Mooney v. Webster

• Decision Date: 21 November 2016
• Docket Number: S16Q0895
• Citation: 794 S.E.2d 31,300 Ga. 283
• Parties: MOONEY v. WEBSTER.
• Court: Georgia Supreme Court

300 Ga. 283

794 S.E.2d 31

MOONEY

v.WEBSTER.

S16Q0895

Supreme Court of Georgia.

Decided: November 21, 2016

Ward Stone, Matthew Stewart Cathey, Thomas Tillman McClendon, Stone & Baxter, LLP, 577 Mulberry Street, Suite 800, Macon, Georgia 31201, for Appellant.

Robert Michael Matson, Akin, Webster & Matson, P.C., P.O. Box 1773, Macon, Georgia 31202, for Appellee.

HINES, Presiding Justice.

This appeal is before this Court on certified questions from the United States Court of Appeals for the Eleventh Circuit¹ in a Chapter 7 bankruptcy case which raises the issue of whether Georgia law exempts the funds in a health savings account ("HSA") from inclusion in the bankruptcy estate.

The questions certified are:

(1) Does a debtor's health savings account constitute a right to receive a "disability, illness, or unemployment benefit" for the purposes of OCGA § 44-13-100 (a) (2) (C) ?

(2) Does a debtor's health savings account constitute a right to receive a "payment under a pension, annuity, or similar plan or contract" for the purposes of OCGA § 44-13-100 (a) (2) (E) ?

(3) Is a debtor's right to receive a payment from a health savings account [one] "on account of illness [or] disability" for the purposes of OCGA § 44-13-100 (a) (2) (E) ?

We answer the first and second questions in the negative, and consequently, the third question need not be addressed.

BACKGROUND

In general, when a debtor files a bankruptcy petition as in the case at bar, the debtor's property becomes part of the bankruptcy estate. See 11 USC § 541 (a).² However, certain property may be exempted from the bankruptcy estate pursuant to applicable federal or state law. As authorized by 11 USC § 522 (b) (2),³ Georgia has opted out of the federal bankruptcy exemptions in favor of exemptions under state law; consequently, for debtors who are residents of Georgia, the applicable exemptions are those set forth in OCGA § 44-13-100 (a).⁴

As stated, the property at issue is a HSA. HSAs are creations of the Internal Revenue Code and were authorized by Congress in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. See Pub. L. 108-173, § 1201, 117 Stat. 2066, 2469-79 (2003). Georgia allowed the creation of HSAs in 2008. See 2008 Ga. Laws 463. Essentially, HSAs encourage individuals who have high deductibles in their health insurance plans to save for their healthcare costs by providing tax-preferred treatment for such savings. See 26 USC § 223 (a).⁵ Disbursements from a HSA for anything other than qualified medical expenses generally are taxable as gross income and at an additional rate of 20%. See 26 USC § 223 (f) (4) (A).⁶

PROCEEDINGS IN FEDERAL COURT

The certified questions arise from the voluntary Chapter 7 bankruptcy petition filed by debtor Denise Mooney in the United States Bankruptcy Court for the Middle District of Georgia ("Bankruptcy Court") on June 27, 2013. In her Schedule B disclosures, Mooney listed her HSA, valued at $17,570.93. And, on her Schedule C filing, Mooney claimed an exemption from the bankruptcy estate for the full value of her HSA, pursuant to OCGA § 44-13-100 (a) (2) (C) and (E). Subsection (a) (2) (C) of the statute exempts the debtor's right to receive "[a] disability, illness, or unemployment benefit," and subsection (a) (2) (E) exempts "[a] payment under a pension, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor."

On August 29, 2013, the Chapter 7 Trustee, Joy Webster, objected to the HSA exemption. Following an evidentiary hearing on the objection, on January 6, 2014, the Bankruptcy Court issued a memorandum opinion sustaining Webster's objection to Mooney's claimed HSA exemption. In so doing, the Bankruptcy Court found as fact, inter alia, that Mooney was self-employed as a physical therapist; she testified that she had worked for 37 years in the healthcare field, and had no immediate plans to retire; in 2008, she opened her HSA to help pay for medical expenses not covered by her health insurance; she used her personal checking account to fund the HSA, and paid all of her out-of-pocket healthcare expenses from the HSA; all disbursements from the HSA were used to pay medical expenses with one exception in 2011 when she withdrew $1,000 from the HSA that was erroneously deposited in it in excess of the statutory annual contribution limit; and she testified that she was never notified by her bank that any of her HSA disbursements were made for an improper purpose.

