Davis v. Kaiser Foundation Health Plan

• Decision Date: 12 October 1999
• Docket Number: No. S99G0306.,S99G0306.
• Citation: 521 S.E.2d 815,271 Ga. 508
• Parties: DAVIS v. KAISER FOUNDATION HEALTH PLAN OF GEORGIA, INC.
• Court: Georgia Supreme Court

521 S.E.2d 815

271 Ga. 508

DAVIS v. KAISER FOUNDATION HEALTH PLAN OF GEORGIA, INC.

No. S99G0306.

Supreme Court of Georgia.

October 12, 1999.

Larry R. Wight, Patrick J. Gibbs, Roswell, for appellant.

Dennis, Corry & Porter, Grant B. Smith, John D. Dixon, Atlanta, for appellee.

Reynolds & McArthur, Charles M. Cork III, Macon, amicus curiae.

BENHAM, Chief Justice.

This case presents for consideration the issue left open by this Court's decision in Duncan v. Integon Gen. Ins. Corp., 267 Ga. 646, 482 S.E.2d 325 (1997): whether this State's public policy of complete compensation prevents enforcement of an insurance policy provision which expressly modifies the complete compensation rule. In Duncan, this Court stated the public policy of complete compensation as follows: "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." Id. at 647, 482 S.E.2d 325.

The underlying facts of this case are that Davis was injured in an automobile collision and suffered damages in excess of $100,000; that she settled her claim against the other driver for the limits of his policy, $15,000, and collected $85,000 from her own uninsured motorist carrier; that Kaiser Foundation Health Plan of Georgia, Inc. (Kaiser), based on a policy provision, sought reimbursement from Davis for $40,361.42 it had paid for Davis's medical expenses; and that the trial court in the suit Kaiser filed to enforce that claim awarded summary judgment to Kaiser. On appeal, the Court of Appeals concluded that there was no overriding public policy restricting the freedom of the parties to contract as they wished when the policy involved here was issued. Davis v. Kaiser Foundation Health Plan of Georgia, Inc., 235 Ga.App. 13, 508 S.E.2d 431 (1998). Accordingly, the Court of Appeals found permissible a contract provision requiring reimbursement of the insurer without regard to whether the insured was completely compensated,¹ and affirmed the trial court's judgment. We granted the writ of certiorari to review the decision of the Court of Appeals, and posed the following question: Whether the complete compensation rule is applicable to a contract of insurance entered into prior to July 1, 1997, which contract contains an express provision requiring the insured to reimburse the insurer for benefits received as a result of injury or illness caused by a third party or in a motor vehicle accident. Because we conclude that the complete compensation rule is a public policy of this State which is applicable to contracts of insurance entered into prior to July 1, 1997, we reverse the judgment of the Court of Appeals.

The decision of the Court of Appeals was based in part on construction of a statute enacted subsequent to the effective date of the policy at issue, and in part on the dissent in Duncan, supra. Key to the Court of Appeals's reasoning that there was no public policy which would void the reimbursement provision was its construction of OCGA § 33-24-56.1, which permits the sort of reimbursement involved here only when the insured has been completely compensated for the loss for which benefits were paid. That statute was enacted at the end of the General Assembly's 1997 session, just a few days after this Court's decision in Duncan, supra, and became effective on July 1, 1997. The Court of Appeals noted that the statute itself did not apply here because it postdated the policy involved, but construed the statute for the purpose of determining whether there was, when the policy was issued, a public policy of complete compensation which would void the reimbursement provision.

In its consideration of the statute, the Court of Appeals correctly stated that the legislature must be presumed to be aware of existing law, but then stated that the General Assembly must be presumed to have intended to change the law. 235 Ga. App. at 15, 508 S.E.2d 431. The cases relied upon by the Court of Appeals, Balest v. Simmons, 201 Ga.App. 605, 607, 411 S.E.2d 576 (1991), and C.W. Matthews &c. Co. v. Capital Ford Truck Sales, 149 Ga.App. 354, 356, 254 S.E.2d 426 (1979), involved amendments to existing statutory pronouncements. The present case, however, involves a statute enacted as an original matter by the General Assembly shortly after this Court's resolution of a limited aspect of the question of reimbursement of insurers by their insureds. The proper principle to apply in these circumstances is this: "When a section of the Code has been codified from a decision of this court, it will be construed in the light of the source from which it came, unless the language of the section imperatively demands a different construction. [Cits.]" Sinclair v. Friedlander, 197 Ga. 797, 798-799, 30 S.E.2d 398 (1944). Application of that principle would require the conclusion that the legislature intended, when it enacted OCGA § 33-24-56.1, to state the pre-existing law, that the rule of complete compensation is the public policy of this State.

Having found no expression of a pre-existing public policy of complete compensation in OCGA § 33-24-56.1, the Court of Appeals proceeded with its analysis and chose to adopt the rationale of the dissent in Duncan. However, the dissent in Duncan was written without the benefit of the legislature's enactment of OCGA § 33-24-56.1, which established that the complete compensation rule was the existing law of this State. With the benefit of that legislation and the application of the proper principle of statutory construction, we conclude 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 OCGA § 33-24-56.1 to make unmistakable that complete compensation is the public policy of this State.

Having concluded that complete compensation is, and was at the time the insurance policy involved here was issued, the public policy of this State, we must consider whether that public policy overrides the parties' freedom of contract. OCGA § 13-8-2(a) provides, "A contract which is against the policy of the law cannot be enforced." While it is true that the power of the courts...