Bottling Co. v. First National Bank, 248 Ga. 114, 116 (1981) (emphasis added). However, freedom of contract is not absolute, and it must yield when the contractual terms violate the policy of Georgia.
OCGA § 13-8-2(a) provides that "A contract which is against the policy of the law cannot be enforced." The statute then lists five types of contracts that are deemed to be against public policy, but states that this list does not exhaust the types of contracts that are against public policy. The statute makes the question of enforceability depend on determining whether the contract is against "the policy of the law." The reimbursement provisions here violate several "policies of the law."

THE REIMBURSEMENT PROVISIONS VIOLATE GEORGIA'S FUNDAMENTAL POLICY REQUIRING COMPLETE COMPENSATION OF AN INSURED FOR PERSONAL INJURIES BEFORE REIMBURSEMENT OF AN INSURER.

THE COMPLETE COMPENSATION RULE IS THE POLICY OF GEORGIA, AS MANIFEST IN EVERY FIELD OF LAW IN WHICH THE LEGISLATURE AND COURTS HAVE ADDRESSED THE QUESTION.

On every occasion in which the legislature and courts have addressed the question of complete compensation, the legislature and courts have upheld the priority of an insured/victim's right to collect complete compensation over the rights, whether statutory or contractual, of first-party medical pay insurers to be reimbursed from third-party liability insurers. This is a general policy of the law of Georgia, both statutory and common law; it is not limited to isolated fields of law.

* Most obviously, the General Assembly enacted OCGA § 33-24-56.1 which, if retroactively applied, would control the outcome of this case in favor of the insured/victim. Whether or not the law should be applied retroactively, it is the most powerful evidence that the policy of this state mandates that insured/victims obtain complete compensation for all economic and non-economic losses before reimbursement is permissible. It certainly confirms this court's earlier finding of a "public policy [that] strongly supports" the complete compensation rule. Duncan v. Integon Gen. Ins. Corp., 267 Ga. 646, 647 (1997) (emphasis added).

* In the field of Workers' Compensation, the General Assembly also has provided for the complete compensation rule. OCGA § 34-9-11.1(b) allows employer/insurers to subrogate to the employee's claims against third parties starting in 1992, but it provides that the employee must first be "fully and completely compensated ... for all economic and noneconomic losses incurred as a result of the injury."
OCGA § 34-9-11.1(b) expresses a clear legislative policy that the victim be completely compensated before the right of subrogation and reimbursement obtains. Indeed, it followed a twenty-year period during which a prior right of subrogation (Ga. Code Ann. §114-403) had been repealed. 1972 Ga. Laws 3, 4. Contemporary cases show that the right of subrogation was inhibiting settlements (since a 1963 amendment) and producing collateral litigation. Feild & Wisenbaker, Workmen's Compensation, 23 Mercer L. Rev. 321, 333-36 (1972). Furthermore, the workers compensation providers were getting a free ride on attorney's fees that the employee incurred in recovering from the tortfeasor. Commercial Union Ins. Co. v. Scott, 116 Ga. App. 633 (1967). Repeal was sought, and apparently obtained, because it was incongruous for an insurer to make himself whole by obtaining a return of compensation, and that any notion that such restitution is equitable overlooks not only the "paid-for" role of the insurer but the fact that both damages and compensation may be inadequate, and finally, the failure to use funds obtained by subrogation as a factor in rate-making makes any monies received by subrogation a windfall. If, as between insurer and employee, equitable principles support a windfall, the insurer is not the person to receive it. Feild & Wisenbaker, supra, 23 Mercer L. Rev. at 324. This analysis is similar to the Court's rationale in Duncan v. Integon Gen. Ins. Corp., 267 Ga. 646, 647 (1997) (citing Shelter Ins. Cos. v. Frohlich, 498 N.W.2d 74 (Neb. 1993)). The restoration in 1992 of subrogation and reimbursement rights only after the employee/ victim has been fully compensated is fully consistent with this notion, as presaged by the same critics in the year following the 1972 repeal. Feild, Workmen's Compensation, 24 Mercer L. Rev. 425, 426 (1973). Thus, again, the policy of the legislature is to require that the victim be fully compensated before the insurer is reimbursed.

