Supreme Court of Georgia Reverses Appeals Court in Auto-Accident Insurance Case

Given the ubiquity of motor vehicle accidents, numerous states have enacted legislation seeking to assure some level of recovery through compulsory insurance coverage and hopefully dissuade litigation as a result. However, although the availability of insurance recovery has purged some judicial resolution of auto-accident fault, the courts have not been completely freed from questions of law involving auto accidents. For instance, in Carter v. Progressive Mountain Insurance, the Supreme Court of Georgia weighed in on the proper interpretation of OCGA § 33-24-41.1, a statute governing how a claimant may settle claims with a third party’s insurance provider while still seeking recovery from his or her personal insurance provider.

This case arose from a car accident on February 22, 2010, when a motorist who was alleged to be under the influence of alcohol struck the claimant. The claimant sued the other motorist and served Progressive Mountain Insurance, her personal under-insured motorist insurance provider. The claimant executed a limited liability release with the other motorist’s insurance provider, GEICO, for the full amount of its $30,000 per-person liability limit, with $29,000 allocated to punitive damages and the remaining $1,000 allocated to compensatory damages. Progressive objected to the allocation and moved for summary judgment on the claimaint’s right to under-insured motorist benefits. The trial court granted the motion, ruling that by conditioning that $29,000 be allocated to punitive damages, the claimant had failed to satisfy the prerequisites for the receipt of under-insured motorist benefits. The Court of Appeals of Georgia concurred and held that by not allocating the entire policy limit to compensatory damages, the claimant had failed to exhaust the limits of the policy and accordingly forfeited her right to under-insured motorist benefits.

However, in an unanimous decision, the Supreme Court of Georgia reversed the Georgia Court of Appeals and held that a claimant may, in conformity with OCGA § 33-24-41.1, settle claims with a third party’s insurance provider and allocate the overwhelming majority of the settled amount to punitive damages while still seeking under-insured coverage from his or her personal insurance provider for the remaining amount of actual compensatory damages. The Supreme Court held that the Court of Appeals erred in holding that no allocation to punitive damages may be made in the limited release, since the text of OCGA § 33-24-41.1 contained no language that would foreclose such an allocation. Specifically, the court noted that the section of the statute that requires payment be “based on injuries” does not prohibit the allocation of punitive damages, since the availability of punitive damages necessarily depends on there being some form of compensatory injury. Therefore, such payment would still be “based on injuries.”

Although the court had concluded that the plain language of OCGA § 33-24-41.1 permitted a limited release to include an allocation for punitive damages, the court still addressed arguments raised by the Court of Appeals about whether permitting allocation subverts the purpose of the larger statutory scheme. The Supreme Court of Georgia found the Court of Appeals arguments to be unavailing, since the full amount of the limited release would be admitted into evidence to offset the liability of an under-insured motorist insurance provider. Pursuant to OCGA § 33-7-11, the under-insured motorist insurance provider’s liability “shall not exceed the sum of all economic and noneconomic losses sustained by the insured.” Since punitive damages do not reflect “losses,” and the full amount of the limited release would still be offset from the under-insured motorist provider’s liability, the statute naturally forecloses fears of unscrupulous damage shifting based purely on the designation of damages as punitive or compensatory in the limited release.

Given the Supreme Court of Georgia’s certainty that no unintended advantage could be derived from designating damages in this fashion, one must wonder why the claimant’s lawyer or GEICO thought it would be useful. Questions of strategy aside, it is easy to see that although auto accidents do not necessarily lead to litigation, obtaining full recovery for injuries sustained in a motor vehicle accident can be an involved undertaking, implicating complex statutory schemes and occasionally antagonistic insurance providers. If you have recently been in an Atlanta motor vehicle accident and have questions regarding your insurance coverage, the insurance coverage of another, or the availability of recovery beyond that afforded through insurance coverage, the lawyers at the Law Office of Terrence R. Bethune have considerable experience with the law surrounding motor vehicle accidents and are prepared to give you guidance. For a free evaluation of your case, fill out our contact form or call 1-800-487-8669.

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