IN THE SUPREME COURT
STATE OF GEORGIA
J. J. RICHARDS, and MARCUS MCCARTY, individually and on behalf of two classes,
Appellants,
v.
GEORGIA DEPARTMENT OF COMMUNITY HEALTH,
Appellee.
Case No. S04A0866

BRIEF OF AMICUS CURIAE

GEORGIA TRIAL LAWYERS’ ASSOCIATION

 

The Georgia Trial Lawyers’ Association (GTLA), appearing as amicus curiae, addresses only two issues on this appeal, taking no position on any other. First, this Court may avoid the constitutional issues raised by Plaintiffs, and at the same time provide them comparable and appropriate nonconstitutional protections. Second, Plaintiffs are entitled to due process notice and hearing before foreclosure of Defendant’s lien, if any.

INTEREST OF AMICUS

GTLA is a voluntary membership organization, composed of some 3,000 Georgia trial lawyers. GTLA often appears as amicus curiae before the appellate courts of Georgia and the United States, concerning issues of significance in compensating victims of injury. GTLA is committed to preserving the jury system and the notion of full compensation for those injured by the wrongdoing of others.

I. PLAINTIFFS ARE ENTITLED TO SET OFF A SHARE OF THEIR LITIGATION EXPENSES AGAINST THE STATE’S CLAIMS.

Plaintiffs raise important constitutional claims, sounding in substantive due process, and "taking without compensation." They challenge the State’s failure to share in their attorney fees and other expenses of recovering from their tortfeasors. The first rule of constitutional adjudication, however, is that a court shall not decide a constitutional issue where the same concerns can be resolved on nonconstitutional grounds. Specifically, when faced with a constitutional challenge, a court should "construe a statute in connection, not only with the common law and the Constitution, but also with ... other statutes and decisions of the courts." Banks v. Georgia Power Co., 267 Ga. 602, 603 (1997) (citation omitted). This avoidance-by-construction approach is especially appropriate here. Plaintiffs’ "takings" claim requires this Court to ask whether Georgia law provides adequate compensation for their loss of property.

The Georgia statutes and common law give Plaintiffs an alternate remedy for Defendants’ failure to share the attorney fees and other expenses of litigation, which are necessary to recover for the State’s benefit. This Court should avoid the constitutional issues and declare that those remedies are available alternatives.

A. Plaintiffs and the State Entered into Written Contracts.

The facts in these cases are undisputed. Plaintiffs have either recovered or are now pursuing recovery for personal injury. Their claims against the tortfeasors include medical costs, lost wages, pain and suffering, and other damages.

Defendants have provided Plaintiffs with Medical Assistance. Each class member signed a written application for assistance, which amounts to a contract. As part of that application and in return for benefits, the Department obtained an assignment of the right to recover medical expenditures caused by the tortfeasor. The application further informed Plaintiffs that receipt of benefits created a lien upon any recovery of damages for Plaintiffs’ injuries.

Defendants have declined, however, to participate in paying attorney fees or any other expense of litigation necessary to recover against tortfeasors. This has left the accident victims to pay the entire amount of those costs. Utilizing its twin weapons of assignment and lien, the Department obtains satisfaction but pays nary a red cent toward the mutual enterprise of recovering those funds. At the same time, Plaintiffs see the yield from their personal injury recovery reduced – sometimes drastically – by the State’s claims against them.

In summary, Plaintiffs entered into written contracts with the Department. The Medical Assistance beneficiary signed a written application seeking benefits. The applicant gave consideration, by (1) assigning to the State her rights against the tortfeasor, to the extent of medical benefits received on account of injuries at the tortfeasor’s hands; and (2) agreeing to a lien in the same amount.

By virtue of the contractual assignment, as Defendants themselves insist, the State has required Plaintiffs to give up their claims against their tortfeasors, to the extent of any monies which might reimburse the State for its Medical Assistance payments. By virtue of its lien, as Defendants themselves insist, the State has required Plaintiffs to give up their entire right and interest in any monies from the tortfeasor which might reimburse the State. Plaintiffs thus have no remaining legal right or entitlement in those monies.

B. The Parties’ Contract Includes a Duty To Pay Litigation Expenses.

From every perspective, including the duty of good faith and fair dealing, this contractual arrangement must be construed to include a duty to reimburse the recipient for partial litigation expenses. "[T]hough courts are generally reluctant to make contracts for the parties, they will imply promises or duties when justice, good faith, or fairness so demand." Higginbottom v. Thiele Kaolin Co., 251 Ga. 148, 149 (1983). "’Good faith’ is a short-hand way of saying substantial compliance with the spirit, and not merely the letter, of a contract." Fisher v. Toombs Cty. Nursing Home, 223 Ga.App. 842, 845-46 (1996) (citation omitted).

This contract should be read to include not only the general duty of good faith and fair dealing, but also the specific duty to contribute to litigation expenses which benefit the State by obtaining Medical Assistance reimbursement. Not only are Plaintiffs acting for the State when they recover against the tortfeasor, they are drafted by the State as its recovery agents.

The State sits on its rights. It could act differently. It could take advantage of its assignments from Medical Assistance beneficiaries by suing in its own right. If it did so, it would have to incur the costs of litigation, including attorney's fees, as an offset against its recovery of reimbursement. If it were to sue on assignment, 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, it would face the possibility that the tortfeasor would lack sufficient insurance or assets to pay for all valid claims. Thus, its recovery would be diminished by normal expenses and devalued by normal risks.

As the record shows, the Department made a conscious policy choice not to make those expenses and not to run those risks. Defendants chose instead to foist off any and all litigation costs and risks onto recipients.