* In the field of No-Fault (PIP) insurance before its repeal, the statute provided rights of subrogation to the no-fault insurer under certain circumstances. The question arose as to whether the insurer or the insured had priority. In 1976, the General Assembly resolved the question by amending the statute to add, in two places, that the right of subrogation would apply "only in the event that the [insured] has been completely compensated for all economic and noneconomic losses." 1976 Ga. Laws, 1078-79. That left unresolved the meaning of the statute before 1976, and in Blaylock v. Georgia Mut. Ins. Co., 239 Ga. 462, 465 (1977), this court observed that having a right of subrogation "does not necessarily establish priorities where the assets of the tortfeasor are inadequate to pay his liabilities." It resolved the priority question by observing that a no-fault provider is not authorized to stop paying benefits simply because other coverages are available (as is true of the insurance policy that is the subject of this case), though it would be entitled to do so if it had priority over the insured, from which this court concluded that the insured's claims have priority over the insurer's. Smith v. Employers' Fire Ins. Co., 255 Ga. 596 (1986), reaffirmed this construction, noted that the General Assembly amended the act in 1978 to language similar to its pre-1976 status, and found that because the General Assembly is charged with knowledge of the Supreme Court's decisions, the General Assembly adopted this court's construction that requires complete compensation before subrogation. Thus, the General Assembly and this court both found a policy to require complete compensation before reimbursement.

This amicus acknowledges that a 1984 amendment of this section led to a contrary construction in a dictum in Southern Gen. Ins. Co. v. Cotton States Mut. Ins. Co., 193 Ga. App. 240 (1989), as noted in Justice Sears's dissenting opinion in Duncan v. Integon Gen. Ins. Corp., 267 Ga. 646, 652 n. 13 (1997). See also Southern Guar. Ins. Co. of Georgia v. Georgia Farm Bur. Mut. Ins. Co., 195 Ga. App. 784 (1990). The General Assembly did not endorse this construction because it repealed the no-fault act effective in 1991. The undersigned believes that this construction is erroneous; that instead, the General Assembly simply provided for subrogation against uninsured tortfeasors under conditions of complete compensation, leaving intact the preexisting normal subrogation rights against insured tortfeasors' insurers, including the judicially interpreted provision for complete compensation. See F. Jenkins & W. Miller, Georgia Automobile Insurance Law (1995 ed.), §34-4, which accords with this amicus's view. In any event, the insured received complete compensation in both pre-repeal cases under the 1984 amendment, and the no-fault provider was not reimbursed at all.

* In the uninsured motorist context, an uninsured motorist carrier is subrogated to the rights of the insured/victim against the tortfeasor. OCGA § 33-7-11(f). While the statute provides only for an offset for the UMC's proportional share of attorney's fees and expenses of litigation, case law has interpreted the statute to impose a complete compensation limit on the right of subrogation, and the General Assembly has often revisited the statute without changing this judicial construction, thereby adopting the judicial construction. Johnson v. State Farm Mut. Auto. Ins. Co., 216 Ga. App. 541, 544 (1995); Mullenberg v. K. J. Saxon Constr. Co., 192 Ga. App. 281, 282 (1989); Cherokee Ins. Co. v. Lewis, 187 Ga. App. 628 (1988), rev'd on other grounds, 258 Ga. 839 (1989).

