The final answer is yes. But the reasoning may not be as simple as it first appears when dealing with a municipal healthcare lien.
Is the Healthcare Lien Subject to ERISA or Georgia’s Made Whole Doctrine?
The general rule in Georgia is that any healthcare lien which is not pre-empted by the Employee Retirement Income and Security Act (ERISA) is subject to Georgia’s made whole statute, O.C.G.A. § 33-24-56.1. In summary, the statute says that any healthcare plan issuing benefits in the state of Georgia is only entitled to reimbursement if the beneficiary is “fully compensated for all economic and non-economic damages,” by a third-party tort settlement, i.e. “made whole.”
This is a terrific protection for plaintiffs in personal injury cases because it eliminates healthcare liens pursued by the health insurance company in almost every case in which the statute applies. In fact, it is hard to imagine a scenario where a health insurer would be able to successfully argue a beneficiary is made whole by a tort settlement absent a large punitive damage award.
As Plaintiff lawyers, we are always searching for any opportunity to apply this statute to any healthcare lien because it means almost certain victory for the plaintiff. The primary exception to the statute is the private self-funded healthcare plan regulated by ERISA. The other most common exceptions are government benefits such as Medicare and Medicaid, which have their own statutory schemes for reimbursement.
However, a common letter from healthcare lien collection companies is to claim that municipal healthcare plans are expressly exempt from O.C.G.A. § 33-24-56.1. Based on a strict reading of the law, that may be correct. A series of statutes set forth the role of municipal retirement and benefit plans beginning at O.C.G.A. § 47-5-1. Specifically, O.C.G.A. § 47-5-72 states that “the provision of retirement benefits and employee benefits pursuant to this chapter shall not be subject to regulation under Title 33.”
That appears to include O.C.G.A. § 33-24-56.1, meaning the made whole statute would not apply to municipal healthcare liens. I am unaware of a Georgia case which says it does not apply, but that appears to be a clear reading of the law.
So are Municipal Healthcare Liens Exempt from “Made Whole?”
As the legendary coach Lee Corso is fond of saying, “Not so fast my friends.”
First of all, there is nothing in the Georgia code section governing municipal healthcare plans beginning at O.C.G.A. § 47-5-1 which expressly grants these plans the ability to seek reimbursement or subrogation. Furthermore, ERISA does not apply to these municipal plans because government plans are expressly exempted from ERISA, per 29 U.S.C. § 1003(b)(1), and § 1002(32).
So if Section 33 of the Georgia Code does not apply to these plans, and ERISA does not apply, where does the municipal healthcare plans right to reimbursement come from in the first place?
Secondly — and most importantly — there is more than just a statutory basis for the “made whole rule” in Georgia. In 1999 the Georgia Supreme Court held that the “complete compensation rule” is the public policy of this state in the context of healthcare liens. Davis v. Kaiser Found. Health Plan, 271 Ga. 508 (1999). Therefore, any insurance policy provision to the contrary is unenforceable as violative of public policy, meaning the plans cannot contract out of the “made whole rule.”
In fact, the Court based its holding in Davis on the fact that the Georgia legislature had recently adopted O.C.G.A. 33-24-56.1 in response to the Court’s holding in Duncan v. Integon Gen. Ins. Corp., 267 Ga. 646 (1997). The Duncan case did allow plans to contract out of the complete compensation rule, which the Supreme Court in Davis determined now conflicted with the 33-24-56.1 statute. So the Davis Court expressly overruled Duncan to bring Georgia’s common law and statutory law in line regarding the enforcement powers of healthcare liens.
So since Davis in 1999, the common law of Georgia, and the statutory law of Georgia, is that an insurer may not collect on a healthcare lien filed against its insured unless and until the insured was made whole, and any contract provision to the contrary is unenforceable.
So even if O.C.G.A § 33-24-56.1 does not apply to a municipal healthcare lien — and even if municipal healthcare plans have some right to reimbursement not expressly stated in the governing statutes — the municipal plans are still subject to Georgia’ common law made whole rule, as stated in Davis v. Kaiser Found. Health Plan.