Mooney appealed the Bankruptcy Court's adverse ruling to the United States District Court for the Middle District of Georgia ("District Court"), and the District Court entered an order affirming the memorandum opinion of the Bankruptcy Court. Mooney then appealed the District Court's order to the United States Court of Appeals for the Eleventh Circuit ("Eleventh Circuit"), and the Eleventh Circuit certified the above-stated questions after determining that the case turns on an interpretation of Georgia law, i.e., whether the exemptions set forth in OCGA § 44-13-100 (a) (2) (C) and (E) include HSA funds.

DISCUSSION

As a threshold matter, OCGA § 44-13-100 (a) does not contain any express exemption for HSAs; this is so even though the statutory provision specifies numerous exemptions including those for precisely identified "benefits." See footnote 4, supra. The General Assembly has had ample opportunity to expressly add HSAs to the lengthy list of exemptions, but has chosen not to do so; in fact, the General Assembly has amended the exemption statute four times since the authorization of HSAs in 2008.⁷ This Court is mindful of the long-recognized doctrine of statutory construction, expressio unius est exclusio alterius, which discourages judicial recognition of exceptions not specifically set forth in a legislative enactment when other exceptions are expressly stated. See Walker v. Walker , 28 Ga. 140, 156 (5) (1859) ; Allstate Life Ins. Co. v. Miller , 424 F.3d 1113, 1116 (n. 3) (11th Cir. 2005). Indeed, as the Bankruptcy Court stated, absent from OCGA § 44-13-100 (a) is the "unequivocal expression of legislative intent" regarding the exemption of HSAs, that is, they are not specifically named as exempt. This sets the stage for the arguments made by debtor Mooney and the questions framed by the Eleventh Circuit.

The next step in the analysis is the consideration of whether a HSA is a "disability, illness, or unemployment benefit" for the purpose of the exemption provided in OCGA § 44-13-100 (a) (2) (C). In this Court's consideration of the meaning of the text of a statute, we are to presume that the General Assembly "meant what it said and said what it meant"; consequently, the statutory text is to be given its "plain and ordinary meaning," viewed in the "context in which it appears." Deal v. Coleman , 294 Ga. 170, 172 (1) (a), 751 S.E.2d 337 (2013). In other words, the text is to be read in its "most natural and reasonable way." Id. Even though OCGA § 44-13-100 (a) (2) (C) sets forth three types of "benefits," the narrower question in the present case is whether a HSA is a "benefit" in regard to "illness."⁸ As noted by the Bankruptcy Court, Webster's Dictionary has defined "benefit" as "something that promotes well-being," a "useful aid," "financial help in time of sickness, old age, or unemployment," or "payment or service provided for under an annuity, pension plan, or insurance policy." Merriam Webster's Collegiate Dictionary 106 (10^thed. 1994).⁹ Webster's has defined "illness" as "an unhealthy condition of body or mind [.]" Webster's at 577. Such definitions are in accord with the plain language of subsection (a) (2) (C), and lead to the reasonable conclusion that the General Assembly did not intend for it to include a HSA. Certainly, it can be argued that a HSA fits within the ordinary understanding of the term "benefit" as help or assistance insofar as providing savings for the payment of medical expenses, and certainly if used properly it can result in favorable tax consequences; but, this is not the end of the inquiry. Again, subsection (a) (2) ( C) does not provide for "benefit" in isolation, but rather, for the purposes of this case, in the context of "illness."¹⁰ And, as the Bankruptcy Court found, HSAs are not necessarily illness benefits or HSA funds paid on account of illness because HSAs may also be used for "diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body," which are uses not dependant on the beneficiary being ill. 26 USC § 213 (d) (1) (A).¹¹ Thus, HSA funds have a much broader purpose that the restricted "benefits" stated in subsection (a) (2) ( C).

Perhaps even more significantly, in construing a statute this Court is to read different sections of the same statute in a consistent and harmonious manner, in the context of the entire scheme of the statute and in an attempt to gather the legislative intent from the statute as a whole. Footstar, Inc. v. Liberty Mut. Ins. Co. , 281 Ga. 448, 450, (637 S.E.2d 692) (2006). What is more, this Court is to construe a statute "with our most analogous statutory construction precedents in mind." In the Interest of D. V. H., a Child ., ––– Ga. ––––, 793 S.E.2d 49 (Case No. S16G0428, decided Oct. 31, 2016). Thus, subsections (a) (2) (C) and (a) (2) (E) must be construed consistently with each other and with the applicable precedent of this Court.

In Silliman v. Cassell , 292 Ga. 464, 738 S.E.2d 606 (2013), this Court was called upon to interpret OCGA § 44-13-100 (a) (2) (E), in the context of the exemption of a single-premium fixed annuity from the debtor's bankruptcy estate. Citing Rousey v. Jacoway , 544 U.S. 320, 125 S.Ct. 1561, 161 L.Ed.2d 563 (2005), this Court determined that the "common feature" of all of the plans found to quality for exemption under subsection (a...