* Even in the absence of statutes, the courts have invalidated provisions of insurance policies that would have the effect of denying complete compensation to insureds. The problem has arisen when a plaintiff is insured under two policies covering the same loss, and both policies contain clauses stating that they are excess over other insurance, which is equivalent to requiring a reimbursement of payments up to the limits of other insurance. In Southern Home Ins. v. Willoughby, 124 Ga. App. 162 (1971), the Court of Appeals addressed the question, reviewed divergent results from other jurisdictions, and held that the clauses cancel each other out. The court recognized that this approach violated both insurers' freedom to contract because "the intent of each insurer as to how the loss should be distributed is disregarded by this solution," id. at 166, but noted that the general intent of the policies was to indemnify the insured for the loss, while not being liable for the entire loss when there is double coverage. Id. By this means, the insured would receive complete compensation, but not a double recovery, even though the approach, strictly speaking, would violate the insurer's freedom of a contract. See also State Farm Fire & Cas. Co. v. Holton, 131 Ga. App. 247, 248 (1974), and Georgia Farm Bureau Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 173 Ga. App. 844, 845-846 (1985), which follow the same rationale.
Such cases are very important for the resolution of this case. The insurers in those cases argued, as does the insurer in this one, that their freedom of a contract should be paramount, even if the insured received no money. The court agreed that the freedom to contract was important, but held that concern subordinate to the need to provide insurance under the terms of the contract, and it worked out a fair way that compensated the plaintiff as the first principle.

In view of all of the foregoing, this court correctly held in Duncan v. Integon Gen. Ins. Corp., 267 Ga. 646 (1997), that the complete compensation rule is "the public policy of Georgia," id., 646, and 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. Indeed, Georgia public policy encourages insurance coverage which assures no less than full compensation to the insured, while at the same time preventing the insured from recovering more than is necessary to make him whole. [Cit.]

267 Ga. at 647. The Court did not purport to announce a new principle; it simply found that this policy already existed.

THE COMPLETE COMPENSATION RULE IS PART OF THE FABRIC OF GEORGIA LAW AS A FUNDAMENTAL PRINCIPLE OF GEORGIA JURISPRUDENCE.

The policy favoring complete compensation in the cases noted above was not simply a collection of isolated rulings and statutes; it existed throughout Georgia jurisprudence, a part of the warp and woof of Georgia law. This conclusion is evident because the courts have decided the above questions in one field of law in reliance upon decisions from other fields or on decisions from other states. Duncan v. Integon Gen. Ins. Corp., 267 Ga. 646 (1997) (relying on common law decisions from other jurisdictions and Georgia uninsured motorist cases in a medical payment's reimbursement setting); Bartow County Bd. of Educ. v. Ray, 229 Ga. App. 333 (1997) (referencing Duncan in a workers' compensation setting); Cherokee Ins. Co. v. Lewis, 187 Ga. App. 628 (1988), rev'd on other grounds, 258 Ga. 839 (1989) (relying on law from other jurisdictions and a Georgia no-fault case in an uninsured motorist setting). If the policy of complete compensation did not exist across the board, those citations of authority would have been irrelevant.

Therefore, the court should conclude that the general policy of the law in Georgia requires complete compensation of the insured before reimbursement of the insurer, and that this was the status of the law before Duncan (as Dunc

an recognized it) and before OCGA § 33-24-56.1 (as the General Assembly refused to differ from Duncan).
Because complete compensation was a general policy of the law, it informs the meanings of statutes, such as the very definition of insurance in OCGA § 33-1-2(2). "It is a familiar rule of construction, where a statute is susceptible of two interpretations, that it should be construed in harmony with the general policy of the law, rather than against it." Singleton v. Close, 130 Ga. 716, 720 (1908) (statute construed in terms of policy of free alienability of property, which policy is "woven in the warp and woof of all of our laws" so that exceptions to the policy must be stated in clear and unmistakable words); Knight v. Georgia Farm Bur. Mut. Ins. Co., 184 Ga. App. 312, 314 (1987) (same rule applied to an uninsured motorist statute); Collins v. C. W. Matthews Contracting Co., Inc., 213 Ga. App. 109, 110 (1994).

All statutes are presumed to be enacted by the General Assembly with full knowledge of the existing condition of the law and with reference to it, and are therefore to be construed in connection and in harmony with the existing law, and as a part of a general and uniform system of jurisprudence, and their meaning and effect is to be determined in connection, not only with the common law and the Constitution, but also with reference to other statutes and decisions of the courts. Gulf Life Ins. Co. v. Folsom, 256 Ga. 400, 403 (1986) (emphasis added). The definition of insurance should be considered in connection with the general policy of Georgia law favoring complete compensation.

