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Georgia Insurance Law Does Not Allow Setoff For Medical Payments

Many insurance companies improperly seek reimbursement for medical payments they have made to the insured when the main case settles for the limits of the uninsured motorist coverage (“UM”) portion of our client’s policy. The Georgia Court of Appeals has held that a non-duplication of benefits clause is only enforceable when the insured’s damages are equal to or below the UM coverage limits of the policy. Johnson v. State Farm Mut. Auto. Ins. Co., 216 Ga. App. 541, 544, 455 S.E.2d 91 (1995); Jenkins & Miller, Georgia Automobile Insurance Law (2008-09 ed. 2008) pp. 499-500.

To quote Jenkins & Miller, “This is because, in such circumstances, the clause only reduces the UM coverage by the amount of the prior payment under the med pay coverage of the policy, without reducing the insured’s recovery of all his actual damages. citing Johnson, 216 Ga. App. at 544; see Yates v. Dean, 244 Ga. App. 333, 334(1), 535 S.E.2d 335 (2000).

A non-duplication of benefits provision is not enforceable when the insured’s actual damages are greater than the policy limits. Johnson at 544; Hudson v. Whited, 250 Ga. App. 451, 453-54, 552 S.E.2d 447 (2001). To do otherwise would operate to reduce the insured’s recovery to an amount below the actual damages and that would violate the statutory requirement that the automobile liability policy must contain an endorsement undertaking to pay the insured all sums which he shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle, within the limits [of the policy]. Jenkins & Miller (2008-09 ed. 2008), p. 500.

In the Johnson case, the trial court refused to reduce the verdict in the case for the amount of medical expenses paid by State Farm prior to the trial verdict. In doing so, the court held that the set off was not allowed as it should be considered collateral source benefits and not entitled to a setoff. Johnson court used the following reasoning in finding against any setoff:

A trial court’s ruling on a motion to reduce verdict based on a question of law, as here, is reviewed de novo. When reviewing a trial court’s ruling on a legal question, we owe no deference to that court. Suarez v. Halbert, 246 Ga.App. 822, 824(1) (543 S.E.2d 733) (2000).

The record shows that Vazquez’s insurer, GEICO, tendered the $25,000 limit of his policy before trial. The parties concede that the $25,000 paid by GEICO reduced Hall’s available UM coverage with State Farm from $100,000 to $75,000. At issue, is whether State Farm may reduce its contractual obligation to pay available UM benefits to Hall in light of its payment of her medical expenses in the amount of $46,794.96 under the medical payments coverage of her State Farm policy.

Before its amendment in 2008, O.C.G.A. § 33-7-11(i) provided:

The endorsement or provisions of the policy providing the coverage required by this Code section may contain provisions which exclude any liability of the insurer for injury or destruction of property of the insured for which he has been compensated by other property or physical damage insurance.

In 2007, the Supreme Court of Georgia held that

[t]he plain meaning of [the foregoing] subsection is that an uninsured motorist carrier can setoff benefits which its insured may have received to compensate for property loss. This being so, we must conclude that the legislature did not intend to authorize an insurer to setoff benefits received for personal injury. That is because when a statute expressly mentions one of many things, the omitted things must be regarded as having been deliberately excluded. Alexander Properties Group v. Doe, 280 Ga. 306, 309 (626 S.E.2d 497) (2006); C. Brown Trucking v. Rushing, 265 Ga.App. 676, 677 (595 S.E.2d 346) (2004).

(Emphasis supplied.) Dees, supra, 282 Ga. at 816. Further, our Supreme Court held that:

[w]hen an uninsured motorist policy provision is in conflict with the clear intent of OCGA § 33-7-11, the policy provision is unenforceable and the statute controls. Hartford Accident & Indemnity Co. v. Booker, 140 Ga.App. 3, 4(1) (230 S.E.2d 70) (1976). Exclusions in uninsured motorist endorsements cannot circumvent the clear mandate of the Georgia Uninsured Motorist Act by withholding the protection required. Rampley v. Doe, 179 Ga.App. 475, 476 (347 S.E.2d 255) (1986).

(Punctuation omitted.) Id. Since the U.M. policy provision in this case permits a setoff of State Farm’s payment of Hall’s medical expenses under the medical payments term of her policy, it conflicts with the plain mandate of the O.C.G.A. § 33-7-11(i), which, prior to 2008, did not authorize insurers to setoff benefits received for personal injury. It is well-settled that to construe the 2008 amendment to O.C.G.A. § 33-7-11(i) retroactively to avoid the foregoing result is impermissible. See London Guarantee & Accident Co. v. Pittman, 69 Ga.App. 146, 156-157(1) (25 S.E.2d 60) (1943) (“Retrospective statutes are forbidden by the first principles of justice․ Retrospective laws which divest previously acquired rights on principle occupy the same position with ex post facto laws. Upon principle, every statute which takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past, must be deemed retrospective.”)

Additional support for the trial court’s refusal to reduce the verdict in this case is evident in the 2008 amendment to O.C.G.A. § 33-7-11(i), supra, wherein the legislature authorized insurers to setoff compensation paid to injured insureds pursuant to medical payments coverage in addition to compensation paid to them under other workers’ compensation laws. Certainly, our legislature enacted the 2008 amendment to O.C.G.A. § 33-7-11(i) with full knowledge of the reach of that subsection prior to its amendment. Dove v. Dove, 285 Ga. 647, 649(4) (680 S.E.2d 839) (2009). It follows that the UM term in this case permitting a setoff for medical expenses paid Hall for personal injury under the medical payments coverage of her State Farm policy is void and unenforceable. London Guarantee, supra, 69 Ga.App. at 156-157(1); Dove, supra, 285 Ga. at 649.

Under the circumstances, therefore, the trial court did not err in denying State Farm’s motion for reduction of the jury’s verdict.


As an Atlanta car accident lawyer, my advice to you is to not agree to any offsets of payments until the appropriateness of such proposed offset is confirmed by an experienced auto accident attorney, who should be well-versed in these types of insurance coverage issues.

Robert J. Fleming has been handling wrongful death cases, dental malpractice, bus accidents, car accident cases and premises injury cases for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of another for more than 20 years. He practices in and around the Atlanta area including handling lawsuits in Fulton, DeKalb, Clayton, Gwinnett, Cobb and other counties and nearby cities including Alpharetta, Austell, Avondale Estates, Chamblee, College Park, Conyers, Duluth, Decatur, Doraville, Hapeville, Johns Creek, Jonesboro, Lawrenceville, Norcross, Peachtree City, Riverdale, Roswell, Sandy Springs, Stone Mountain, and Smyrna. If you have been seriously injured in a car accident and would like quality legal representation, contact Robert J. Fleming directly on (404) 525-5150 or contact us online.

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