Ga. Dep't of Cmty. Health v. Neal

• Decision Date: 20 November 2015
• Docket Number: No. A15A1033.,A15A1033.
• Citation: 334 Ga.App. 851,780 S.E.2d 475
• Parties: GEORGIA DEPARTMENT OF COMMUNITY HEALTH v. NEAL.
• Court: Georgia Court of Appeals

334 Ga.App. 851

780 S.E.2d 475

GEORGIA DEPARTMENT OF COMMUNITY HEALTH

v.NEAL.

No. A15A1033.

Court of Appeals of Georgia.

Nov. 20, 2015.

Julie Adams Jacobs, William Wright Banks Jr., Robin Joy Leigh, Samuel S. Olens, Stephanie Kay Burnham, for Appellant.

Jeffrey L. Berhold, Atlanta, Michael Travis Foust, Peter Andrew Lampros, Allan Leroy Parks Jr., for Appellee.

BRANCH, Judge.

Plaintiff Trecia Neal filed this action seeking class certification on behalf of Gold and Silver members of the State Health Benefits Plan ("SHBP") for 2014. Neal's complaint alleges that the Georgia Department of Community Health ("the Department") breached its contract with these members when it retroactively eliminated the three tiers of coinsurance for healthcare services and instead combined them into a single schedule of co-payments, adding co-payments for pharmacy benefits and certain medical visits, and also refused to reduce premiums. The Department moved to dismiss on the ground of sovereign immunity, but the trial court denied the motion on the ground that the Plan documents, read with relevant statutes and regulations, created a written contract that established a waiver of sovereign immunity. The Department appealed this ruling under the collateral order doctrine,¹ AND NOW ARGUES that no such written contract amounting to a waiver has been proven. We agree and reverse.

"We review de novo a trial court's ruling on a motion to dismiss based on sovereign immunity grounds, which is a matter of law. Factual findings are sustained if there is evidence supporting them, and the burden of proof is on the party seeking the waiver of immunity." Bd. of Regents v. Canas, 295 Ga.App. 505, 509(3) 672 S.E.2d 471 (2009) (citation and punctuation omitted).

Although we would view the record in favor of the trial court's judgment, the relevant facts are not in dispute. The State Health Benefits Plan ("SHBP" or "the Plan") is comprised of three health insurance plans for state employees, public school teachers, and public school employees respectively.² Neal is an employee of the DeKalb County school system. During the open enrollment period in late 2013, the Department offered Neal and other SHBP members three health insurance coverage options for the upcoming calendar year 2014: Gold, Silver, and Bronze. In exchange for higher premiums, Gold and Silver members would receive more money for their Health Reimbursement Accounts, lower deductibles, lower co-insurance rates, and lower out-of-pocket maximums than Bronze members. Neal registered online, verified her address and dependents, selected Gold coverage, clicked on a "CONFIRM" button, and received a confirmation code. In doing so, Neal expressly accepted SHBP's "terms and conditions," including her "responsibility to review any applicable Plan documents ... including [those] posted electronically" on the Department's SHBP website "at the time of [her] decision."

These "Plan documents," which were posted on the SHBP web site, included a 23–page so-called Active Decision Guide, prefaced by a welcome letter from the Commissioner of the Department, and a 134–page Summary Plan Description, including a schedule of benefits, descriptions of numerous specific benefits and services, payment and appeal procedures, and notices. According to the Active Decision Guide, the Summary Plan Description governed the terms of coverage. On the page where it announces the dates of open enrollment for the 2014 Plan, the Active Decision Guide states: "The material in this booklet is for information purposes only and is not a contract. It is intended only to highlight the principal benefits of the SHBP plan options." (Emphasis supplied.) The same page of the Active Decision Guide also states that "[a]vailability of SHBP options may change based on federal or state law changes or as approved by the Board of the Department of Community Health (DCH)" and that "[p]remiums for SHBP options are established by the DCH Board and may be changed at any time by the Board resolutions subject to advance notice."

Nothing in the Summary Plan Description identifies the Plan as a contract. Indeed, the Summary Plan Description often emphasizes that the administrators of the Plan, including a "Medical Claims Administrator," retained the power to "waive, enhance, change or end certain medical management processes" if "in the [administrator's] discretion such change further[s] the provision" of medical services.³ The September 2013 Board resolution establishing 2014 premium rates includes a notice as follows:

The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution, and does not constitute a contract or promise of any amount of subsidy.