As defined, "insurance" is a "contract which is an integral part of a plan for distributing individual losses whereby one undertakes to indemnify another or to pay a specified amount or benefits upon determinable contingencies." OCGA § 33-1-2(2); Ponder v. Fulton-DeKalb Hosp. Auth., 256 Ga. 833, 835 (1987). Therefore, such a policy must either "indemnify" the insured or "pay" specified "benefits," as these terms are construed in accordance with the general policy of complete compensation.

This policy did not pay a benefit except to the extent that loan companies "pay benefits"; like a loan receipt it merely advanced a sum and required that the insured "must reimburse us for services or benefits you receive" under the first sentence of the provisions in issue (subject to a later determination that the insured tried in good faith but failed to obtain payment for her insurer from the tortfeasor). Implicit in the concept of payment of a benefit is that the payment is unconditional (OCGA § 13-4-24) and that the benefit serves to make the insured whole, for otherwise it is not a benefit. Payments under the subject provisions are conditional; they must be reimbursed "if your injury or illness is caused or alleged to be caused by a third party or in a motor vehicle accident." In such circumstances the payments are repayable loans or advances, not benefits.

Therefore, the policy can only constitute "insurance" to the extent it indemnifies the insured. Unless it makes the insured whole, the policy cannot be said to indemnify the insured. A contract to indemnify has been defined as:

A collateral contract or assurance, by which one person engages to secure another against an anticipated loss or to prevent him from being damnified by the legal consequences of an act or forbearance on the part of one of the parties or of some third person. [Cit.] The term is also used to denote a compensation given to make the person whole from a loss already sustained.

Gamble v. Reeves Transp. Co., 126 Ga. 161, 163 (1972) (emphasis added). In order to indemnify, the policy must "make the person whole." The provisions in issue here do not make the insured whole since the insured is called upon to sacrifice some part of her compensation for other injuries to reimburse the MPI.
In short, without application of the complete compensation rule, the policy here is not insurance. Without that rule, it violates the public policy of our state regulating insurance contracts.

THE COURT OF APPEALS MISAPPLIED RULES OF STATUTORY CONSTRUCTION IN CONCLUDING THAT OCGA § 33-24-56.1 WAS A LEGISLATIVE EFFORT TO CHANGE A PRIOR RULE CONTRARY TO THE COMPLETE COMPENSATION RULE.

The Court of Appeals stated that the law before OCGA § 33-24-56.1 must have allowed reimbursement provisions such as the current one because the General Assembly was aware of existing law, including Duncan v. Integon, and that the General Assembly must be presumed to have changed the existing law, citing cases that address the meaning of language added to an existing text. Davis v. Kaiser Foundation Health Plan of Georgia, Inc., 235 Ga. App. 13, 15 (1998). On the contrary, it is because the General Assembly was aware of Duncan that the presumption of changing the law is misplaced. If the General Assembly had changed the law of Duncan, it would have rejected the holding there. Instead, the General Assembly confirmed the holding and simply provided a methodology for enforcing each party's rights.

It is apparent from the text of OCGA § 33-24-56.1 that the General Assembly intended merely to make explicit and confirm the existing law, especially since Duncan v. Integon Gen. Ins. Corp., 267 Ga. 647 (1997), was decided during the legislative session and was well known to the legislators. "The acts of the legislature will be construed as intending to state the preexisting law, and not to change it, unless the contrary plainly appears." Johnson v. Eidson, 235 Ga. 820, 824 (1976). The preamble states that the act "provides for reimbursement," thus allowing reimbursement, where "an injured insured person has been fully compensated," and the rest of the act simply supplies procedures for resolving questions of the extent of reimbursement. OCGA § 33-24-56.1 would look very different if the General Assembly had differed from this court's understanding of the policy of Georgia or if it had wanted to allow insurers the opportunity to avoid the effect of the complete compensation rule by contract.