Because the Department has adopted a universal policy of not seeking to recover from tortfeasors, the Medical Assistance agreement turns its beneficiaries into foot soldiers for the Department. If anyone, including the State, is to recover anything from the tortfeasor, the beneficiary must seize the initiative. The State’s conscious enlistment of injured parties as its recovery agents, through the written Medical Assistance application, brings with it a commensurate duty of fairness to share in the costs of that conscription.

The State argues erroneously that it contributes to the expenses of recovery. The State’s factual basis for the argument is its expenditures to claim its share of any recovery after the fact, and to reach any possible settlement. But the State’s conclusion does not follow. The State does not share in the expenses for which Plaintiffs seek contribution.

The State’s expenditures are in no way designed to promote any recovery from the tortfeasor. Plaintiffs’ independent litigation efforts are solely responsible for creating the possibility of any recovery. The limited purpose of the State’s negotiation-and-settlement expenditures is to wrest a portion of that well-earned recovery from Plaintiffs.

More fundamentally, the Court should be aware of a revealing paradox, inherent in the State’s arguments. On the one hand, Defendants insist that their medical payments create a debt owed by Plaintiffs, as recompense for medical services. Starting from this premise, Defendants conclude that the Department is entitled to full recompense from Plaintiffs for all medical payments, without contributing to the expenses of their recovery from the tortfeasor.

On the other hand, Defendants insist just as stoutly that they are not recovering from Plaintiffs, but rather from the tortfeasor. (In order to escape the anti-lien language of the federal statutes, the Department must characterize its lien as running against the amount owed by the tortfeasor.) But this approach necessarily concedes that someone first has to recover those funds.

Simple fairness requires that the parties’ contract be read to include a duty to share in those costs. The Department has structured its policies so that recipients must undertake litigation, if anyone will. Absent an implied sharing requirement, the State would reap the rewards without the costs.

C. Plaintiff’s Attorney Fees Are Appropriate Contract Damages.

"Any necessary expense which one of two contracting parties incurs in complying with the contract may be recovered as damages." O.C.G.A. § 13-6-9; Hopper v. M & B Bldrs, Inc., 261 Ga.App. 702, 706 (2003). Such damages include attorney fees necessary to the contract. Horine v. Hicks, 25 Ga.App. 802, 804 (1920). Such damages also include expenses necessary to satisfy obligations implied in the contract, including attorney fees expended. McKenzie v. Mitchell, 123 Ga. 72, 75 (1905). Because the State has made Plaintiffs’ collection efforts an integral part of the Medical Assistance contract, Plaintiffs are entitled to recover a portion of their attorney fees and other litigation expenses.

D. Contract Recovery Is Available Against the State of Georgia.

Because the State has breached implied duties in its written contract with recipients, it cannot claim the mantle of sovereign immunity. Department of Transp. v. APAC-Georgia, Inc., 217 Ga.App. 103 (1995). The State Constitution waives sovereign immunity "as to any action ex contractu for the breach of any written contract ... entered into by the state or its departments and agencies." Ga. Const. 1983, Art. I, Sec. II, Par. IX ©). Thus a written contract is required in order to waive the State’s sovereign immunity. Board of Regents v. Tyson, 261 Ga. 368 (1991); PMS Constr. Co. v. DeKalb County, 234 Ga. at 872 ("no recovery may be had for an implied contract"); Department of Transp. v. Fru-Con Constr. Co., 206 Ga.App. 821, 825 (1992) (claimant "must recover on the basis of the express contract with" the State).

But because written contracts also include implied duties, actions for breach of those implied duties are included within the State’s sovereign immunity waiver. In Department of Transp. v. APAC-Georgia, the Court of Appeals expressly distinguished Fru-Con Constr. Co., and correctly held that "claims against the State based on implied contractual duties are [not] ex delicto, and thus [are not] barred by the doctrine of sovereign immunity. ... [T]he State [can] be sued for breach of an implied contractual obligation in a written contract. [These] implied duties, includ[e] the duty of good faith and fair dealing." 217 Ga.App. at 105.

II. PLAINTIFFS ARE ENTITLED TO DUE PROCESS NOTICE AND HEARING UPON FORECLOSURE OF THE STATE’S LIEN.

Foreclosure of liens upon personal property requires notice to the alleged debtor or other person whose property may be affected, and a prior hearing, as a matter of procedural due process. Mason v. Garris, 360 F.Supp. 420, 364 F.Supp. 452 (N.D.Ga. 1973) (three-judge court).

The Court may well ask what purpose such procedures would serve here. The answer is, plenty. For one thing, the State admits that its lien is effective only as to medical expenses caused by the tortfeasor. But Medical Assistance benefits are available for all medical needs of a qualified beneficiary, not just those derived from an accident. A given case may raise issues as to whether expenses for which the State seeks reimbursement were caused by the tortfeasor, thus whether they are within the scope of the assignment and the lien. To the extent they are not within the scope of the lien, the State may not recover. Appropriate notice and a hearing can sort out these factual issues.

To the extent this Court agrees that Plaintiffs are entitled to an offset against the State’s claim for the value of the legal services provided, that issue too will require adequate notice and a hearing in case of dispute. If the State and the beneficiary are unable to agree on an appropriate setoff, some neutral arbiter must hear the evidence and decide.

Finally, to the extent this Court should agree with Plaintiffs that any lien extends only to damages awarded for medical costs, factual issues again may arise as to how to allocate a given judgment or settlement.

In short, Plaintiffs are entitled to due process protections before foreclosure of the State’s asserted lien.

CONCLUSION

This Court should grant review and reverse the trial court, to require the State to share in litigation expenses including attorney fees, and to require appropriate due process protections.

This ____ day of _________, 2004.

 

/s/ David A. Webster