On January 27, 2014, facing financial shortfalls in the Plan, the Department eliminated the three tiers of coinsurance (Gold, Silver, and Bronze) for most health care services and established a single tier of co-payments made retroactive to January 1. Gold and Silver members were required to continue paying higher monthly premiums even as their copayments were increased to Bronze levels.

On May 14, 2014, Neal filed this action seeking class certification on behalf of Gold and Silver Plan members and asserting breach of contract and breach of implied covenant claims against the Department. Exhibits attached to the original complaint included the September 2013 Board resolution adopting premium rates for 2014 and the January 2014 resolution and website page announcing the changes to the Plan put at issue by Neal. In June 2014, after the Department moved to dismiss on the ground that Neal had not proved a waiver of sovereign immunity by written contract, Neal amended her complaint, asserting the same claims but now also attaching the Active Decision Guide and the Summary Plan Description. The Department again moved to dismiss on sovereign immunity grounds. After a hearing, the trial court denied the Department's motion on the ground that "the Plan [d]ocuments, including all contemporaneous writings thereto, constitute a written contract" such that the Department waived its sovereign immunity as to Neal's claims. This appeal followed.

The Department argues that the trial court erred in denying the Department's motion to dismiss because Neal had not established that the SHBP documents created a contract between her and the Department sufficient to waive the State's sovereign immunity. The Department also argues that the trial court erred when it concluded that the relevant statutes and regulations created a contract between Neal and the Department for purposes of sovereign immunity. We agree with both of these contentions.

1. The Express Contract Exception to Sovereign Immunity. The trial court held that when Neal enrolled in the SHBP Plan and paid premiums for enhanced health care coverage, she entered into a written contract with the Department, memorialized in the Commissioner's welcome letter at the beginning of the Active Decision Guide, such that the Department's sovereign immunity was waived. This conclusion was erroneous.

Except as specifically provided in the Georgia Constitution of 1983, sovereign immunity extends to the state and all of its departments and agencies. The sovereign immunity of the state and its departments and agencies can only be waived by an Act of the General Assembly which specifically provides that sovereign immunity is thereby waived and the extent of such waiver.

Ga. Const. Art. I, Sec. II, Par. IX (e). "Where the sovereign has sovereign immunity from a cause of action, and has not waived that immunity, the immunity rises to a constitutional right and cannot be abrogated by any court." Tyson v. Bd. of Regents of the Univ. System of Ga., 212 Ga.App. 550–551, 442 S.E.2d 9 (1994), citing State Bd. of Education v. Drury, 263 Ga. 429, 430(1), 437 S.E.2d 290 (1993).

One of the limited circumstances in which the State has waived its sovereign immunity is in "any action ex contractu for the breach of any written contract now existing or hereafter entered into by the state or its departments or agencies." Ga. Const. of 1983, Art. I, Sec. II, Para. IX (c). "It is axiomatic that the party seeking to benefit from the waiver of sovereign immunity bears the burden of proving such waiver." Ga. Dept. of Community Health v. Data Inquiry, 313 Ga.App. 683, 685(1), 722 S.E.2d 403 (2012) (citation and punctuation omitted). "[I]n order to overcome the Department's assertion of sovereign immunity," Neal has "the burden of showing that the contract sought to be enforced is in writing and contains all of the terms necessary to constitute a valid contract." Id. (emphasis supplied). As we have previously explained in the context of sovereign immunity, "[a] valid written contract may be formed when there are multiple, signed, contemporaneous agreements between the parties which demonstrate their intent to enter into a binding contract and the individual documents, considered together, include all the necessary terms of a contract."

Bd. of Regents v. Ruff, 315 Ga.App. 452, 456(2), 726 S.E.2d 451 (2012) (punctuation and footnote omitted; emphasis in original). Because a person may sue the state only "on an express contract," recovery under an "implied contract" theory is barred. Dept. of Transportation v. Fru–Con Const. Corp., 206 Ga.App. 821, 825(3), 426 S.E.2d 905 (1992).

Read as a whole, the documents at issue here do not show that the parties entered into a signed, written contract. The welcome letter to the Active Decision Guide, which is the only document bearing the signature of the Commissioner of the DCH, opens by welcoming Plan members to open enrollment; refers to "fiscal and regulatory challenges" that may require "innovative solutions to address these challenges"; describes some features of the 2014 Plan; and ends by thanking members ...