According to the MPI (p. 20, n. 4), the rule that construes statutes as stating pre-existing law applies only where the statute has "an obvious predecessor," citing TEC America, Inc. v. DeKalb County Bd. of Tax Assessors, 170 Ga. App. 533, 537 (1984). Unfortunately for this argument, TEC America specifically states that the rule is also applicable "when construing the original codification of a previously existing rule of law which was not statutory in origin." Therefore, the rule of construction applies to the codification of the non-statutory rule in Duncan v. Integon.

Contrary to the Court of Appeals, a legislative enactment that clarifies the policy of the law to require complete compensation of the insured before reimbursement of the insurer does not require a finding that the law before the enactment was different. See insurance cases such as Knight v. Georgia Farm Bur. Mut. Ins. Co., 184 Ga. App. 312, 314 (1987) (addition of clarifying language in statute covering a situation does not mean that statute did not already implicitly cover the subject); Colwell v. Voyager Cas. Ins. Co., 184 Ga. App. 842, 843-44 (1987) (statutory amendment merely changed the clarity of the prior law); Leader Nat. Ins. Co. v. Gaydon, 185 Ga. App. 322, 326-7 (1987) (current statute's explicit negation of duty to give duplicate notice of insurance cancellation does not mean that it was required before statutory change). The Court of Appeals erred in reasoning to a contrary conclusion.

THE COMPLETE COMPENSATION RULE HAS BEEN ADOPTED BY COURTS OF OTHER STATES, NOTWITHSTANDING CONTRARY INSURANCE PROVISIONS.

Kaiser's brief (pp. 7-14) gives the erroneous impression that all courts authorize insurers(1) to modify the complete compensation rule at will. On the contrary, the courts are divided on this issue. This section addresses cases that prohibit contractual modification of the complete compensation rule and responds to some cases cited by Kaiser.

Several courts have ignored insurance policy provisions by subordinating conventional (contractual) subrogation under equitable subrogation, so that the equitable principles mandating complete compensation prevail over contract provisions. See e.g.,

* Wimberly v. American Cas. Co., 584 S.W.2d 200 (Tenn. 1979) ("The doctrine of subrogation in insurance does not arise from, nor is it dependent upon, statute or custom or any of the terms of the contract; it has its origin in general principles of equity and in the nature of the insurance contract as one of indemnity. The right of subrogation rests not upon a contract, but upon the principles of natural justice." Thus the distinction between legal and conventional subrogation is "only dispositive of 'whether there is a right of subrogation in the first instance, rather than in the enforcement of such right.'");

* Rimes v. State Farm Mut. Auto. Ins. Co., 106 Wis. 2d 263, 316 N.W.2d 348 (1982) ("Whether an insurer is claiming rights under the insurance contract, or under rules of equity, the entire law of subrogation is based upon equitable principles.");

* Allstate Ins. Co. v. Clarke, 527 A.2d 1021 (Pa. Super. 1987) ("The right of subrogation may be contractually declared or founded in equity, but even if contractually declared, it is to be regarded as based upon and governed by equitable principles.");

* Franklin v. Healthsource of Arkansas, 328 Ark. 163, 942 S.W.2d 837 (1997) ("The same facts give rise to both legal and conventional subrogation." A rule preferring conventional over legal subrogation "is arbitrary and inconsistent with theories of equity." Where the insured and insurer cannot both be made whole, "the equitable principles and objectives of subrogation are controlling."). This case overrules Higginbotham v. Arkansas Blue Cross & Blue Shield, 849 S.W.2d 464 (Ark. 1993), a case noted in the dissent in Duncan v. Integon.
In Thiringer v. American Motors Ins. Co., 91 Wash. 2d 215, 588 P.2d 191 (1978), the Supreme Court of Washington stated that the complete compensation rule "embodies a policy deemed socially desirable in this state, in that it fosters the adequate indemnification of innocent automobile accident victims." It held that a provision in the policy contrary to this rule "would be obviously unfair, since the insured pays a premium for the PIP coverage and has a right to expect that the payments promised under this coverage will be available to him if the amount he is able to recover from other sources, after diligent effort, is less than his general damages."

The Supreme Court of Rhode Island "has disallowed contractual limitations that curtail an insured's recovery in instances in which the insured has not recovered the amount of his or her actual loss." DiTata v. Aetna Cas. & Sur. Co., 542 A.2d 245 (R.I. 1988).

In Powell v. Blue Cross Blue Shield of Alabama, 581 So.2d 772 (1990), the Supreme Court of Alabama rejected a policy provision stating that the "right to reimbursement of the Administrator comes first even if a Member is not paid for all of his claim for damages against the other person ...." It joined the jurisdictions requiring complete compensation because that rule better reflects the underlying equitable principles that give rise to the remedy of subrogation itself, without which there would be no right of subrogation at all, and better reflects the purpose for which one purchases insurance. The very heart of the bargain when the insured purchases insurance is that if there is a loss he or she will be made whole. The cases that originally applied subrogation to insurance contracts did so on behalf of the insurer only after the insured had been fully compensated. These cases never envisioned the use of subrogation as a device to fully reimburse the insurer at the expense of leaving the insured less than fully compensated for his loss.

In Porter v. McPherson, 198 W. Va. 158, 163, 479 S.E.2d 668, 673 (1996), the Supreme Court of West Virginia observed that reimbursement rights in insurance policies (as opposed to hospital liens) were subject to the made whole rule. "The equitable principle underlying the made-whole rule in insurance subrogation cases is that the burden of loss should rest on the party paid to assume the risk (the insurer) and not on the party least able to shoulder the loss (the inadequately compensated insured)."

In Hare v. State of Mississippi, No. 97-CA-01443-SCT (Miss. decided March 18, 1999), the Supreme Court of Mississippi also refused to allow policy terms to defeat the complete compensation rule
because the intent of subrogation is to prevent a double recovery by the insured, especially here as expressly stated in the State Health Plan. Until the insured has been fully compensated, there cannot be a double recovery. Otherwise, to allow the literal language of an insurance contract to destroy an insured's equitable right to subrogationignores the fact that this type of contract is realistically a unilateral contract of insurance and overlooks the insured's total lack of bargaining power in negotiating the terms of these types of agreements.

From the foregoing discussion, the complete compensation rule is plainly a viable principle in American jurisprudence.

Wine v. Globe American Casualty Co., 917 S.W.2d 558 (Ky. 1996), cited by Kaiser (Kaiser's Br. at 7), does not support Kaiser's position. There, the Kentucky Supreme Court expressly declined to determine whether it would join the jurisdictions that do or do not allow contractual modification of the complete compensation rule (917 S.W.2d at 564). The language which Kaiser quotes appears not in the insurance policy, but in a release executed by the insured after actual negotiated, with both sides having counsel and equal bargaining position, where the insured's loss had been sustained and fully appreciated. 917 S.W.2d at 565. These considerations do not apply to Kaiser's contract of adhesion here. The Kentucky Supreme Court held that "subrogation rights may be modified by contract, provided violence is not done to established equitable principles" (id., emphasis added), and concluded that releases executed under these circumstances do not violate equitable principles such as complete compensation.

The defect in York v. Sevier County Ambulance Authority, 1998 WL 334433 (Tenn. App. 1998), discussed by Kaiser (Kaiser's Br. at 7-9), is that, while recognizing that "Tennessee's 'made whole' doctrine" (see Wimberly v. American Cas. Co., 584 S.W.2d 200 (Tenn. 1979), supra) prohibits an insurer from recovering in subrogation "unless the insured is made whole," the court found no public policy invalidating a reimbursement clause. The same public policy that prohibits subrogation unless the insured has been made whole prohibits reimbursement unless the insured has been made whole. Subrogation is nothing but a right of reimbursement coupled with a particular means of enforcement. Mahler v. Szucs, 135 Wash.2d 398, 957 P.2d 632 (1998).

Peterson v. Ohio Farmers Ins. Co., 191 N.E.2d 157 (Ohio 1963), and Culver v. INA, 599 A.2d 400 (N.J. 1989), cited by Kaiser (Kaiser's Br. at 10), dealt with property damage claims and a post-loss settlement that adjusted the rights of the parties and assigned the claim to the insurer. Post-loss settlements lack the elements of adhesion noted by various courts above. Property claims, likewise, do not control Georgia law, which treats property claims separately from personal injury claims in several respects. OCGA § 51-1-32 (personal injury and property damage claims are separate in motor vehicle wrecks, allowing the settlement of one and litigation of the other); OCGA § 44-12-24 (property damage claims may be assigned, personal injury claims may not).

THE REIMBURSEMENT PROVISIONS IN ISSUE VIOLATE GEORGIA'S POLICY AGAINST ASSIGNMENT OF PERSONAL INJURY CLAIMS.

Georgia prohibits the assignment of personal injury claims. OCGA § 44-12-24; Carter v. Banks, 254 Ga. 550, 552-3 (1985). Where the assignment of a personal injury claim to an insurer is prohibited, the insurer may not indirectly accomplish the same result by means of a loan receipt. National Surety Corp. v. McDonnell, 194 Ga. App. 597 (1) (1990) (loan receipt that would indirectly assign PIP claim to insurer in violation of statute "must be considered an absolute payment and not a loan"). Under the provision at issue here, if it were valid, medical payments amount to payments under a loan receipt: they are loans which the insured must repay from a recovery. But unlike mere loan receipts, where at least the insurer controls the litigation at its expense, the insured here must pursue the litigation at her expense.

The loan receipt is a valid method for handling the property damage claims out of which loan receipts historically arose, but in order to be valid, the case must "involve property damage as opposed to personal injury claims." American Chain & Cable Co., Inc. v. Brunson, 157 Ga. App. 833, 834 (1981) (loan receipt where one defendant paid the plaintiff, but retained a right to be repaid out of plaintiff's claim against a joint tortfeasor, was invalid as an indirect assignment of the personal injury claim and was thus an absolute payment). Both McDonnell and Brunson, supra, invalidate provisions of loan receipts requiring reimbursement from the proceeds of a personal injury claim based on Georgia's prohibition on assignment of personal injury claims. That prohibition applies equally to the reimbursement provisions in this case.

Furthermore, if the policy provisions in question were valid, the MPI would get a free ride. The MPI would be in a better position than if it had been allowed, contrary to the law of Georgia, to subrogate to the insured/victims's claims. If it were allowed to subrogate, it would have to incur the costs of litigation, including attorney's fees, as an offset against its recovery of reimbursement. If it were allowed to subrogate, it would incur the risks of all litigation, and particularly, it would incur the risk that the insured/victim may be found to be contributorily negligent in some degree that would offset its recovery. Finally, if it were allowed to subrogate, it would face the possibility that the tortfeasor would lack sufficient insurance or assets to pay for all valid claims, including those of the insured/victim and the MPI. Thus, if it were allowed to subrogate, the MPI's recovery would be diminished by normal expenses and devalued by normal risks. But if the provisions here were valid, it would incur no costs in proving that the third party is liable, it would incur no risk of a finding of comparative negligence, and its claims would stand before the insured/victim's claims to complete compensation. The insured/ victim incurs more risks in recovering the amount due than the insurer incurs, though the insured/victim pays the insurer a premium to take such risks.

The provision at issue here is an outrageous violation of the principle against assignment of personal injury claims.

.THE REIMBURSEMENT PROVISIONS IN ISSUE VIOLATE GEORGIA'S PROHIBITION ON BARRATRY

.Barratry is a crime. OCGA § 16-10-95(a)(3) declares a person guilty of barratry who "solicits or encourages the institution of a judicial ... proceeding ... before being consulted by a complainant in relation thereto." The subject reimbursement provision commands the insured to file an action seeking reimbursement on behalf of the MPI, on pain of reimbursing the MPI herself, even if she does not want to seek payment from a third party. It therefore violates the prohibition against barratry and is void against Georgia public policy. OCGA § 13-8-2(a).

If the policy provisions were valid, they would require the injured party to proceed to suit whether the injured party desires to do so or not. The policy provides that if the injury is "caused or alleged to be caused by a third party or in a motor vehicle accident," "you must make a reasonable effort to obtain payment," and "this means you must file and seriously pursue a claim ... for payment for medical services." Even though it would be pointless for the plaintiff, who receives nothing, the insurer commands her to sue. Even if she simply desires not to sue, the insurer commands her to sue. Even if it would cost her time and expense to sue, the insurer commands her to sue.

The subject policy provisions interfere with the injured party's personal decision to use the courts by commanding a suit. Therefore, they violate the Georgia policy against barratry.

THE REIMBURSEMENT PROVISIONS IN ISSUE VIOLATE GEORGIA'S POLICY THAT A PLAINTIFF SHOULD NOT BE COMPELLED TO SURRENDER A CAUSE OF ACTION IN ABSENCE OF COMPLETE COMPENSATION.

Within the system of tort law, Georgia recognizes the "principle that a plaintiff should never be compelled to surrender his cause of action against any wrongdoer unless he has intentionally done so, or unless he has received such full compensation that he is no longer entitled to maintain it." Williams v. Physicians & Surgeons Community Hospital, Inc., 249 Ga. 588, 589 (1982) (punctuation omitted, emphasis added); Oconee Regional Medical Center v. Haygood, 217 Ga. App. 600, 601 (1995); Johnson v. Ruppert, 177 Ga. App. 883, 884 (1986). In Williams, this court invalidated a release of subsequent tortfeasors after noting that "strict adherence to the terms of a preprinted release form is unfair to laymen who may be unknowledgeable or not represented by an attorney during negotiation and execution of the release." Id., 591. Hence the value of freedom of contract was trumped by the unfairness of provisions that defeated a personal injury claim without full compensation. The same can be said for the preprinted insurance policy in this case, except that the insured/victim here had even less control over its selection and terms than the settling plaintiff in Williams. Yet the provisions in issue would require the insured to surrender to her own insurer parts of her claim against the tortfeasor for other economic and noneconomic damages, namely, those parts that must be abandoned (e.g., lost wages, pain and suffering) in order to fully reimburse her insurer for its medical payments.(2) This is contrary to the tort law of Georgia.

CONCLUSION

For the foregoing reasons, the undersigned respectfully submits that the Court should construe the insurance policy provisions in question as subject to the policy of Georgia that requires complete compensation for all economic and noneconomic damages before the insurer is entitled to receive reimbursement.
Respectfully submitted,

CHARLES M. CORK, III

Ga. Bar No. 187915

REYNOLDS & McARTHUR

P. O. Box 6897

Macon, Georgia 31208-6897

(912) 741-6000

CERTIFICATE OF SERVICE

I certify that I have this day served a copy of the foregoing document, with any attachments, upon all counsel of record by mailing the same with sufficient postage in a properly addressed envelope, as follows:

Mr. Larry R. Wight
11205 Alpharetta Hwy., Suite C-3
Roswell, Georgia 30076

Mr. Patrick J. Gibbs
1088 Canton Street
Roswell, Georgia 30075

Mr. Grant B. Smith
Mr. John D. Dixon
Dennis, Corry & Porter LLP
3300 One Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326

Dated this April ____, 1999

.CHARLES M. CORK, III

1. In a telling phrase, Kaiser states the issue as whether to recognize "a party's right to modify the application of the complete compensation rule," as other states have done. Kaiser Br., 6. Plainly, Kaiser recognizes that the provision in question is Kaiser's unilateral effort to change the law.

2. Georgia law provides a mechanism for resolving this dispute: submission of special interrogatories to determine what part of an award is to be allocated to the reimbursable medical payment. Allstate Ins. Co. v. Austin, 120 Ga. App. 430 (2) (1969), cert. dismissed, 226 Ga. 93 (1970) (burden on insurer to show by evidence whether verdict compensated plaintiff for item covered by policy as opposed to other items of damage).